Featured Product

    RBNZ Retains Certain Dividend Restrictions Amid Ongoing Challenges

    March 31, 2021

    RBNZ is easing the dividend restrictions placed on retail banks at the height of the COVID-19 pandemic. The changes will allow banks to pay up to a maximum of 50% of their earnings as dividends to their shareholders. The 50% dividend restriction will remain in place until July 01, 2022, at which point RBNZ intends to normalize the dividend setting by removing the restrictions entirely (subject to no significant worsening in economic conditions). This is also the date at which higher capital requirements begin to apply to systematically significant banks, as set out in the RBNZ Capital Review. RBNZ has written to the registered trading banks to advise them of the decision and outlined the expectations that banks will be prudent in determining the appropriate size of dividends paid to their shareholders.

    The RBNZ restrictions on repaying holders of Additional Tier 1 and Tier 2 capital instruments have also been lifted. Dividends may not exceed 50% of net profit after tax reported in the bank’s most recently completed financial year. The restrictions do not prevent a bank from paying an interim dividend (for example, at the half year). In such cases, it is the total dividend paid in the year that is limited by the restriction. Mr. Geoff Bascand, Deputy Governor and General Manager Financial Stability of RBNZ, pointed out that it is appropriate to retain partial restrictions on the dividends banks can pay amid ongoing uncertainties, even though economic activity in the country has picked up over recent months. A restriction preventing banks from paying any dividends was put in place in April 2020, and extended in November 2020, to support financial stability and the provision of credit in the economy due to the impact of the COVID-19 pandemic on the New Zealand economy. The restrictions have been successful in this purpose. 

    RBNZ also notes that bank decisions should consider the requirement to meet higher capital requirements resulting from the Capital Review of RBNZ. The higher capital requirements set out in the Capital Review begin to apply from July 01, 2022. Mr. Bascand also noted that RBNZ has delayed the implementation timetable of the Capital Review twice over the course of last year to allow banks the regulatory relief needed to support their customers. However, "building strong capital buffers needs to be prioritized.”

     

    Related Links

    Keywords: Asia Pacific, New Zealand, Banking, Financial Stability, COVID-19, Regulatory Capital, Dividend Distribution, Basel, Implementation Timeline, RBNZ 

    Featured Experts
    Related Articles
    News

    APRA Publishes Results of Climate Risk Self-Assessment Survey

    The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.

    August 04, 2022 WebPage Regulatory News
    News

    ACPR Publishes Updates Related to CRD IV and Covered Bonds

    The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).

    August 03, 2022 WebPage Regulatory News
    News

    BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs

    The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.

    August 03, 2022 WebPage Regulatory News
    News

    EIOPA Publishes Guidance on Climate Change Scenarios in ORSA

    The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).

    August 02, 2022 WebPage Regulatory News
    News

    EBA and ECB Respond to Proposals on Sustainability Disclosures

    The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.

    August 01, 2022 WebPage Regulatory News
    News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News
    News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News
    News

    EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences

    The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.

    July 29, 2022 WebPage Regulatory News
    News

    EESC Opines on Proposals on CRR and European Single Access Point

    The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).

    July 29, 2022 WebPage Regulatory News
    News

    HM Treasury Publishes Multiple Regulatory Updates in July 2022

    HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.

    July 29, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8423