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ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 6:41 am
by idpickering
European regulators lifted their de facto ban on bank dividends while imposing strict limits on payout levels to help lenders maintain financial strength during the pandemic.
The European Central Bank said that the continent’s banks should keep dividends and share repurchases to less than 15% of profit for 2019 and 2020, or 0.2% of their key capital ratio, whichever is lower, according to a statement Tuesday. That’s a more conservative payout level than the Bank of England announced last week.
European lenders’ shares have lagged behind the broader market this year, after they repeatedly warned that being unable to return cash to investors risks cutting them off from capital markets. Despite optimism that the end of the pandemic is in sight, some regulators remain concerned that allowing a full return to payouts may leave banks without the financial reserves to bear losses without taxpayer bailouts.
https://www.bloomberg.com/news/articles ... -dividends
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 8:55 am
by dealtn
Seems such a small level, and for such a short time, it is a token. I would argue it makes the ECB look more interventionist than others, and would be negative relative to other areas. The signal maybe that they are worried about certain countries, and their banks/banking systems, and the requirement for uniformity is driving a pan-Europe restriction.
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 11:05 am
by GoSeigen
dealtn wrote:Seems such a small level, and for such a short time, it is a token. I would argue it makes the ECB look more interventionist than others, and would be negative relative to other areas. The signal maybe that they are worried about certain countries, and their banks/banking systems, and the requirement for uniformity is driving a pan-Europe restriction.
Might send bank shares down again for a bit, which I'd certainly welcome as I still wish to add to my positions.
GS
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 1:57 pm
by monabri
So the yields in the link below might be optimistic?
viewtopic.php?p=365170#p365170Might buy a coffee or two!
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 2:03 pm
by Dod101
It is all a bit of a joke n'est ce pas? Why anyone would want to buy bank shares I do not know. I hold a fair chunk of HSBC and it seems to me to be outrageous that the PRA and others are dictating what they may or may not do when most of their financial strength is as a result of trading, in their case, in the Far East.
Dod
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 2:14 pm
by dealtn
Dod101 wrote:It is all a bit of a joke n'est ce pas? Why anyone would want to buy bank shares I do not know. I hold a fair chunk of HSBC and it seems to me to be outrageous that the PRA and others are dictating what they may or may not do when most of their financial strength is as a result of trading, in their case, in the Far East.
Dod
You've already been given examples of why people would want to buy bank shares (on several occasions when you express such).
Anyway what's the difference to someone buying them, or holding them? Is there some kind of difference as my understanding is, except in the specific instance of buying xd, all holders are treated equally, and the shares pari passu, regardless of when that purchase took place?
What makes your decision as a holder, any different to a new buyer? Possibly a wish to avoid crystalizing a tax event - but that's getting somewhat tangential to the discussion.
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 2:40 pm
by Dod101
dealtn wrote:Dod101 wrote:It is all a bit of a joke n'est ce pas? Why anyone would want to buy bank shares I do not know. I hold a fair chunk of HSBC and it seems to me to be outrageous that the PRA and others are dictating what they may or may not do when most of their financial strength is as a result of trading, in their case, in the Far East.
Dod
You've already been given examples of why people would want to buy bank shares (on several occasions when you express such).
Anyway what's the difference to someone buying them, or holding them? Is there some kind of difference as my understanding is, except in the specific instance of buying xd, all holders are treated equally, and the shares pari passu, regardless of when that purchase took place?
What makes your decision as a holder, any different to a new buyer? Possibly a wish to avoid crystalizing a tax event - but that's getting somewhat tangential to the discussion.
I know I know. I was not really expecting any response. My comment was based on frustration; nothing though, I expect, compared to the frustration that HSBC will be feeling.
Dod
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 3:11 pm
by dealtn
Dod101 wrote:... nothing though, I expect, compared to the frustration that HSBC will be feeling.
I don't think we disagree significantly here!
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 3:36 pm
by scrumpyjack
UK banks are not subject to ECB edicts AFAIW
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 3:54 pm
by idpickering
I don't hold any bank shares currently, but used to hold HSBC and Lloyds. I'm in no rush to buy back into them, or any other bank come to that, right now. I'm not saying never though.
Ian.
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 4:03 pm
by Dod101
scrumpyjack wrote:UK banks are not subject to ECB edicts AFAIW
I have not directly compared the edicts but they are probably not that different. Anyway our dear PRA appears to be quite strict enough although I hope that there might be room for some horse trading.
Dod
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 10:47 pm
by 88V8
scrumpyjack wrote:UK banks are not subject to ECB edicts AFAIW
Not now they're not.
But will the PRA have the courage to go its own way, or will it be told to fall in line with the ECB so as not to rock the Brexit boat.
V8
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 16th, 2020, 11:58 pm
by AJC5001
scrumpyjack wrote:
UK banks are not subject to ECB edicts AFAIW
I keep seeing this abbreviation. I know what AFAIK and AFAIAA mean, but I'm stuck on the "W" in AFAIW.
TIA
Adrian
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 17th, 2020, 12:05 am
by Dod101
88V8 wrote:scrumpyjack wrote:UK banks are not subject to ECB edicts AFAIW
Not now they're not.
But will the PRA have the courage to go its own way, or will it be told to fall in line with the ECB so as not to rock the Brexit boat.
V8
I am fairly sure of the answer to that and anyway, despite the fact that we have had at least 4 years to get used to the idea, everything seems to need at least another 12 months to transition despite the fact that we are just about to end the so called transition period.
Dod
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 17th, 2020, 8:32 am
by scrumpyjack
AJC5001 wrote:scrumpyjack wrote:
UK banks are not subject to ECB edicts AFAIW
I keep seeing this abbreviation. I know what AFAIK and AFAIAA mean, but I'm stuck on the "W" in AFAIW.
TIA
Adrian
Sorry, meant to be AFAiAA
Re: ECB Lifts Bank Dividend Ban With 15% Payout Cap on Profit
Posted: December 17th, 2020, 9:08 am
by hiriskpaul
scrumpyjack wrote:UK banks are not subject to ECB edicts AFAIW
No, they never have been.