This translation has been automatically generated and has not been verified for accuracy.Questions are building about whether big U.S. banks will have to cut dividends later this year as the coronavirus crisis puts a record portion of Americans out of work, making it difficult for borrowers to pay back loans.
“One of the most important variables that will determine whether banks have adequate capital to maintain dividends is the extent to which consumers draw down on outstanding credit-card lines,” Goldman Sachs bank analyst Richard Ramsden said in a report on Thursday. On balance, however, “all of the banks should be in a position to maintain dividends at, or close to, the current run rate,” he said.Dividends are seen as evidence of good financial health and encourage loyalty from investors who expect that income, which makes companies leery of cutting them.
Although major U.S. banks already halted share repurchases through June to conserve capital, they face political pressure from Democratic lawmakers, prominent former regulators and some economic commentators to cut dividends as well. Goldman Sachs Group Inc CEO David Solomon and Morgan Stanley CEO James Gorman made similar statements in television interviews this week.Behind the scenes, however, dividends have increasingly become a top agenda item, an industry lobbyist told Reuters, with bankers discussing what they should do and whether they should coordinate any action.
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