Bank dividend suspension proved effective – ECB
Lenders that reduced distributions increased both provisions and lending to the real economy
The European Central Bank recommendation for banks to suspend the distribution of profits during the pandemic proved effective, said the supervisor today (August 18).
Analysis suggests “banks that altered their dividend distribution plans increased provisions by 5.5% and lending to the real economy by 2.4% relative to banks that left their distribution plans unchanged”, said the ECB. Some banks had already made dividend payments, or already had no plans to make a payout.
ECB Banking
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