Following the example of the ECB for the significant institutions1, the Bank of Italy has decided to recommend to banks under its direct supervision (the less significant institutions) not to distribute or commit distributing dividends at least until 1 October 20202. Moreover, share buy-backs will have to be restricted and less significant institutions in Italy will have to adopt "prudent and farsighted" variable remuneration policies.
The five largest Italian banking groups, which account for almost half of the total assets of the domestic banking system, are thus likely to mobilize (in addition to the benefits that were not intended to be distributed) EUR 4.8 billion of additional common equity Tier 1 in 20193, representing 4.1% of its current outstanding amount (EUR 116.9 billion). These supplementary reserves will absorb part of the increase in the cost of risk in 2020 and will limit the decrease in regulatory capital, which has increased by 61% since 2008.
