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The other side of the coin is that 2019 dividends have already been decided. Last year, the payouts amounted to roughly 1.8 billion Swiss francs ($1.9 billion) to their respective regions: 400 million francs was straight dividends, while the remainder took the form of compensation for a special kind of capital and for the state guarantee and a share of profits which automatically flows back to the canton, according to lobby data.

The payouts represent a weighty economic factor regionally, as Switzerland's association of 26 cantonal finance minister noted. The group is considering potential measures to prevent all the payouts from flowing, it said, and is in regular contact with Switzerland's finance department, which is spearheading the more than $40 billion corona lending bazooka through banks.

Dividend «Pearls»

The cantonal banks themselves will fiercely defend their right to payouts, as those institutes queried by finews.com made clear. Just as their local government owners appreciate cantonal banks as reliable for dividend yield, outside investors consider their shares attractive for the same reason.

Basler Kantonalbank, or BKB, noted that it had decided its dividend before the pandemic's outbreak. Thanks to a very favorable capital and liquidity standing, the bank said it could «completely fulfill» its economic responsibility to its canton. St. Gallen's cantonal bank is equally unmoved: it plans to pay a 16 franc per share dividend in two weeks.

Initial Signs of Storm

Lucerne's cantonal bankers are also sure that their revenue outlook and reserves allow for a 12.50 franc per share payout «without any problem». The bank points to annual stress tests which factor in shocks including a five percent drop in economic growth, interest rates four percent higher than current, negative levels, and a property market tumble of more than one-third. 

«Even in this scenario, Lucerne's cantonal bank has the capital to withstand the situation on its own,» a spokesman for the bank said. The lender was the first cantonal bank to show signs of the crisis: it took a 16 million franc write-down on financial holdings after market turmoil last month.