KNF issues new dividend regulations for banks

The Financial Supervision Authority KNF, released new dividend payout criteria for banks for 2018. To be allowed to pay them out, lenders cannot be undergoing restructuring, have to have a leverage ratio above 5 percent and must have Tier 1 and total capital ratio no lower than the required minimum increased by 150 basis points. Banks which meet those requirements and also have a buffer that equals 2.5 percent of their total risk exposure could spend 75 percent of 2017 profit o the dividend, while 100 percent payout will be possible for banks meeting the 75 percent criterion in a stress scenario. Furthermore, banks with large portfolios of FX-denominated loans could be forced to pay lower dividends, depending on the portfolios’ size. Dividends will be adjusted according to the criterion of share of FX mortgages in total non-financial sector receivables and the share of FX mortgages issued in the years 2007-2008 in the retail FX portfolio.