European Central Bank lifts ban on dividend payments for 2021, but cautions over bonuses

The European Central Bank said Tuesday that lenders can restart limited dividend payments next year following a nine-month ban and told banks to be prudent about bonuses given the economic crisis caused by the pandemic.

The ECB move follows a lifting of a ban by the Bank of England last week. Along with the Federal Reserve, most major bank regulators restricted bank dividends and buybacks when the pandemic hit the economy earlier in the year. Stopping payouts helped preserve capital, giving banks bigger buffers to absorb losses as customers hit tough times. But the lack of payouts also hammered bank shares.