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Corona crisis: banks save shareholders instead of people

Attac calls for ban on profit distribution to shareholders and strict conditions for bank bailouts

Corona crisis Banks save shareholders instead of people

The world is heading for the worst economic crisis in decades. The most important task of the banks is now to continue to provide the economy and society with money and to defer loans to people and businesses. In addition, they have to cope with high loan defaults so that they do not have to be saved by the general public themselves and thus exacerbate the crisis.

"But instead of doing everything to improve their equity base and thus their security against crises, individual banks such as Raiffeisen Bank International (RBI) and Oberbank are still planning to maintain or increase the profit distributions to their shareholders," criticizes Lisa Mittendrein von Attac. (1). These banks are saving shareholders instead of people even before the crisis.

Attac urges the banks to stop distributing profits. "If Erste Bank and BKS should also distribute dividends (as planned before the Corona crisis), bank shareholders could earn over a billion euros in the middle of the Corona crisis."

ECB is required

At the same time, Attac is calling on the ECB to pass a ban on profit distributions, bonus payments and share buybacks for the entire euro area, as well as a strict limitation of manager salaries in order to make the banks more crisis-proof. "Only under these conditions should banks be allowed - if necessary - to use up capital buffers in order to be able to provide loans to companies and people," explains Mittendrein. The Basel Committee on Banking Supervision also said in a statement that support for the real economy must now take precedence over profit distributions. (2)

Owners instead of the general public should save banks

The impending economic downturn will definitely hit European banks hard. "The mistake of 2008, in which the general public saved bank shareholders by watering can principle, must not repeat itself," says Attac. "The European settlement guideline, which should guarantee the" bail in "of the owners, must be implemented without exception in the coming crisis," demands Mittendrein.

“Systemically important” banks are still threatening entire economies

Attac also criticizes in this context that it failed to break up systemically important banks after the 2008 crisis. Your equity is now higher than before the crisis, but still far too low. "This is falling on our heads now, as there are still banks that are too big to be wound up and thus threaten entire economies." Ultimately, the general public could have to step in again, since neither the "Bail in “The owner, the European bank rescue fund, can absorb their losses, Attac criticizes.

(1) The RBI announced on March 18 “Despite the adversity, the dividend will increase to EUR 1,0 per share. It was not necessary to change the dividend " 

According to Oberbank On March 23, the Annual General Meeting is expected to propose an increase in the dividend by 5 euro cents to 1,15 euros. 

Photo / Video: Shutterstock.

Written by Helmut Melzer

As a long-time journalist, I asked myself what would actually make sense from a journalistic point of view. You can see my answer here: Option. Showing alternatives in an idealistic way - for positive developments in our society.
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