Bad news for banks and the owners of these institutions’ securities: European credit institutions are expected to forego dividends and share buybacks until January 2021 or even later. At least that is what the supervisors of the European Central Bank (ECB) want. The banks are said to be prepared for losses and prefer to lend their money as loans rather than distributing it to the shareholders.
The banks’ anger promptly followed. The chief executive of the Federal Association of German Banks, Christian Ossig, railed:
“In our view, a general ban on distributions for all banks does not make sense. The ECB has all the information it needs to ask individual banks not to pay dividends.”
The fact is: the development of the individual institutes is very different. Germany’s largest money house, for example, Deutsche Bank, made a profit of €158 million in the second quarter of 2020. Loan loss provisions, even without a reminder from the ECB, amounted to €761 million.
See the full ESRB report here.