Bank of Italy Extends Dividend Payout and P2G Guidance Amid Crisis
Bank of Italy extended the application of the recommendations on the dividend distribution and variable remuneration policies. Bank of Italy also issued clarifications on the expiration of the flexibility granted on compliance with capital and liquidity buffers during the COVID-19 pandemic.
Earlier, in March 2020, Bank of Italy published a Recommendation asking less significant banks not to pay dividends and to abstain from buyback of treasury shares up to October 01, 2020. Now, in line with the provisions of the ESRB Recommendation from May 27, 2020 and the ECB guidance for significant banks, Bank of Italy recommends the less significant banks to not pay dividends, or make any firm commitments to pay dividends, for 2019 and 2020 and to not proceed with the repurchase of shares. The central bank will assess the adequacy of the adopted policies within the annual supervisory review and evaluation process (SREP). It will continue to monitor the situation and will consider the opportunity for further communication on the distribution of dividends and variable remuneration policies after January 01, 2021.
In line with what was communicated by ECB, Bank of Italy continues to encourage banks and non-bank intermediaries under its supervision to use the assigned Target Component following the SREP process (Pillar 2 Guidance or P2G), the Capital Conservation buffer (CCB), and the Liquidity Coverage Ratio (LCR) to absorb losses in an orderly manner to encourage loans to families and businesses. The Bank of Italy will, therefore, not request the restoration of the capital buffers before the end 2022 and the LCR level before the end of 2021; these dates may be postponed, if necessary. If it should be deemed appropriate to increase the level of the Pillar 2 Guidance for some intermediaries, the necessary time to reach the new levels will be granted.
Related Link (in Italian): Press Release
Keywords: Europe, Italy, Banking, COVID-19, Dividend Distribution, Pillar 2 Guidance, SREP, Regulatory Capital, Liquidity Risk, LCR, CRR/CRD, Less Significant Institutions, Bank of Italy
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
