European financial institutions have a limit until Friday, January 15, to present their dividend policy for the coming months to the European Central Bank on account of the 2019 and 2020 years and before the veto imposed in March and partly lifted last December.
The ECB decided in December to lift the veto on dividends, but only in part and with conditions. Thus, banks may only distribute as a dividend a cap of 15% of the accumulated profits in 2019 and 2020 or that do not exceed 0.20 points of the CET1 capital ratio. Of both, the lowest figure. The measure runs until September. But he also recommended that the sector be “very moderate”, and if you can avoid paying dividends now.
Well, Sabadell has opted for this conservative model and has communicated to the ECB its decision not to distribute a dividend on account for the year 2020 until after September, the month in which the ECB will return to study the situation of the sector and the economy after the effect of the Covid, and once the supervisor has in his hands the results of the stress tests of the banks.
It is true that even if an entity has requested the ECB to be able to distribute dividends before September, even though they are limited, the supervisor has the last word. Hence, it is quite possible that, in addition to Sabadell’s decision, other banks are not distributing dividends at this time.
Sabadell, however, was able to distribute a dividend charged to 2019, since in December 2019 it paid 0.02 euros per share, and in April it paid another 0.02 euros, remuneration that had been approved at the meeting on March 27, the same day that the ECB communicated its decision to temporarily veto dividends.
There is also the circumstance that Sabadell has changed its management leadership and is in a process of restructuring, which includes the sale of its British subsidiary TSB, sources from investment banking recall.
Santander has been one of the banks that has claimed the most for the distribution of dividends. In fact, in October its shareholders’ meeting approved a dividend of 0.10 euros charged to 2020. Of this payment it is possible that the bank will pay a part (about 7 cents) before May, for which it has requested authorization now, and another part in October, once the ECB predictably lifts all restrictions on the payment of the dividend, depending on the market. BBVA wants to carry out a significant share buyback to reward the shareholder, but this operation will not be effective until the sale of its US subsidiary is closed, which will happen in mid-2021, before it expects to pay the shareholder something in cash.
Bankia is now leaving the dividend policy for CaixaBank, the entity with which it is expected to merge between March and June. In any event, CaixaBank has requested authorization to pay part of the dividend.
Bankinter enters the profitability and capital base to distribute a part of the dividend (15% of the profit) before September in cash. In addition, it is in talks with the ECB to see if in the end it can take Línea Directa public on the Stock Exchange and distribute 83% of the insurance company’s securities as an extraordinary dividend among its shareholders. Unicaja, another of the listed banks, has also asked the ECB to pay a part of the 2020 dividend now, according to market sources.
Maria Abascal. The Spanish Banking Association (AEB) has appointed María Abascal as the new director of public policy, a division that encompasses all activities related to banking, regulation, operations, means of payment and digitization. He replaces Rocío Sánchez Barrios, who in September assumed new responsibilities at the European Investment Bank (EIB). Commercial technician and state economist with 15 years of experience in the financial sector, he will also be part of the executive committee of the European Banking Federation. Since 2018 she was the global director of institutional relations at BBVA. He was also chief economist for regulation and public policy at BBVA Research, responsible for financial regulation analysis.