Press release | Date: 25/03/2020| No: 12/2020
Today, the Ministry of Finance has sent a letter to the Financial Supervisory Authority (FSA) regarding financial institutions’ use of profits for 2019, as a reply to a letter from the FSA on the same subject. The Ministry will not impose regulations to restrict dividends or other voluntary pay-outs at this time. However, as expressed in the letter, the Ministry expects financial institutions to refrain from paying dividends and other voluntary pay-outs until the economic uncertainty has subsided.
“I presume that the financial institutions are conscious of the severity of the economic situation, and I expect institutions to postpone their decisions on dividend payments to shareholders. We are in the midst of an extraordinary situation, and it is important that banks and insurers act prudently and refrain from any distributions that could weaken their solvency,” says Minister of Finance Jan Tore Sanner.
“A regulation to ban dividend distributions would be a very strict measure towards both banks and insurers, and would impact all institutions in the same way. It would also affect small savings banks’ ability to give donations to various causes in their local communities. After an overall assessment, I have decided that a regulation to ban distributions of profits would not be the right measure at this time,” says Sanner.
In the letter to the FSA, the Ministry of Finance does not rule out the possibility of a regulatory ban at a later point in time. If such a measure were to be considered necessary to promote financial stability, the Ministry will reassess the need for a regulation to restrict Norwegian financial institutions’ opportunity to make voluntary pay-outs.