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After the big banks, private banks such as Julius Baer and EFG have followed Finma’s call and pay dividends in stages. This increases the pressure to pull also for cantonal banks. But they don’t move.
Supervisors cannot actually dictate their dividend policy to banks. Nevertheless, the urgent admonitions of Mark Branson heard: The call by the director of the Swiss Financial Market Supervisory Authority (Finma) to handle distributions particularly carefully with a view to the Corona crisis has so far been followed by the heavyweights UBS and Credit Suisse (CS) as well as the private banks Julius Baer and EFG International.
This increases the pressure on other institutions, especially the 24 Swiss cantonal banks. Quite a few of these, like the above institutes, are listed on the stock exchange and also operate abroad through subsidiaries – such as the Geneva, St.Galler and Zürcher Kantonalbank. Like the UBS and CS, the latter is also one of the systemically important institutes for Switzerland.
Even more attack surface
So far, Finma’s calls to the state banks have been dying out. “The question of dividend distribution also affects the cantonal banks,” says the group’s body, the Association of Swiss National Banks (VSKB). But: “As far as we know, all cantonal banks with share capital or participation capital intended to pay out the originally planned dividend, or it has already occurred.”
The unwavering stance is likely to give cause for discussion, not least in Swiss banking. There, the mood has already heated up in recent months against the state institutions, which together clearly dominate Swiss domestic business. The supremacy is a thorn in the side of the competition, and the state guarantee of numerous cantonal banks, any tax advantages and advantages in refinancing offer critics a target.
Important as a cash supplier
As close as it is to the canton can be advantageous – in the current dividend discussion it probably puts state institutions on the tightrope of politics. Because of the corona crisis, the stands have to expect massive tax losses. The dividends of the «own» bank as a cash supplier are becoming even more important than they were before.
As good experts report on the question, the cantonal governments tend to take the view that the state banks are excellently capitalized and that financial stability as an argument for smaller dividends therefore only stands out to a limited extent.
CHF 1.8 billion distributed
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