The “fast” forced by dividends for the shareholders of Italian banks, leading foundations, should come to an end in a few months. “If the conditions of the economy and the financial sector do not deteriorate, our recommendation on the restriction of distributions during the pandemic could expire at the end of September 2021”, announced the president of the ECB, Christine Lagarde in a hearing in the European Parliament.
“In the absence of negative developments, we plan to repeal” the block “starting from the end of the third quarter” and to return to review dividends and buy backs, confirmed the head of supervision, Andrea Enria.
Confident Piazza Affari: + 1.36% the FTSE Italia banks, led by Unicredit (+ 2.5%), Intesa Sanpaolo (+ 1.1%) and Banco Bpm (+ 1.7%). It should be remembered that the dividend stop is aimed at keeping the bar of the capital solidity of the banks high and therefore at creating a safe area to absorb any non-performing loans left by Covid. It is not for nothing that Enria expects remuneration policies “to remain prudent and commensurate with the ability of banks to generate internal capital and the potential impact of a deterioration in the quality of exposures, even in adverse scenarios”.
The ECB’s moral suasion is evident, also because careful risk management remains fundamental. Most EU banks are “fully” or “broadly” in line with Supervisory expectations but – Enria warned – “some, including those that now have rather low credit risk levels, must fill significant gaps” in control risk. To prevent future problems.
“Our concerns about financial stability have shifted from risks on corporate liquidity” to their budgetary vulnerabilities, explained Lagarde, stressing that “the degree of corporate debt has risen, especially for the smallest companies most affected” from the virus. «It is important to avoid» that the combination of many debts and lower profits, «can lead to insolvencies».