(Redesigned and written)
PARIS, May 28 (Reuters) – Restrictions imposed on bank dividend payments last year due to the economic crisis caused by the coronavirus pandemic are expected to be lifted in September, the president of the French central bank said on Friday.
“The restrictions on dividends can and should be lifted from next September,” François Villeroy de Galhau told reporters, speaking in his capacity as head of the French financial regulator ACPR.
“It is a question of the attractiveness of our financial institutions in a context of intense international competition”, he declared.
The final decision of the European Central Bank is expected for the summer recess, he added.
The ECB allows banks to use part of their regulatory capital buffers to absorb losses resulting from the COVID-19 crisis. Villeroy said the economic and health situation was starting to return to normal, there was no need to maintain these measures beyond next year.
Villeroy also said regulators were closely examining the risk that an increase in bankruptcies could pose for banks, but they had so far not detected a significant increase.
Loans by French companies climbed 13.3% last year while those of small and medium-sized enterprises jumped 20.3%. Companies have taken out 140 billion euros ($ 171 billion) in state-guaranteed loans to help them cope with the cash flow crunch.
“Let us be clear in the face of certain totally unfounded doubts. French banks are not under-provisioned, ”said Villeroy.