Warning eurozone bank dividends could fall below Lehman levels

Eurozone bank dividends are poised to fall below the levels seen after the collapse of Lehman Brothers, as regulators push for lenders to bolster capital.

According to dividend forecasts by Bloomberg, French, Italian and Spanish banks will face the heaviest cuts after troubled Italian bank UniCredit and French bank Societe Generale scrapped their dividend payments for 2011.

However, banks outside the eurozone, including the US and Sweden, are likely to keep or increase their payouts after regulators said they did not need to raise more capital.

Under new European regulations, lenders are under pressure to raise an additional €115bn of capital by June 2012. It is becoming harder to generate the cash from earnings, which are forecast to shrink 20% this year from 2010 levels, or from investors through rights offerings. Eurozone bank stocks declined 36% in 2011, according to Bloomberg data.

All four publicly listed French lenders, five of Spain's nine banks and nine out of 14 in Italy will cut or omit their dividends when they announce annual earnings, Bloomberg estimates show.

In all, 53 lenders in 11 euro nations will pay a combined €9.24 a share in dividends. This is 41% less than the previous year and 28% below 2009, the year after Lehman's bankruptcy.

In France, Societe Generale said last quarter it will not pay a dividend to its shareholders. BNP Paribas and Natixis may reduce their dividends by 29% and 26% respectively.

Meanwhile, the Bank of Greece, the nation's publicly traded central bank, is forecast to cut its payout to 70 cents a share from €1.56 a year earlier.

However, Spanish bank Banco Santander was likely to match last year's dividend payment, while Italian bank Banco Popular would likely keep its dividend payout at half of 2011 earnings.

British lenders will fare relatively better, with HSBC, Barclays and Standard Chartered expected to raise dividends for a second year. Swedish lender Swedbank AB may more than double its 2011 dividend in 2012.

Last month, the European Banking Authority found Greece, Spain, Italy, Germany and France had the largest capital shortfalls. The fresh capital is expected to be generated from investors, retained earnings and lower employee bonuses, according to the EBA.