Banks are preparing for dividend distribution

By Leonidas Stergiou

Reading the agenda items and related accompanying documents ahead of the general meetings of the four systemic banks (July 21-28), one finds a description of accounting entries aimed at writing off accumulated losses.

According to the banks, these accounting movements do not affect the capital ratios and the total capital, however, they are necessary in order to be able to submit a request to the supervisory authorities for the distribution of a dividend, even from the fiscal year 2022 (payment in 2023 ).

In the latest presentations to analysts, Eurobank and National Bank have confirmed that the target for dividend distribution for the 2022 financial year remains. Alpha Bank and Piraeus Bank are preparing for one use later.

From use 2022

National has outlined a gradual dividend policy starting with a rate of 20%, with the aim of protecting capital and maintaining a capital adequacy ratio above 15%-16%. The intention to distribute a 20% dividend from the profits of 2022 has been announced by Eurobank both during the presentation of the results of 2021 and those of the first quarter of 2022, which is expected to be highlighted in the results of the second quarter.

From profits 2023

For its part, Alpha Bank has announced its intention to distribute dividends from 2023 earnings (ie payment from 2024), at a rate between 20%-30%. According to the management of Piraeus Bank, the business plan is designed with a basic scenario of distributing a dividend of 35% from the profits of the fiscal year 2024 for 2025. However, the possibility of distributing a dividend for the fiscal year 2023 in 2024 is not excluded, but in rate of 20%.

Of course, all this requires the consent and approvals of the competent supervisory authorities. However, preparations have begun.

The preparations

One of the moves – in addition to profitability, capital and the transformation program – includes the write-off of accumulated losses, through reserve funds created by previous capital increases, premium issues, through subsidiaries, etc.

These funds that are under various accounts have been created from previous years and are used in accounting to write off losses from previous years. These movements do not affect the supervisory funds themselves and are subject to the approval of the competent supervisory authorities

Eurobank

The second item to be approved at the regular general meeting of Eurobank, held today, was titled “Offset of “Corporate Law Reserves” and “Difference from Issuance of Premium Shares” with the Company’s Accumulated Losses.” The description is quite technical, but they aim to write off accumulated losses of 13.8 billion euros.

National Bank

At the general meeting of the National Bank (July 28) the corresponding issue is described under the title “Approval of offsetting a) of the special reserve of article 31, par. 2, Law 4548/2018 (former special reserve of article 4, par. 4a, Law 2190/1920) €5,014,165,089.90 and b) part of the Difference from the issue of premium shares €10,323,602,529.78, with accumulated accounting losses of €15,337,766,619.68, in accordance with articles 31, par. 2 and 35 par. 3, case b) of Law 4548/2018, as they apply.”

Alpha Bank

In Alpha Bank (general meeting on July 22) it is mentioned in the relevant matter for approval clearly that these are moves that prepare the dividend distribution. Under the heading “Approval of the netting of the Retained Earnings account with the Regular Reserve and the Special Reserve of article 31 of Law 4548/2018” it is stated, among other things, that “the Retained Earnings dated 31.12.2021 include carried forward losses of the amount Euro 7,017,667,923.94 and income from dividends of Subsidiaries of previous management years amounting to Euro 788,777,132.67, which, according to the current income tax legislation (Article 48 of Law 4172/2013, as applicable), should monitored separately.”

Piraeus Bank

At the Piraeus Bank (general meeting on July 22), the matter is entitled “Approval of the offsetting of an amount from the Company’s “Over-par” account, including a special reserve of article 4 par. 4a of K.N. 2190/1920, with the primary account 42 “Balance of losses from new years”, to write off losses of equal amounts from past years, in accordance with articles 31 par. 2 and 35 par. 3 of Law 4548/2018, and providing relevant authorizations to the Board of Directors. The movements described and are quite technical, as in all the relevant descriptions of the banks, they aim to write off accumulated losses of 14.5 billion euros from previous years.