(Corrects Caixabank and Sabadell dividend policy, clarifies
Popular and Bankia's, paragraphs 12-14)
* BBVA and Santander only banks with high cash payouts
* Recommendation will have no impact on most banks
By Julien Toyer
MADRID, June 27 The Bank of Spain on Thursday
urged Spanish lenders to limit 2013 cash dividends to the
equivalent of 25 percent of annual profit in a move that may
force the country's two largest banks to revise policies.
A central bank spokesman said the recommendation did not
apply to scrip dividends, but lenders were asked to take into
account the evolution of results and make reasonable adjustments
to dividends paid in shares.
In a letter sent to all Spanish lenders, the central bank
said they should limit dividends to maintain high levels of
capital in an uncertain economic environment.
Last week, in its annual review of the Spanish economy, the
International Monetary Fund had already called on Spanish
lenders to reinforce the quantity and quality of their capital
by being very prudent on cash dividends while cleaning up loan
books and quickly selling distressed assets.
The new guidelines will have no impact on most of the
banking sector as most lenders stopped paying dividends when
Spain sought a 42-billion-euro ($54.6 billion) bailout for its
banks, brought low by the bursting of a decade-long property
However, Spain's two biggest banks, Santander and
BBVA, last year maintained high levels of cash payouts
despite taking a massive hit on profit after booking billions of
euros in provisions to cover potential losses on real estate
BBVA's cash dividend was worth about 80 percent of annual
profit in 2012, up from about 30 percent in 2011.
Santander's cash dividend was worth about 50 percent of
annual profit in 2012, also up from 20 percent in 2011.
A spokesman for BBVA said it was too early to know if the
recommendation would impact the bank's dividend policy and it
would have more visibility as the year progresses.
BBVA's next cash payment to shareholders is planned to take
place in January 2014.
Santander declined to comment.
Popular, Sabadell, Caixabank
and Bankia have not made any dividend payment so far
While Bankia has a ban on dividend payments until 2014 under
its EU-agreed restructuring plan, Popular has said it would look
at restarting dividend payments in 2013.
Caixabank and Sabadell said they are likely to maintain the
same level of payouts to shareholders as in 2012, with the
option to choose between cash or shares.
The Bank of Italy issued a recommendation in the first
quarter, saying banks that had posted a loss or had a low
capital base should not distribute dividends.
As a result, Italian regional lender Banca Carige had to
withdraw its dividend plan.
In addition, the European Commission limits dividend
payments of bailed-out banks in Europe. In Ireland all lenders
suspended dividends at the start of the crisis and have not
stated plans to resume them.
($1 = 0.7691 euros)
(Additional reporting by Lisa Jucca in Milan and Padraic Halpin
in Dublin; Editing by Fiona Ortiz and David Goodman)