The European Central Bank President, Christine Lagarde, says that the EU banks will lift a cap on the dividends and share buybacks at the close of September.
- The lifting of the cap is a positive signal that the banking industry will promote returns for the suffering shareholders.
- The EU systematic risk board will allow for removing the restrictions when the economic and financial sector situations cannot decline materially.
- In 2020, the bank stocks suffered significantly after the regulators imposed a de facto ban on the shareholder returns in exchange for unprecedented relief and taxpayer-financed stimulus COVID-19 package.
- Later, the ECB, in collaboration with other agencies, restricted dividends and share repurchases in the first nine months of 2021 to deal with uncertainty over the performance of the economy.
The Euro Stoxx Banks Index increased by 2.2% as the lifting of the cap made the EU banks highly attractive to investors.
SX5E gains +0.31%, SX7E gains +1.37%