French Bank Shareholders Have Most at Stake in Dividend Delays

(Bloomberg) -- The European Central Bank’s unprecedented call on Europe’s banks to delay dividends would hit shareholders in the three largest French banks particularly hard.

If BNP Paribas, Credit Agricole and Societe Generale follow UniCredit SpA, ABN Amro NV and ING Groep NV in heeding the call, about 7.8 billion euros ($8.6 billion) would be in jeopardy, according to calculations by Bloomberg News. Taken together, the euro area’s 20 biggest banks could postpone dividends of as much as 22.3 billion euros.

The ECB on Friday evening urged banks to delay paying dividends at least until October to improve their financial strength. Banks would have an extra 30 billion euros of capital if they follow the recommendation for payouts for the 2019 and 2020 financial years, according to Andrea Enria, the ECB’s top banking watchdog.

Spokespeople for BNP Paribas and Societe Generale said they’re considering the ECB’s announcement.

Banks received unprecedented relief from the ECB this month after it temporarily allowed them to tap capital buffers and gave them more time to tackle soured loans. However, only a handful of lenders have so far agreed to increase reserves by delaying or suspending dividends.

”It is more than ever the time for banks to be reasonable and work alongside other stakeholders” when deciding on their dividends, said Fidelity International fund manager Romain Boscher, who oversees 190 billion euros, including stakes in Commerzbank AG and Intesa Sanpaolo SpA. “No one know what’s coming in the next weeks and humility is the best option.”

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