Italian banks 'planning to cut dividend pay-outs'

26 October 2010

Banks in Italy are attempting to avoid having to make rights issues by looking to lower their dividend pay-out levels.

UniCredit, Intesa Sanpaolo and Monte dei Paschi are among the least capitalized financial institutions in Europe – a potential problem with new global capital standards set to be introduced for banks.

But senior executives told the Financial Times that the companies will not be following the example of Standard Chartered and Deutsche Bank in launching rights issues.

"In order to beef up capital, halving the historic dividend pay-out ratio is perfectly possible," said one insider source.

Under the new regulations from the Basel Committee on Banking Supervision, core tier one capital levels will have to stand at a minimum seven per cent by 2019.

Earlier this month, Standard Chartered chief executive Peter Sands predicted that many national regulators "will go further faster" in introducing even tougher capital standards than the new Basel rules.

By Claire Archer

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development