Banco de Portugal no longer recommends that banks not pay dividends, but calls for prudence – Observer
Banco de Portugal will no longer recommend the non-distribution of dividends by banks, as of September 30, but advises that each institution must be “prudent”Such payments, reported this Friday in a statement.
Since 2020, Banco de Portugal has recommended that the banks it supervises not to make or limit the payment of dividends to shareholders, as well as to apply more restrictive measures in the payment of variable remuneration, a measure that effective until september 30th.
This Friday, in a statement, the banking supervisor and regulator said that these “recommendations will not be extended beyond their expiration date” (ie, September 30), following the decisions already adopted by the European Central Bank (ECB) for the largest European banks (which include BPI, BCP, Caixa Geral de Depósitos and Novo Banco).
However, warns Banco de Portugal, “it is crucial that institutions maintain a prudent approach in the distribution of dividends and in the duration and payment of variable remuneration”, even due to the impacts of the pandemic crisis that is still being felt on the banks, “namely those related to credit risks“.
By the end of September, most of the credit defaults will end, and it is expected that many customers will not be able to pay their debts. In fact, legislation has been enacted for banks to facilitate debt solutions for these customers.
Also in Friday’s statement, Banco de Portugal says that each bank must assess the impacts made “on the projections of own funds”, ensuring that it is left with “sufficient equity capital to face a possible deterioration in the quality of assets and transfer the financing to the economy”.
Banco de Portugal ends the statement by saying that it will monitor the actions of the banks in this field and that “it will take supervisory measures that reveal themselves in this matter”.