Germany, France want firms to suspend dividends

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German listed companies will be asked to suspend dividend payments to qualify for government assistance designed to ease the impact of the coronavirus crisis.

The government will be able to dictate conditions on dividends as part of an aid programme involving loans from state bank KfW and the goal is that credit does not end up being disbursed to shareholders, an economy ministry spokesman said in Berlin.

Germany is in line with neighbour France in insisting firms forgo dividend payments. All companies that have delayed tax liabilities will have to reimburse the state and pay penalties if they proceed with dividends, finance minister Bruno Le Maire said. Any big corporations that flaunt the call to stop payouts will also cease to be eligible for 300 billion euros of loan guarantees.

Chancellor Angela Merkel's government on Friday secured final parliamentary approval for a package of measures totaling more than 750 billion euros ($826 billion) to address the impact of the virus on Europe's biggest economy. On top of that, the KfW has 500 billion euros available to boost the liquidity of companies struggling with a collapse in demand.

German economy minister Peter Altmaier said at the weekend that Germany will also demand cuts in wages and bonuses for senior managers of companies that apply for financial aid.

"It's important to me that management boards and senior executives contribute in emergencies, especially with respect to bonus payments," Altmaier said in an interview with the Frankfurter Allgemeine Zeitung newspaper.

The government's policy on dividends was evident in a 1.8 billion-euro credit line for TUI AG announced March 27. "One of the conditions of the KfW loan is that TUI de facto waives dividend payments for the term of the credit line," the tourism company said in a statement. —Bloomberg