ECB updated its recommendation to banks on dividend distributions. To boost the capacity of banks to absorb losses and support lending to households, small businesses, and corporates during the COVID-19 pandemic, ECB recommends that banks should not pay dividends for the financial years 2019 and 2020 (until at least October 01, 2020). Banks should also refrain from share buy-backs aimed at remunerating shareholders. To maximize the support to the real economy, it is also considered appropriate that discretionary dividend distributions should not be made by less significant credit institutions.
This recommendation does not retroactively cancel the dividends already paid out by some banks for the financial year 2019. However, banks that have asked their shareholders to vote on a dividend distribution proposal in their upcoming General Shareholders meeting will be expected to amend such proposals in line with the updated recommendation. The recommendation follows the earlier ECB announcements about the temporary relief measures to ensure that banks keep supporting the economy. ECB expects bank shareholders to join this collective effort.
Keywords: Europe, EU, Banking, Securities, COVID-19, Dividend Distribution, Recommendation, Pillar 2, ECB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleBaFin Explains Regulatory Measures to Address Impact of COVID-19
FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.
HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.
FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).
HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).
HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.
In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.
EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.
MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.
FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.
GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.