Dividend ban banks may last longer

The second round of COVID may take longer for banks to be able to return dividends to their shareholders. Within European Banking Supervision, there are growing concerns about the deteriorating economic outlook and its possible impact on banks ‘ balance sheets, as initiates have reported to Bloomberg press office.

Not so long ago, the European Central Bank (ECB) seemed to have voted to lift the dividend ban imposed earlier this year. Many banks have been pressing for a decision along these lines lately. But now such a scenario seems a little further away.

The experts indicated that an intermediate solution is also possible. In addition, banks that are in good shape could already pay dividends. But the share of the profits they could distribute to their shareholders would initially be limited.

The ECB asked banks at the end of March not to pay dividends during the coronacrisis. This money could be better managed by the financial institutions in order to have an extra buffer, for example, to take the hit from loans to businesses and consumers that could not be repaid. The purchase of own shares was also out of the question. In July, the central bank repeated the call for a different use of the money until the end of the year. The ECB indicated that it would take a new decision in December.