European Central Bank Will Let Greece’s Big 4 Banks Pay Out Dividends

After being urged by Bank of Greece Governor Yannis Stournaras, the European Central Bank (ECB) is reportedly poised to let the country’s Big 4 banks pay dividends when supervisors take it under consideration in June.

That was reported by POLITICO, citing unnamed Greek banking sources who said the banks will be able to pay out €840 million ($893.31 million) as the financial institutions have come back to big profitability.

The country’s banks had to be bailed out with €50 billion ($53.17 billion) during a 2010-18 financial and austerity crisis that also saw them under a mountain of bad loans since sold over to collection agencies hounding people to repay.

If approved, it would be the first time in 15 years that bank shareholders could cash in on their investments, another Greek banking source also not identified told Pro Morning Central Banker (MCB) Europe.

National Bank of Greece payouts will be capped at 20-25% of the lenders’ 2023 profits, Piraeus Bank is expected to return 10% of its profit to shareholders, Alpha Bank 20%, and Eurobank 25%, all in line with the banks’ own guidance, the source said.

National Bank of Greece shareholders will have to lower their expectations, as the ECB is only likely to let it pay out 25% of its profits, below the 30% the bank guided for in March.

The payouts of the four systemic lenders will be smaller than for most of their European peers, as the supervisor still has concerns about the quality of their capital. Around 40% of the groups’ capital is in the form of deferred tax credit (DTC), which the ECB sees as lower-quality equity, said Business Daily Greece.

Earlier, Stournas told Yahoo Finance in an interview in Frankfurt – the ECB’s home – that the recovery of Greek banks has to be acknowledged. “It’s the time to allow dividends,” Stournaras said. “This decision and the exact parameters will be taken later in the year — in June.”

“We all know the constraints, but nobody can deny the huge improvement in the NPL (Non-Performing Loan) situation, the profitability situation, the capital metric situation, the liquidity situation,” he said. “The time has come for the supervisors to consider allowing the shareholders of the banks to get some dividend.”


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