CBC calls directly supervised banks not to pay dividends amid COVID19 turmoil

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The Central Bank of Cyprus (CBC) with a new recommendation published today calls on directly supervised banks or less significant credit institutions not to pay dividends until October 11, 2020, amid the crisis caused by the coronavirus pandemic.
 
The new recommendation echoes the recommendation issued by the European Central Bank to large eurozone banks directly under its supervision.
 
The CBC recommends to Cypriot smaller banks to refrain from distributing any dividend, to refrain from issuing any irrevocable commitment to distribute dividend in 2019 and 2020 and not to commit to any share buy backs aiming at remunerating shareholders.
 
Furthermore, the CBC stresses than “any less significant institution that fails to comply with this recommendation will be called on to provide explanation to the CBC.”
 
“The CBC considers that credit institutions should be in position to continue their role to fund households, small business and corporations amid the coronavirus pandemic and the adverse impact this has created. For this reason, it is necessary the credit institutions to preserve their capital base to support the real economy in this current extremely uncertain environment,” the CBC stressed, highlighting that “the preservation of capital base to support the economy and absorb potential losses is considered by the CBC as this highest priority over any possible dividend distributions and share buy-backs.”

Source: CNA