Italy: Bank of Italy recommends to banks not to distribute dividends – BNP Paribas

Following the example of the ECB for the significant institutions, the Bank of Italy has decided to recommend to banks not to distribute or commit distributing dividends at least until 1 October 20202, Thomas Humblot from BNP Paribas briefs.

Key quotes

“Share buy-backs will have to be restricted and less significant institutions in Italy will have to adopt ‘prudent and farsighted’ variable-remuneration policies.” 

“The five largest Italian banking groups are likely to mobilize EUR 4.8 billion of additional common equity Tier 1 in 2019, representing 4.1% of its current outstanding amount.” 

“These supplementary reserves will absorb part of the increase in the cost of risk in 2020 and will limit the decrease in regulatory capital, which has increased by 61% since 2008.”