Paris (awp / afp) – Joining several recommendations already issued by the European Central Bank, the European Banking Authority also called on Tuesday the continent’s banks to give up distributing dividends and calls for moderation on bonuses.
Faced with the coronavirus epidemic and its dire consequences for the economy, “the competent authorities should ask the banks to review their remuneration policies and practices” in order to guarantee “solid and effective risk management”, said the European Banking Authority in a press release.
“The remuneration and, in particular, its variable part should be fixed in a conservative manner”, explains the authority, according to which “a larger part of the variable remuneration could be deferred for a longer period and a larger proportion could be paid in shareholder-type instruments “.
These injunctions echo the statements of Andrea Enria, the head of the European supervisory mechanism, published Tuesday by the daily Financial Times, urging the banks to be “extremely extreme in terms of variable compensation”.
In addition, the European Banking Authority in turn urges, as did the ECB on Friday, “all banks to refrain from distributing dividends or share buybacks which result in a distribution of capital outside of the banking system, in order to maintain its solid capitalization. “
Giving up dividends could free up 30 billion euros in capital, the central bank estimates.
The European Central Bank and European Banking Authority have recently stepped up measures to ease capital requirements or prudent credit rules to ensure that banks continue to support the economy.
For supervisors, the challenge is to ensure that a maximum of capital is preserved by the banks so that they can continue to lend to the economy while being able to absorb the probable faults that threaten a further share. unknown of their credits due to the negative economic fallout linked to the coronavirus crisis.
On Tuesday, the Italian group Intesa San Paolo announced in particular that around twenty of its leaders would donate part of their bonuses acquired in 2019, for a total amount of 6 million euros, to support health initiatives.
afp / rp
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