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Goldman Says Options Show Top U.S. Bank Dividends May Fall 30%

  • Average dividend increase was 10% before Covid-19 pandemic
  • Wells Fargo and Citigroup most likely to cut their dividends
The Citigroup Inc. headquarters stands in New York, U.S.

The Citigroup Inc. headquarters stands in New York, U.S.

Photographer: Victor J. Blue/Bloomberg

Options are pricing in odds that the seven top U.S. banks will cut their dividends by an average of 30%, according to an analysis by Goldman Sachs.

Analysts led by Richard Ramsden wrote that the options market had been pricing in a 10% increase in bank dividends before the Covid-19 pandemic hit. They say options are now implying Wells Fargo and Citigroup will have the two largest dividend cuts in 2021, at 65% and 44%, respectively. Goldman said options showed Morgan Stanley may cut its dividend by 29%, the smallest in the top seven.