European banks: One (dividend) size does not fit all - GS

Gungnir Resources

18/11/2020 08:31

** Goldman Sachs says it will be more manageable for
Europe's banking sector if the European Central Bank (ECB) makes
its ban on dividends conditional  urn:newsml:reuters.com:*:nF9N2CA00Z
    ** When the ECB first prolonged the blanket ban in July, the
key problem was not the extension as such, but a lack of clarity
around the process and its timeline, GS says
    ** Negative side effects including a sharply higher cost of
capital are clearly visible and have hit strong banks the most,
GS says
    ** According to the broker, a conditional lifting of the ban
that would differentiate between stronger and weaker banks would
put less strain on the sector
    ** In 2021, banks will be taking a stress test, and the ECB
could make a successful "pass" a condition for the amount and
timing of dividend distributions, GS says
    ** The broker ups Italy's Intesa Sanpaolo  ISP.MI  to "buy"
from "neutral" on better prospects for capital return and cuts
the Swiss UBS  UBSG.S  to "neutral" from "buy", citing valuation

 ((zuzanna.szymanska@tr.com))