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ECB expects to lift ban on bank dividend payments

ecb headquarters

The European Central Bank could lift a restriction on bank dividend payments in the coming months thanks to an improved macroeconomic scenario in the euro zone, ECB policymaker Pablo de Hernandez de Cos said on Friday.

“Now the macroeconomic situation has changed and the arguments that would justify extending or maintaining the recommendation are progressively disappearing,” De Cos told a financial event in Spain.

“In the coming months, in July or September, we will communicate this decision, which has not yet been taken,” he added.

The ECB has asked banks to limit dividends and buy-backs until the end of September but has already indicated that the restrictions would be lifted unless the economic outlook deteriorates.

Bank of France Governor Francois Villeroy de Galhau told Bloomberg he supports the lifting of restrictions on European bank dividend payments, in order to ensure a level playing field with competitors in other markets.

A formal move to lift the current restrictions is necessary to keep European banks attractive to investors, as exceptional measures on payouts in the U.K. are less stringent, and could be lifted as early as end June in the U.S., Villeroy, who also sits on the European Central Bank’s Governing Council, said at a conference on Friday. A decision is expected to be made by the end of July, he said.

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