Romania’s central bank recommends local banks to defer dividend payments

Romania's National Bank (BNR) recommended commercial banks to refrain from distributing dividends to their shareholders until the end of the third quarter this year.

The banks should consult the monetary authority if they eventually decide to go ahead with paying dividends.

As a general guideline, the commercial banks should not consider a dividend payout ratio of over 15%, and the dividends should not exceed 20 basis points of the bank's own capital, according to Cristian Popa, member of the BNR Board.

In April 2020, BNR also recommended local banks not remunerate their investors with part of the previous year's profit to have the necessary capital resources to cope with the impact of COVID-19 on the economy. BNR mentioned the cautious dividend policy as a recommendation and not a mandatory requirement.

Cristian Popa says that these are the same recommendations as those pursued at European level, mainly by the European Systemic Risk Board (ESRB).

"We have already communicated this approach to the banks in advance," Cristian Popa told Ziarul Financiar.

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