ECB to let banks pay out 15% of profits if they can prove they can afford it: sources

FRANKFURT (Reuters) – The European Central Bank will likely decide on Tuesday to let banks pay out up to 15% of their cumulative profits for 2019/20 in dividends if they can convince ECB supervisors that they can afford to do so, two sources told Reuters.

The ECB recommended in March that euro zone banks on its watch refrain from any dividend distribution this year so that they preserve capital for a likely wave of unpaid loans as a result of the coronavirus pandemic.

ECB supervisors meeting on Tuesday to review the matter were set to ease this restrictions and vote on a proposal allowing lenders to pay out up to 15% of the profits they accumulated this year and the last, the sources said.

But one source cautioned that banks needed to show supervisors that they had enough capital to make such distribution and decisions would be made on a case-by-case basis, meaning the burden will be on banks to prove their case and gain approval.

An ECB spokeswoman declined to comment.