SHARE
COPY LINK

FINANCE

Should Denmark’s banks still pay out to owners despite coronavirus?

As the new coronavirus risks throwing the world into the most violent recession in recent history, authorities in the Nordic region are urging their banks to forego paying out dividends to shareholders.

Should Denmark's banks still pay out to owners despite coronavirus?
"During the financial crisis, society supported the banks. Now we are in a corona crisis and here banks should support society," said Simon Kollerup, Denmark's business minister.
At a time when tens of thousands of people are losing their jobs in the crisis, the banks' plans to issue generous dividends have not been well-received by authorities and some of the public — who recall the banks' tendency to ask for taxpayer bailouts when things go south.
 
In Denmark, the government and the banking sector agreed on Monday to encourage banks to “reconsider dividend payments and share buy-backs already planned in view of the serious financial situation.”
   
“During the financial crisis, society supported the banks. Now we are in a corona crisis and here banks should support society,” said Simon Kollerup, Denmark's Minister for Industry, Business and Financial Affairs.
   
This was not quite as radical as the call by Norway's Financial Supervisory Authority on Wednesday for a ban on financial institutions paying out 2019 dividends “until further notice”.
   
“A ban on dividend payments and other distributions will have a profound impact,” the government agency said in a statement.
   
It added that “in view of the widespread crisis the country is in” that it believes “that such a measure is necessary to promote financial stability.”
   
Late Wednesday evening, the Norwegian government said it would not introduce a ban — though it did not rule out the possibility “in the future” — but urged all banks to postpone their dividends until the economic uncertainty had passed.
   
“I'm counting on financial institutions to have understood the severity of the economic situation and postpone their dividends to shareholders,” Finance Minister Jan Tore Sanner said in a statement.
   
In other Nordic countries, authorities have so far stopped short of suggesting regulation, instead urging the banks to reconsider their shareholder payouts.
   
The Finnish Financial Supervisory Authority said it would “monitor closely” that banks allocate relief measures for their intended purpose instead of paying dividends or bonuses.
   
“When people risk losing their jobs and companies risk keeling over, it is not the time for banks to pay dividends to their owners,” Sweden's Minister for Financial Markets, Per Bolund told a press conference on Tuesday.
   
'Neither necessary or desirable'
 
The Nordic region's typically robust economies have not escaped the economic turmoil brought on by the new coronavirus pandemic: businesses have closed and tens of thousands of people have lost their jobs.
   
Norway expects GDP to fall by one percent this year and many of the top Nordic companies are feeling the pinch.
   
Clothing giant H&M has temporarily closed nearly 3,500 stores worldwide and toy maker Lego has closed more than 150 stores.
 
Airlines SAS and Norwegian Air Shuttle have suspended most of their flights and sent home most of their staff.
   
As in many other parts of the world, many Nordic companies have suspended or reduced their planned dividends, or are under pressure to do so.   
 
But the region's banks have so far not followed suit.
   
Sweden's three largest banks have proposed paying out dividends totalling 34.3 billion Swedish kronor ($3.4 billion, 3.1 billion euros), according to a calculation by news agency TT, though they have said they could potentially postpone the payouts.
   
Finland's Nordea has announced plans to pay out dividends totalling about 1.5 billion euros.
   
In Norway, leading bank DNB, which is planning on paying out 14 billion Norwegian kroner ($1.3 billion, 1.2 billion euro) in dividends for 2019, said its board of directors would “assess” the situation ahead of its general meeting at the end of April.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

COVID-19

IN NUMBERS: Has the Omicron Covid-19 wave peaked in Denmark?

The number of new Covid-19 infections fell on Saturday for the second day in a row, following a three-day plateau at the start of last week. Has the omicron wave peaked?

IN NUMBERS: Has the Omicron Covid-19 wave peaked in Denmark?
Graffiti in the Copenhagen hippy enclave of Christiania complaining of Omicron's impact on Christmas. Photo: Philip Davali/Scanpix

How many cases, hospitalisations and deaths are there in Denmark? 

Denmark registered 12,588 new cases in the 24 hours leading up to 2pm on Saturday, down from the 18,261 registered on in the day leading up to Friday at 2pm, which was itself a decline from the record 28,283 cases recorded on Wednesday. 

The cases were identified by a total of 174,517 PCR tests, bringing the positive percentage to 7.21 percent, down from the sky high rates of close to 12 percent seen in the first few days of January. 

The number of cases over the past seven days is lower than the week before in almost every municipality in Denmark, with only Vallensbæk, Aarhus, Holseterbro, Skanderborg, Hjørring, Vordingborg,  Ringkøbing, Kolding, Assens, Horsens, Thisted, and Langeland reporting rises. 

Hospitalisations have also started to fall, with some 730 patients being treated for Covid-10 on Saturday, down from 755 on Friday. On Tuesday, 794 were being treated for Covid-19 in Danish hospitals, the highest number since the peak of the 2020-21 winter wave.

The only marker which has not yet started to fall is the number of deaths, which tends to trail infections and hospitalisations. 

In the 24 hours leading up to 2pm on Saturday, Denmark registered 28 deaths with Covid-19, the highest daily number recorded since 20 January 2021, when 29 people died with Covid-19 (although Denmark’s deadliest day was the 19 January 2021, when 39 people died). 

How does Denmark compare to other countries in Europe? 

Over the last seven days, Denmark has had the highest Covid-19 case rate of any country in Europe bar Ireland. The number of new infections in the country has climbed steadily since the start of December, apart from a brief fall over Christmas. 

So does this mean the omicron wave has peaked? 

Maybe, although experts are not sure. 

“Of course, you can hope for that, but I’m not sure that is the case,” said Christian Wejse, head of the Department for Infectious Diseases at Aarhus University Hospital. “I think it is too early to conclude that the epidemic has peaked.”

He said that patients with the Omicron variant were being discharged more rapidly on average than had been the case with those who had the more dangerous Delta variant. 

“Many admissions are relatively short-lived, thankfully. This is because many do not become that il, and are largely hospitalized because they are suffering with something else. And if they are stable and do not need oxygen, then they are quickly discharged again.” 

Denmark’s Prime Minister Mette Frederiksen said during a visit to an event held by the Social Liberal party that the latest numbers made her even more optimistic about the coming month. 

“We have lower infection numbers and the number of hospitalisations is also plateauing,” she said. “I think we’re going to get through this winter pretty well, even if it will be a difficult time for a lot of people, and we are beginning to see the spring ahead of us, so I’m actually very optimistic.” 

She said that she had been encouraged by the fact that Omicron was a “visibly less dangerous variant if it is not allowed to explode.” 

SHOW COMMENTS