On 23 July 2021, the European Central Bank announced that it was not extending beyond September 2021 its recommendation that all banks in the Eurozone limit dividends. Instead, supervisors will assess the capital and distribution plans of each bank as part of their regular supervisory process. When assessing a Eurozone bank’s capital trajectory and its distribution plans, supervisors will take a forward-looking view which will be informed by the results of the 2021 stress test. Supervisors will also carefully consider the bank’s credit risk practices which may affect the credibility of its capital trajectory. Supervisors will engage with banks over the summer as part of the regular supervisory dialogue. The recommendation on dividends remains applicable until 30 September 2021, meaning the next decisions to pay dividends should take place in the fourth quarter of 2021.
