CNB to Allow Dividend Distribution Based on Individual Assessment
CNB announced that it will set the limits for dividend payments conservatively for supervised institutions, in accordance with the ESRB Recommendation dated December 15, 2020. However, CNB will assess institutions' proposals for dividend payments individually, with focus on reviewing capital adequacy, risk profile, business model, and other significant factors. CNB will also discuss each case within the college of supervisors of the relevant financial group before making its statement. CNB assumes that financial institutions will come up with possible proposals only after they have the audited results for 2020 available.
Based on the initial ESRB recommendation dated May 2020, financial institutions should refrain from dividend payments until the end of 2020. However, later, another ESRB recommendation dated December 15, 2020 extended the horizon of limiting the payment of dividends by financial institutions during the COVID-19 crisis until September 30, 2021. This revised recommendation gave financial institutions the option of making a partial dividend payment, provided that they proceed very prudently and that the payment does not exceed the conservative limits set by the supervisory authority. ESRB requires national financial market supervisors to set limits on the concerned institutions, considering the need to maintain their capital at a sufficient level to limit systemic risks and to enable each institution to contribute to the economic recovery. ESRB also expects the national supervisors to ensure that the overall level of dividend payments by supervised institutions is significantly lower than in the years before the COVID-19 crisis.
Related Links
Keywords: Europe, Czech Republic, Banking, Dividend Distribution, COVID-19, Regulatory Capital, Basel, Systemic Risk, CNB
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
Previous Article
APRA Connect to Go Live by September 2021Related Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
