Dividend freeze helped keep lid on bank CDS spreads – BIS

But the ban on distributions wrecked bank share prices

Dividend restrictions foisted on European banks at the start of the coronavirus crisis helped contain their credit default swap (CDS) spreads, research by the Bank for International Settlements (BIS) shows.

Analysis of data from before and after the outbreak of Covid-19 shows that the larger the decline in expected dividends at a bank, the less its CDS spreads widened through the stress.

In contrast, when it came to bank equity, the BIS researchers found the greater the fall in anticipated