La Bank of Italy recommended to less significant credit institutions in our country (supervised from Via Nazionale) of "refrain from recognizing or paying dividends or limit their amount to no more than 15% of 2019-20 cumulative earnings or 20 basis points of the CET1 ratio (in any case, the lower of the two). Furthermore, Bankitalia asks the same institutions to not to "pay interim dividends out of 2021 profits" and to "exert extreme prudence in the recognition of variable remuneration".
The Bank of Italy thus aligns itself with recommendations sent by the ECB to the systemic banks of the Eurozone, which only minimally correct the stop on dividends launched last spring to protect the assets of banks in view of the new wave of NPLs caused by the anti-pandemic closures.
“In light of the current economic environment and considering that the impact of the pandemic on intermediaries' financial statements has not yet fully manifested itself, also thanks to the massive public support measures – explains Via Nazionale – the Bank of Italy deems it appropriate, in line with the approach adopted by the ECB for significant banks in the euro area, maintain an extremely cautious approach, in order to safeguard the banks' ability to absorb losses and lend to support the economy".
Bank of Italy also specifies that, in order to pay dividends, "banks will have to critically verify in advance their capital solidity and the relative self-financing capacity, current and prospective, taking into account the impacts of the pandemic on the quality of assets and on the income statement, and contact Supervision to assess whether the expected level of distribution is considered prudent. The same limits, constraints and procedures apply to the repurchase of treasury shares for the purpose of remunerating shareholders".
An “extremely cautious” approach Until 30 September 2021 it will have to be adopted by the banks to which this recommendation is addressed also with reference to variable remuneration. The Bank of Italy will carefully evaluate corporate policies in this area, with particular attention to their impact on the capital profile - concludes Via Nazionale - In the absence of a substantial worsening of the macroeconomic situation, from 30 September 2021 the Bank of Italy will return to evaluating the dividend distribution and remuneration policies based on the results of the ordinary supervisory review and evaluation process of the individual intermediaries”.
