Weekly Global News Wrap: ECB extends dividend ban; AmEx warns of slow rebound as credit losses soar

And Goldman Sachs' new performance review opens for more job cuts.

From Reuters

The European Central Bank has extended its dividend ban to euro zone banks until the end of the year and allowed them to dip into their capital and liquidity buffers for even longer.

The ECB said banks could withstand a second wave of infections, but it called on authorities to be ready to intervene and prevent a credit crunch, possibly via recapitalisations.

The euro zone’s top supervisor extended a ban on dividends and share buybacks by three months until 1 January and recommended that banks “exercise extreme moderation” with bonuses. It will review the decisions in Q4.

From Reuters

Credit card issuer American Express fears of a slow recovery in transaction volumes in the near term, after it set aside $1.6b for potential credit losses that weighed on its quarterly numbers.

Overall spending volumes were down 20% in mid-July compared with a 40% decline in April, the company said in a post-earnings call. Its high exposure to travel and entertainment (T&E) industries, which have been ravaged by the pandemic, has led to the sharp decline.

The company raised its consolidated loss provisions to $1.6b from $861m a year earlier, in anticipation of a spike in defaults from a wave of layoffs.

From Reuters

Goldman Sachs is adopting a performance review system that will grade up to 10% of its 39,000 employees as under-performers this year, potentially leading to more job cuts in 2021 than the bank has made in recent years.

The bank’s main goal is to let staff know where they stand as roughly 90% of the bank’s workforce works from home due to COVID-19 restrictions, a spokesperson said.

Goldman Sachs’ review changes are another sign that COVID-19 working restrictions are prompting some large corporations to overhaul their human resources policies. The bank is notorious for its tough annual review, which typically paves the way for a cull of roughly 5% of staff, often for missing performance targets.