The International Monetary Fund (IMF) has advised banks to stop dividend payouts to shareholders during Covid-19 crisis in other to build capital buffers against market shocks given the uncertainty surrounding the economic impact of the pandemic.
The statement was made by the IMF financial counsellor Tobias Adrian in an interview streamed live on Twitter.
According to Tobias, we are still in the early days of the crisis and the global macro-economic figures are not suggesting that the Coronavirus economic crisis will abate soon.
Therefore in the attempt to prepare for a worst economic crisis that will accompany the Covid-19 pandemic, lender should reverse capital by stopping dividend payout to shareholders, as that is a cheap way to have enough buffer to withstand the economic crisis.
While noting that the thirty systemic important banks, biggest banks in the world paid out over $250 billion as dividend last year, such fund will come handy as neccessary buffer in this time of Economic crisis according to him.
Tobias further said that shareholders have the opportunity to earn the dividend in the future if the banks are able to survive the current Coronavirus Economic crisis.