The European Central Bank (ECB) will maintain a vigilant attitude on dividend distribution policies. Thus, Andrea Enria, the president of the Supervisory Board of the organization, has recognized this in an interview published within the Supervisory Activities Report that the ECB has published this Tuesday, at a time of great complexity for the macro interview due to the rapid rise of interest rates, persistent inflation and the unknown effects of the financial crisis caused by Credit Suisse.
The document recalls that the banks have planned distributions for 2023 that are quite in line with the recovery of dividends and buybacks that they made in 2022, coming out of the restrictions related to the pandemic. “We have not objected to any specific plan by the banks,” explains Enria, who goes on to point out that “we have entered into a bilateral supervisory dialogue with all the banks as part of our regular assessment of capital trajectories,” he said.
In that sense, the report warns that by the end of 2022, the macroeconomic outlook began to improve again. “But this does not mean that the macroeconomic shock is over. If inflationary pressures persist, the necessary accelerated process of monetary policy normalization could, in turn, affect the portfolios and business lines of specific banks, bringing from a wide range challenges and the creation of potential winners and losers”, explains the ECB through the Supervisory Activities Report.
The ECB has highlighted that the banking sector as a whole has proven to be very resistant to the crisis caused by the war in Ukraine, “even more than we expected based on the vulnerability analysis that we published in May 2022.” However, it must be taken into account that this document was prepared before the outbreak of the financial crisis caused by Credit Suisse.