The European Central Bank intends to ask the big banks to reconsider their dividend distribution plans in the face of the risk of recession in the event of an end to Russian gas supplies, the chairman of banking supervisor Andrea Enria said on Thursday.
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“
We will propose asking banks to recalculate their capital trajectories under a worst-case scenario potentially including a gas embargo or a recession
,” Andrea Enria told a hearing before the European Parliament's Economic Affairs Committee.
This recalculation will be used to "
verify their dividend distribution plans
", added the Italian central banker.
Russia's war in Ukraine has driven up energy and food prices, and concerns are growing about the risk of recession if Russian gas supplies are completely cut off.
Although euro area banks have fairly solid capital buffers thanks to the reforms made after the great financial crisis of 2008, the ECB wants to ensure that these institutions are credible in forecasting their payments in dividends or other measures. impacting their capital.
The payment of dividends to shareholders is one lever among others to control the amounts of capital on the balance sheet, which banks must keep in sufficient quantity to absorb any shocks.
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The subject will be discussed next week at a meeting of the supervisory board of the banking supervisor within the ECB, said Andrea Enria.
The ECB already imposed a general ban on dividend payments to shareholders in March 2020 during the first wave of the Covid-19 pandemic, then simply imposed a limit on these payments in December of the same year.
The scheme was not extended beyond last September.