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 Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
