Banks must wait to pay out dividends to be better insured against serious financial downturns during the corona crisis, the Minister of Finances said.
Well-capitalized banks are a prerequisite for keeping businesses and households covered for large losses and continuing to lend. It is therefore important that they retain surplus funds now,” the Ministry writes in a press release.
Finance Minister Jan Tore Sanner (H) notes that much uncertainty remains about the future development of the corona pandemic. The outbreak of the virus has caused the biggest setback to the Norwegian and international economy in many decades.
High risk remains
There is still a risk that economic developments will be slower than expected, for example in the event of further major outbreaks of infection.
“Although we have seen signs of an increase in the Norwegian and international economies in recent months, the danger is far from over. I therefore, assume that Norwegian banks are waiting to distribute dividends or buy shares until the uncertainty is further reduced,” says Sanner.
The Finance Minister’s call to Norwegian banks comes about a month and a half after the European Central Bank withdrew and asked banks in the 19-euro countries to wait to pay dividends or bonuses before January next year.
It will not prohibit
Also, in March this year, Sanner called on banks and insurers to forego dividend and bonus payments. He then received criticism from the Red Party for not prohibiting them from distributing dividends last year, as suggested by the Norwegian Financial Supervisory Authority in a letter to the Ministry.
This time insurers are asked to “base their profit allocation on thorough analyses of their own solvency” but are not covered by Sanner’s call to wait to pay dividends.
© NTB Scanpix / #Norway Today