Within the European Central Bank (ECB), voices are being raised to allow banks to pay dividends again. Some central bank policymakers believe that extending a call to banks not to reward shareholders does more harm than good, say sources of Bloomberg press office. However, there is still a group of policy makers who do not think a resumption of dividend payments is a good idea.
The ECB asked banks at the end of March not to pay dividends during the coronacrisis. This money could be better managed by the financial institutions in order to have an extra buffer, for example, to take the hit from loans to businesses and consumers that could not be repaid. The purchase of own shares was also out of the question. In July, the central bank repeated the call for a different use of the money until the end of the year.
Supporters of the resumption of dividend payments believe that European banks have sufficient money. By keeping their shareholders satisfied, they would now also keep investor confidence, and that is what they need for the longer term.
A decision on the longer-term non-payment of dividends will probably not be taken until the end of this year and will be based on figures on the economy in the coming months. The ECB has already stated its position in the fourth quarter.