Goldman is showering its shareholders with money – with the blessing of the regulators. Following the latest stress test, the Federal Reserve lowered the minimum requirement for common equity tier 1 (CET1) capital for the New York-based financial institution to 13.6% of risk-weighted assets.

Goldman responded by announcing a three-fold increase in its dividend to 4 dollars per share as part of its distribution plan. J.P. Morgan is not to be outdone either. In future, the institution will only have to maintain a common equity tier 1 ratio of 11.5% instead of 12.3%. The capital freed up as a result will be used to increase the quarterly dividend by 10 cents to 1.50 dollars, and to buy back shares worth a staggering 50 billion dollars.

This dwarfs the 8 billion plus X that Deutsche Bank is cumulatively paying out for the financial years 2021 to 2025. Commerzbank, which still has to digest the costs of ongoing job cuts, will not even reach 5 billion euros in the same period. Nevertheless, domestic banks cannot be accused of stinginess. Commerzbank is promising generous distributions in the coming years.

The payout ratios of Deutsche Bank and European competitors such as Unicredit, BNP Paribas and Intesa Sanpaolo are actually higher, at 50 to 70% of net profit, than the 30% that large US banks give their shareholders. Unfortunately, however, the situation is different in absolute terms. Even a huge slice of a small pie can sometimes be bigger than a small slice of a huge pie.

The disproportionately larger and oligopolistic US banking market allows capital market-oriented players to achieve margins that European banks can only dream of. They will therefore not be able to win the dividend competition in the foreseeable future. In fact, the opposite is true: the deregulation campaign initiated by the US authorities, with the reduction of the supplementary leverage ratio, will actually widen the gap even further.