Sven Giegold
Member of the European Parliament – Greens/EFA Group

Speaker of the German Green Delegation

Corona crisis: Prudential supervisors must restrict banks’ dividends and bonuses

On 12 March, the Single Supervisory Mechanism (SSM), ECB’s supervisory arm, and the European Banking Authority (EBA) announced measures to mitigate the impact of COVID-19 on the EU banking sector. The two bodies linked their capital relief for banks with expectations “to use the positive effects coming from these measures to support the economy and not to increase dividend distributions or variable remuneration”. This week, Germany’s financial watchdog BaFin recommended banks to refrain from share buybacks and think twice before paying dividends and bonuses. However, to date no European prudential supervisor has enacted binding restrictions on banks’ dividend distributions and bonus payments.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

“Now is not the right time for banks to please their shareholders or pay generous bonuses. Financial institutions must not misuse the relief provided by the ECB and prudential supervisors’ crisis measures. While Europe’s real economy is put into the freezer, financial institutions urgently need to follow prudent distribution policies. If banks do not act responsibly themselves in this severe crisis, prudential supervisors need to make full use of their supervisory powers and rigidly restrict payouts in dividends and bonuses. In this critical situation, taxpayers’ money is meant to support our health systems and the real economy and not to rescue again carelessly acting banks.”

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