Dividend waiver at banks – LBBW postpones decision

Frankfurt, Zurich, Stuttgart Numerous banks suspend their dividend payments according to instructions from the European Central Bank (ECB).

Landesbank Baden-Württemberg (LBBW) now also wants to postpone the decision on a dividend to its owners until autumn. The board decided to propose to the state of Baden-Württemberg, the Sparkassenverband and the city of Stuttgart, the largest German state bank announced on Thursday.

The board of directors had originally planned to propose a distribution of 259 million euros to the three owners at the general meeting in May after 250 million euros in the previous year.

Despite the ongoing low interest rate phase, LBBW had significantly increased its profit last year. At around 444 million euros, earnings after taxes were 7.5 percent higher than in 2018.

Many banks had previously declared that they would not distribute profits, most recently Aareal Bank.

Helaba and BayernLB have also suspended their dividends. According to financial circles, DZ Bank also wants to postpone the decision and payment of the dividend.

The second largest German cooperative bank after DZ Bank, the Deutsche Apotheker- und Ärztebank (Apobank), on the other hand, wants to maintain a dividend payment.

At the end of March, the Commerzbank announced in an ad hoc announcementthat she will not propose a dividend for 2019. “For the current fiscal year 2020, the Executive Board will not provide for a dividend payment until the uncertainties caused by Covid 19 have ended. After that, he will decide about it again, if necessary, ”it said.

The Dutch institutes had previously ABN Amro, ING, Rabobank and the Italian UniCredit, as well as numerous smaller financial houses in the euro area, have announced that they will not initially distribute any money to shareholders.

ECB had asked banks to waive dividends

In March, the ECB asked banks not to pay dividends for 2019 and 2020 due to the virus pandemic until at least October 1.

A similar request came from the Swiss authorities. They advised banks to “carefully consider” how high the dividends should be in the current environment. The ECB has no supervisory powers over Swiss banks.

“Although we are well capitalized and financed, we believe it is wise to follow the ECB’s recommendations,” said ING chief Ralph Hamers, who will become UBS’s chief executive officer later this year.

This gives the bank more flexibility to help customers and society fight the corona crisis. “These are exceptional times for all of us.” After October 1, ING will make further decisions about its dividend policy.

ABN Amro said that the consequences of the virus crisis for customers, the quality of the loan portfolio and the entire economy could not yet be estimated. The bank expects a record loss in the first quarter, also because a customer in the US had gambled on risky securities. ABN Amro will therefore follow the advice of the ECB and initially put the dividend plans on hold.

The major Spanish bank Santander had also announced that the planned interim dividend would be canceled. The funds should be used to help people and companies in need, the largest bank in the euro zone justified the move.

UniCredit also planned not to make a profit distribution and also to suspend share buybacks. The Munich HypoVereinsbank, which belongs to UniCredit, can, however, transfer a dividend of almost 3.3 billion euros to the Italian parent company, as Bundesbank board member Joachim Wuermeling told the “Handelsblatt”.

“With the recommendation, we want to prevent that in the current uncertain situation, distributions that may be urgently needed later flow out of the banking system. This is not the case with payments between parent companies and subsidiaries within banking groups. “

The Deutsche Bank does not meet the ECB’s dividend council, as it had already announced that it would not distribute profits for 2019 and 2020 due to its restructuring of the group.

More: The European banking supervisors are asking the credit institutions not to squander their equity but to use it primarily in Europe.

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