- IMF's managing director Georgieva: halt bank dividends and buybacks now – Financial Times
Market news
21 May 2020
IMF's managing director Georgieva: halt bank dividends and buybacks now – Financial Times
- One of steps needed to reinforce bank buffers is retaining earnings from ongoing operations
- 30 global systemically important banks distributed about $250bn in dividends and share buybacks last year; this year they should retain earnings to build capital in system
- This has unpleasant implications for shareholders, including retail and small institutional investors
- All stakeholders will ultimately benefit if banks preserve capital instead of paying out to shareholders during pandemic
- Protecting the banking sector’s strength now means that, once the recovery picks up, shareholders can expect large payouts
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