Frankfurt Financial supervision has loosened the rules for banks significantly in the wake of the corona crisis. This should enable the institutes to support companies in this difficult time. However, the authorities want to prevent banks from using the additional scope to keep their shareholders on line with dividends.
The European banking regulator has therefore tightened its pace on this subject. On Friday evening, it asked the largest institutes in the euro zone not to pay dividends until at least October 1, 2020. The same applies to the buyback of own shares.
“With the recommendation, we want to prevent that in the current uncertain situation due to distributions, much needed capital may later flow out of the banking system,” Bundesbank board member Joachim Wuermeling told Handelsblatt. “However, this is not the case for payments between parent companies and subsidiaries within banking groups. That is why the recommendation does not extend to such transactions. ”The Munich-based HypoVereinsbank can therefore pay its Milan-based parent company UniCredit a dividend of EUR 3.29 billion as planned.
“The situation within groups is comparable, even if it is not legally a group,” said Wuermeling, who is responsible for banking supervision on the Bundesbank board.
Here too, a dividend payment remains “within the financial group of the savings banks or cooperatives” and thus in the banking system. “That’s why I don’t assume that distributions will be waived within alliances,” emphasized Wuermeling.
DZ Bank, fund provider Deka and individual Landesbanken are therefore likely to be able to pay dividends to their owners after a case-by-case assessment. DZ Bank belongs to the Volks- und Raiffeisenbanken, some of which have factored in the distribution of their central institution in their plans.
The same applies to the savings banks, to which Deka belongs 100 percent. The ownership structure of the Landesbanken is very different. The savings banks hold only 25 percent of BayernLB, but more than 80 percent of Helaba.
As in the previous year, Helaba plans to distribute 90 million euros to its owners for the 2019 financial year. “This corresponds to a payout ratio of less than 20 percent,” said CEO Herbert Hans Grüntker on Wednesday. “We believe that we are careful with our capital resources.”
DZ Bank plans to pay dividends to its owners totaling EUR 322 million. This corresponds to a payout ratio of around 17 percent.
“Basel IV” rules are postponed
In contrast to DZ Bank and Deka, German private banks such as Commerzbank, Aareal Bank or Deutsche Pfandbriefbank will probably have to suspend or cancel their planned dividend payments for 2019.
On the other hand, the institutes can look forward to further relief. International banking regulators announced on Friday that they will postpone the introduction of tougher capital requirements because of the corona crisis by a year. The set of rules, which is called “Basel IV” in the industry, should only be gradually introduced in 2023.
More: So far, almost everything has been about relieving companies of labor costs. Now relief is also being discussed in the cost of capital.