The European Central Bank is asking banks to suspend dividend payments through October to preserve lending capacity during the coronavirus crisis, a c
The European Central Bank is asking banks to suspend dividend payments through October to preserve lending capacity during the coronavirus crisis, a call that comes about two weeks after a group of eight big U.S. banks suspended their own stock buybacks to conserve capital.
The ECB, in a statement Friday, said the recommendation “concerns dividends for 2019 and 2020, at least until” October of this year. It said that its recommendation to forgo dividends was “to boost banks’ capacity to absorb losses and support lending to households, small business and corporates” during the pandemic.
The European Banking Federation, an industry trade group, said Friday that banks should halt 2020 dividend payments but said 2019 payouts should be the decision of individual institutions, according to a Reuters report.
Unlike U.S. firms, many European companies don’t pay dividends on a quarterly basis, sometimes paying once or twice a year. The DAX stock index, which tracks large German companies, has fallen 19% this month. The CAC 40, whose constituents include blue-chip French companies, is down 18%.
In the U.S., Bank of America (ticker: BAC), Goldman Sachs Group (GS), and six of the other largest banks suspended stock buybacks through the second quarter in an effort to support “customers, clients, and the nation” amid the coronavirus pandemic.
Read more: Here’s a List of Companies That Have Suspended Their Dividends and Stopped Buying Back Stock
Dividends are becoming rarer across the corporate world, as the coronavirus pandemic spreads. Some big U.S. firms in industries hit hard by the crisis, including Delta Air Lines (DAL), Ford Motor (F), and Marriott International (MAR), have already suspended their dividends.
Under the roughly $2 trillion stimulus package signed into law Friday, companies wouldn’t be able to pay dividends until “12 months after the date of the loan or loan guarantee is no longer outstanding.”
But outside of companies taking advantage of stimulus funds, there has been no blanket ban on dividends, thus far.
IHS Markit said recently that it expects there will be 230 dividend suspensions from the 1,800 largest payers globally.
Fonte:https://www.barrons.com/articles/european-banks-are-asked-to-suspend-dividends-could-u-s-banks-be-asked-the-same-51585419893
