DÜSSELDORF (dpa-AFX) – The German financial regulator Bafin is calling on the local banks to refrain from dividend payments in the new year due to the corona crisis. “When paying dividends, caution is still appropriate,” said the executive director responsible for banking supervision Raimund Röseler the magazine “Wirtschaftswoche” (Thursday).
A corresponding ban on dividends was recently relaxed after long discussions. The European Central Bank (ECB), which is the largest banks and banking groups of the Eurozone directly supervised, had already asked the institutes in December not to distribute dividends until the end of September 2021 if possible and not to buy back shares. If you did it anyway, you should take into account possible further burdens as a result of the Corona crisis.
According to Röseler’s assessment, the consequences of the pandemic are likely to lead to considerable problems for some institutes in this country. “We expect more bank loan defaults, especially after the end of government aid.” In internal scenarios, according to the report, the Bafin expects the non-performing loan ratio to rise from around 1 percent to 1.5 percent. In extreme cases, it could be more than twice as high.
“That will not lead to a banking crisis, but to a crisis for some banks,” said Röseler. He expects that as a result, more banks will come under intensified supervision. Institutes that “had poor earnings even before Corona” are particularly affected.
Joachim Wuermeling, who is responsible for banking supervision on the board of the Bundesbank, also urges the institutes to be cautious. “It would be deceptive as a bank to feel safe now. The big end is yet to come,” he told the magazine. Wuermeling considers the banks to be more resilient than in the financial crisis. However, the institutions should keep a close eye on their loan books./stw/stk/jha/