The European Central Bank (ECB) as the supervisory authority, unlike the Bank of England, wants to prevent excessively bubbly distributions and urges moderation.
The largest UK banks will again be able to distribute unlimited dividends to their shareholders for 2020. The British central bank lifted the restrictions imposed on the country’s large financial institutions due to the corona crisis on Tuesday with immediate effect.
The big banks in the euro area can also expect easing in terms of dividends. But the European Central Bank (ECB) as the supervisory authority, unlike the Bank of England, wants to prevent excessively bubbly distributions.
The British central bank certifies that the big banks are well capitalized and that they can withstand severe economic upheavals. The central bank as the supervisory authority had already relaxed the restrictions in December. The current decision concerns Barclays, HSBC, Lloyds, NatWest and Standard Chartered as well as the British unit of the Spanish Banco Santander.
The ECB, on the other hand, insists on moderate distributions from banks in the euro area despite the dividend freeze that is likely to expire soon. The central bank will call on the institutions to continue to be cautious, said the Spanish ECB supervisor Margarita Delgado in an interview published on Monday evening by the Bloomberg news agency. The central bank could also take the necessary steps.
Excessive distributions could initially lead to the recommendation of the ECB to return to a more average distribution policy, said Delgado. “We have other tools if the bank does not follow the recommendation of the supervisory authority.”
During the Corona crisis, the ECB imposed an extensive dividend freeze on the largest banks in the euro area in order not to exacerbate a possible imbalance in the balance sheet in the economic crisis through excessive cash outflows. According to ECB boss Christine Lagarde, the stop could expire in September. The warning from the Spanish representative in the ECB’s supervisory body should now dampen investors’ hopes for excessively bubbly distributions.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
