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ECB Urges Eurozone Banks to Skip Dividends as Coronavirus Jeopardizes Economy

The European Central Bank (ECB) informed eurozone banks Friday to skip dividend payments and share buybacks until October on the earliest and use their profits to assist the economy as it’s struck by the coronavirus pandemic.

ECB Urges Eurozone Banks to Skip Dividends as Coronavirus Jeopardizes Economy

With massive parts of the eurozone in lockdown and the economy braced for an unusual contraction, most banks have acknowledged they might struggle to pay a dividend for this year.

However, many giant lenders, along with Spain’s Santander and Italian duo Intesa Sanpaolo and UniCredit, had been nonetheless clinging to plans for paying out part of last year’s earnings.

The ECB estimates the measure would save banks 30 billion euro worth of capital.

Germany’s banking association begrudgingly accepted the choice as long as it remained a one-off.

The European Banking Federation (EBF) said earlier Friday banks ought to halt 2020 dividend payments; however, it left any determination on payouts from 2019’s income to bankers’ own judgment.

In Spain, Santander has stated it will hold off paying its interim dividend for this year, due in November, and Caixabank cut its own payout.

Germany’s Commerzbank and Aareal Bank had additionally stated they ere reconsidering their dividends.

The French authorities Friday called on firms in which the state has a stake not to pay dividends as they deal with the coronavirus pandemic.

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