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The EBA continues to demand prudence from banks in the payment of dividends


The European Banking Authority (EBA, for its acronym in English) continues to ask European banks for prudence and warns of the need to be conservative in the payment of dividends after the European Central Bank (ECB) has agreed that entities can distribute a maximum payout of 15%.

Due to the consequences generated by the coronavirus, the EBA asked the banks to continue with a conservative distribution policy and to use capital to ensure the financing of the economy. However, Brussels has reiterated the request after they announced the new conditions of the European Central Bank (ECB) for the payment of dividends. They explain that "the Covid-19 crisis and the uncertainty about its impact on the economy are likely to continue, with a possible further deterioration of asset quality metrics in the coming quarters. "

In a statement they have criticized that "EBA urges banks to refrain from distributing capital outside the banking system when deciding on dividends and other distribution policies, including share buybacks, unless extreme caution is applied ”.

Likewise, it has indicated that Distributive banks need to carefully analyze the impact of capital and its ability to create income on new projects. The goal is for banks to continue to have high resources to withstand any asset quality problems.

They have insisted that it is necessary "continuing to apply conservative distribution policies is essential to ensure the preservation of strong capital levels within the European banking sector and forms the basis for provide the necessary support to the economy”.

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