Yesterday evening, on 15 December 2020, the ECB decided to relax the dividend freeze that had been in place since March for the large European banks under its supervision. The ECB had previously recommended banks to refrain entirely from distributing profits and buying back shares during the crisis. Due to a lack of legal powers, the ECB can only issue a strong recommendation on this, but not impose a binding ban. As of next year, the banks will be allowed to resume distributions under certain conditions. A maximum of 15% of the cumulative profits of 2019 and 2020 may be distributed and the regulatory capital ratio may fall by a maximum of 0.20%.
The end of the blanket restrictions on distributions had been expected after the Bank of England had taken a similar decision. We Greens had argued vehemently for an extension of the restrictions and had written a letter to the Chair of the ECB’s Supervisory Board, Andrea Enria, to inquire whether he considered the supervisory powers insufficient in the crisis.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“After months of pressure, ECB banking supervision gives in to demands by the financial lobby. At the height of the second wave, it relaxes its conditions and allows banks to pay dividends again. At the same time, the immense crisis support for the banks continues unchanged. In particular public loan guarantees and the ECB’s TLTRO programmes are massive bank subsidies by the public sector. This simply does not fit together. Billions of taxpayers’ money flows directly from the public purse to the banks’ shareholders. The ECB also remains too lenient when it comes to remuneration. Bank managers continue to receive lavish bonuses despite the state subsidies. This crisis shows: The state can still be blackmailed by the banking sector.”
Decision by the ECB on ending the dividend freeze:
Our call for an extension of the dividend freeze:
Our letter to Andrea Enria regarding the dividend freeze: