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Bloomberg
UniCredit SpA suspended a dividend payment and a share buyback in a setback to Chief Executive Officer Jean Pierre Mustier’s plan to improve shareholder rewards.
The decision comes after the European Central Bank recommended that lenders restrict payouts until at least October as the coronavirus pandemic wreaks havoc on markets. Its previous call for banks to be prudent on dividends persuaded few major banks to change their policies.
Andrea Enria, the ECB’s top banking watchdog, said it would be socially irresponsible to withhold dividends “in these exceptional times.†Italy’s Banca Generali SpA and Banca Mediolanum also announced delays to their payouts, as did Dutch Banks ABN Amro NV and ING Groep NV.
Mustier laid out a new strategy for UniCredit in December, promising that an increasing proportion of earnings would be paid out to shareholders via dividends and buybacks through 2023. Milan-based UniCredit had planned to distribute a dividend of 63 cents a share on 2019 earnings and the board had authorised the repurchase of as much as $517 million of shares.
UniCredit will release the 2019 dividend deducted from its CET1 capital, boosting the measure by 37 basis points.
The bank will offer its shareholder foundations interest-free loans equal to the amount of the planned dividends, its said in a statement.