ECB tells bloc’s banks to skip dividends as coronavirus hits core of economy

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ECB tells bloc’s banks to skip dividends as coronavirus hits core of economy

On Friday, the 27th of March 2020, as a consequential repercussion of the coronavirus pandemic which has been pouring fresh scorns over the eurozone economy, the European Central Bank had ordered the bloc’s lenders to stall dividend pay offs alongside share repurchase programs until October at the earliest, while the ECB had also urged the bloc’s lenders to use their profits to back an ailing eurozone economy which has every potentiality to dip deeper in to an apocalyptic and protracted recession.

In point of fact, latest remarks from the European Central Bank came forth shortly after the EU had cancelled a rescue plan for the bloc’s businesses which were reeling amid a gruelling outbreak of coronavirus pandemic.

In tandem, a number of eurozone lenders had already acknowledged that they might fail to pay a dividend this year with larger parts of eurozone remain in lockdown. Nonetheless, despite the bloc’s economy has been bracing for a tidal wave of contraction what initially seemed to be a mild storm, a raft of large lenders including Spain’s Banco Santander, Italy’s Intesa Sanpaolo alongside UniCredit had still been holding on to their plans of proffering a part of their last year’s profits.

Meanwhile, citing its latest move to stall dividends and share repurchase programs could save as much as €30 billion worth of capital, ECB said in a statement on Friday (March 27th), “To boost banks’ capacity to absorb losses and support lending...they should not pay dividends for the financial years 2019 and 2020 until at least 1 October 2020. Banks should also refrain from share buy-backs aimed at remunerating shareholders. ”