Investor understand that the money invested in firms are used for the running of businesses to make profits which shareholders would cash out as dividend. Since the ease of lockdown, banks have fired a Number of staffs and reduced branches in operation to cut down loss and manage investment.
Owing to these factors, the IMF boss have adviced bank to use dividend to run its business and postponed its payment to investors.
This aim is to stop banks from running at loss and possibly shutting down.The IMF Managing Director, Kristalina Georgieva said, retaining earnings through suspension of dividend payments would provide banks with enough capital to serve as a buffer against the adverse effects of the pandemic.
As we brace ourselves for a deep recession in 2020, and only partial recovery in 2021, this resilience will be tested.
“Having in place strong capital and liquidity positions to support fresh credit will be essential.
“One of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations.”
Pointing out that the resources available to banks were substantial, she disclosed that the IMF staff calculated that ‘the 30 global systemically important’ banks distributed about $250bn in dividends and share buybacks in 2019.
“This year, they (banks) should retain earnings to build capital in the system".
Owing to these factors, the IMF boss have adviced bank to use dividend to run its business and postponed its payment to investors.
This aim is to stop banks from running at loss and possibly shutting down.The IMF Managing Director, Kristalina Georgieva said, retaining earnings through suspension of dividend payments would provide banks with enough capital to serve as a buffer against the adverse effects of the pandemic.
As we brace ourselves for a deep recession in 2020, and only partial recovery in 2021, this resilience will be tested.
“Having in place strong capital and liquidity positions to support fresh credit will be essential.
“One of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations.”
Pointing out that the resources available to banks were substantial, she disclosed that the IMF staff calculated that ‘the 30 global systemically important’ banks distributed about $250bn in dividends and share buybacks in 2019.
“This year, they (banks) should retain earnings to build capital in the system".