Banks may be ready to start dancing again

CHUCK Prince, the former boss of Citigroup, once said that banks have to keep dancing while the music is playing. But he added that when the music stops, things will be complicated.

During the Covid-19 pandemic, the music suddenly stopped for many banks around the world. It got complicated not just for lenders, but it was also a confusing time for bank investors. Regulators had quickly stepped in to advise banks against buying back their shares, and reduce - or in some cases, even withhold - dividend payments.

Banks were also encouraged to help embattled businesses and to make adequate provisions for debts that might never be repaid. That was a huge blow for their investors who often rely on bank dividends as an important source of income.