Disagreements between ECB and them Eurozone banks, who insist on ignoring her recommendation to hold capital and avoid paying dividends despite a significant increase in their profitability. The largest of them plan to distribute billions to their shareholders, despite growing signs that the eurozone economy is in for a difficult period. And, of course, more and more ECB leaders, supervisors and national central banks are regularly attacking the need to exercise restraint and raise funds in the face of a looming recession.

Joachim Würmeling, Member of the Board of Directors. from the Bundesbank, but also a member of the ECB’s supervisory board, which oversees the eurozone’s largest banks, was the latest in line to echo the ECB’s message to banks yesterday. He urged them not to promise dividends and was not satisfied with the recommendation, but warned that “if you are bound by such promises, despite the fact that the situation has changed fundamentally, then you will face very difficult dilemmas.” The new warning comes just a month and a half after ECB head of unified banking supervision Andrea Enria repeated the same recommendation. However, according to market analysts, it is clear that banks are visibly worried, as they are trying to attract investors in the hope that they will support their shares in this way. This is because the recommendations continue to come at an extremely favorable time for banks, whose profitability is rising significantly after a sharp increase in interest rates and a boom in trading after a decade of low profits.

Therefore, they announced to their shareholders a number of ambitious plans.

“The situation has changed radically, you will face very tough dilemmas,” warned J. Vermeling, a member of the ECB’s supervisory board.

UniCredit, for example, has set lofty payout targets for its shareholders as part of its 2024 plan. Italian bank chief executive Andrea Orcelle also promised shareholders that next year he will repeat the €3.75 billion dividend he distributed to them this year. As for Germany, which, according to the Bundesbank, will face a mild recession next year, its largest banks are showing complete defiance of the ECB. Flagship Deutsche Bank plans to increase its next shareholder dividend by 50% as part of an €8 billion distribution plan by 2025. Commerzbank also plans to pay its first post-2020 dividend next year.

Mr. Würmeling stressed yesterday that the big profits made by the banks this year should not lead them to “recklessness”. According to him, “next year could be one that freezes things a little for this, and we recommend that you save funds and have them on hand to cover any losses.”

This is, of course, not the first time the ECB has intervened to thwart the payment of dividends. This particular recommendation goes back to the dreaded 2020 and the first waves of the pandemic, when the Bank of the Eurozone urged banks to avoid not only paying dividends, but also buying back their shares, because, as emphasized then, it is still unclear who the overall economic consequences of the pandemic will be.