In response to the COVID-19 pandemic, NBB issued a communication for credit institutions (NBB_2020_33) announcing that it has extended, until January 01, 2021, its previous recommendations to suspend the dividend payments. NBB also recommended insurers and reinsurers to suspend the dividend payments until January 01, 2021. To implement the ESRB recommendations for insurers, NBB will make the necessary amendments to Circular NBB_2020_12. These recommendations are in line with the ESRB recommendation (ESRB/2020/07) of May 27, 2020. NBB also published a set of questions and answers (Q&A), for credit institutions, on moratorium and guarantee schemes in response to the COVID-19 crisis.
Additionally, NBB recommends financial institutions to maintain a prudent and conservative attitude toward variable remuneration and profit sharing. EBA had published a statement on dividends distribution, share buybacks, and variable remuneration on March 31, 2020. In line with the EBA statement, NBB requires that the recommendations for moderation in remuneration policy be respected and that the existing expected impact of this crisis on the institution be taken into account in determining the 2020 remuneration schemes (to be paid out in 2021). In this context, NBB reminds institutions that assessment of the appropriateness of remuneration policy is also a part of the Supervisory Review and Evaluation Process (SREP) exercise.
Keywords: Europe, Belgium, Banking, Insurance, COVID-19, Dividend Distribution, Remuneration, Share Buybacks, Q&A, Moratorium, Guarantee Guarantee Scheme, ESAs, ESRB, NBB, ECB
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