Cut dividends, up capital, Draghi tells …
ROME, March 13 (Reuters) – Bank of Italy Governor Mario Draghi has sent a letter to Italy’s banks urging them to direct profits towards strengthening their capital base rather than distributing dividends.
In the letter, sent on Friday and obtained by Reuters on Saturday, Draghi, who is also president of the Financial Stability Board, told the banks to ‘immediately adopt strategic choices to reinforce stability and market standing.’
Draghi said now was the time to strengthen the quality and quantity of banks’ capital bases to respond to more stringent requirements in the wake of the financial crisis which exploded in 2008.
He said the Bank of Italy ‘expects’ that banks’ boards ‘direct the maximum amount of profits potentially distributable (as dividends) towards strengthening capital.’
Italy’s two largest banks by market capitalisation, Unicredit and Intesa Sanpaolo are due to report 2009 results next week. Keywords: ITALY BANKS/DRAGHI
(Reporting by Gavin Jones; editing by Patrick Graham; Rome newsroom; gavin.jones@reuters.com; Phone: +39-06-8522-4232)
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