The big European banks have crossed out billions of dividends

news-single-imgcaption" style="width:240px">Like the German Deutsche Bank, which remains on 5 years of losses in a row and has already given up paying a dividend in 2021 for the current year, European banks are posting a low overall profitability, regularly reminds the ECB. (Keystone)

–

The biggest banks in the eurozone followed the requirements of their supervisor by giving up paying almost 30 billion euros in dividends during the coronavirus pandemic, the European Central Bank (ECB) said on Monday.

By refraining from rewarding their shareholders for the 2019 financial year, the banks directly supervised by the ECB “retained around 27.5 billion euros in profits”, indicates an article to be published in the next half-yearly report on the financial stability of the institution.

These establishments had initially planned to grant 35.6 billion euros in dividends for last year. Almost 6.2 billion euros had already been paid in late March when the ECB recommended that they stop until October, and just under 2 billion euros were still paid after this recommendation.

The undivided dividends represent “around 1.8% of equity and 35% of total profits” of these banks, adds the ECB.
In March, the single supervisor of some 120 large establishments in the euro zone asked the banks to give up rewarding their shareholders, while giving more flexibility on the capital to keep in the face of the crisis.

The aim was to encourage the continuation of loans to households and businesses, and to keep a mattress to absorb potential losses coming from borrowers in difficulty.
The profits now withheld by the banks could be used to cover “an increase of around 60 billion euros” in bad loans, writes the ECB in this article.

Conversely, most American and Swiss banks indicated at the end of the first quarter that they “would respect their dividend distribution plans”, recalls the ECB.
American banks have been cleaning up their balance sheets faster since the last crisis in 2009, which today allows them to both finance the economy and pamper their shareholders.

Like the German Deutsche Bank, which remains on 5 years of losses in a row and has already given up paying a dividend in 2021 for the current year, European banks are posting a low overall profitability, reminds the ECB regularly (AWP)

– .