Bank plan says no to cash dividend

Banks taking part in the government’s 28-billion-euro liquidity support plan won’t be allowed to pay a cash dividend on 2008 earnings, Economy and Finance Minister Yiannis Papathanassiou said yesterday. Those who sign on will only be able to provide a dividend in the form of shares, Papathanassiou told Parliament. An amendment to the plan is expected to be submitted to Parliament today. Lenders will also be barred from using funds from the plan to acquire shares under buyback plans, the minister added. Brokerage services provider Proton Bank said the move came as a surprise after the original text of the law said banks would be allowed to pay up to 35 percent of profits as a dividend. «On the other hand, banks will now accumulate more capital ahead of an uncertain year,» Proton said in a research note. Most Greek lenders are taking part in the plan, designed to ensure the country’s slowing economy is adequately funded. The government wants the pace of credit expansion to stay above an annual 10 percent clip this year. Greece’s economy is slowing sharply after years of 4 percent growth, with the central bank projecting gross domestic product growth of 0.5 percent this year, a fraction above a 0.2 percent forecast by the European Commission.

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