European Central Bank Lifts Dividend Ban, ING and Banco Bilbao Vizcaya Well-Positioned to Benefit

The head of supervision at the European Central Bank, or ECB, Andrea Enria recently confirmed the bank would lift the ban on dividends and share buybacks that it imposed on eurozone banks in March last year. Eurozone banks will now be able to resume returning capital to shareholders at the end of third-quarter 2021. The market widely expected the lifting of the ban, so we do not believe it will have a material near-term impact on the valuation of eurozone banking shares. As banks start reporting second-quarter earnings and the market gets a better idea of the extent of capital returns there may be more support for share prices. The European banking authorities will announce the results of their stress tests at the end of July. This will also provide investors with a better idea of which banks are best placed to return capital to shareholders.