Thursday was a day dominated by European bank weakness based on balance sheet concerns and profitability concerns. After all, negative interest rates on deposits with the European Central Bank can act effectively as a tax against reserves. Concerns have grown in 2016 about the health of European banks, particularly again with concerns growing in Europe’s peripheral (PIIGS) states.
Societe-Generale’s profit warning was the catalyst on Thursday, and it is bleeding over into the other major banks. Many of Europe’s largest banks come with American depositary shares (ADSs) that trade in New York. Just keep in mind that many of the top PIIGS (Portugal, Italy, Ireland, Greece, Spain) banks are now no longer listed on the New York Stock Exchange like National Bank of Greece, Allied Irish Banks and Bank of Ireland.
24/7 Wall St. has looked over the ADS policies of dividend payments. Be advised that ADS dividends are almost never static, and sometimes the announcements and available information are simply not the same from source to source. We have looked at the investor relations notes and formal announcements where possible, but these yields may already be different, considering currency changes and that some announcements have not been made.
As a reminder, having negative interest rates means that banks are effectively being taxed on their reserves and that they cannot earn money (or as much money) on bonds, leaving mostly risk via loans for their funds, all while having to maintain high reserves and continuing to have to pay fines from before, during and after the financial crisis.
Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) ADSs were down over 5.8%, with a last ADS payment of $0.087, down about 60% from a dividend payment in 2014. BBVA’s ADS dividend payments have already been in decline. It has a 52-week range of $5.89 to $10.75 in New York trading.
Banco Santander S.A. (NYSE: SAN) saw its ADSs down 4.4% at $3.75 on Thursday. The bank pays a €0.05 dividend, and this was last seen as $0.055 in the United States in a January quarterly payout, down slightly of late but down about 70% from 2014. Its ADS yield today would be over 5.8%. Its ADSs have a 52-week range of $3.69 to $7.79 in New York.