{"id":19514,"date":"2021-01-03T23:31:17","date_gmt":"2021-01-03T21:31:17","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=19514"},"modified":"2021-01-03T23:31:17","modified_gmt":"2021-01-03T21:31:17","slug":"after-ecb-dividend-cap-flouted-finnish-watchdog-mulls-next-step","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/19514","title":{"rendered":"After ECB Dividend Cap Flouted, Finnish Watchdog Mulls Next Step"},"content":{"rendered":"

(Bloomberg) — Finland\u2019s financial watchdog is trying to figure out how to respond after a lender it oversees explicitly disregarded the European Central Bank\u2019s guidelines on shareholder rewards.<\/span><\/p>\n

The decision by Alandsbanken Abp,\u00a0announced\u00a0on Jan. 1, to pay almost four times the dividend cap set by the ECB is \u201cunfortunate,\u201d\u00a0Jyri Helenius, head of banking supervision at the Finnish Financial Supervisory Authority, said in an interview. The lender acted without its watchdog\u2019s permission, but Helenius acknowledged there\u2019s not much he can do about it.<\/span><\/p>\n

\u201cWe expect banks to comply with the recommendation, even though we aren\u2019t able to make it legally binding,\u201d Helenius said. \u201cIt\u2019s unfortunate that a Finnish bank is slipping from the common European front on this.\u201d<\/span><\/p>\n

Last month, the ECB lifted a de facto ban on dividends but urged banks to limit such shareholder payouts to less than 15% of profit for 2019 and 2020, or 0.2% of their key capital ratio, whichever is lower. Alandsbanken says it plans to pay out 59% of 2019\u2019s earnings, citing record profits that year.<\/span><\/p>\n

The cap on bank dividends in the\u00a0euro zone\u00a0is stricter than in the U.K. and Switzerland and has prompted criticism from some corners of the financial industry. \u200b<\/span><\/p>\n

Nordea Bank Abp, Finland\u2019s biggest bank, has said it will follow the recommendation but that it will\u00a0contact the ECB\u00a0to \u201cdiscuss the intended level of distribution,\u201d noting that it is \u201cone of the best capitalized banks in Europe.\u201d<\/span><\/p>\n

Alandsbanken, which is too small to come under direct ECB supervision, said the latest guidelines fail to take into account the comparative strength of some banks in the\u00a0euro zone.<\/span><\/p>\n

Long-Term Risks<\/span><\/h3>\n

Alandsbanken said holding back on dividends could alienate the very investors it relies on to grow. \u201cThe long-term risks to the bank may be larger\u201d if shareholders don\u2019t get a substantial portion of profits, it said. That\u2019s why it\u2019s \u201cchoosing not to follow\u201d the guidance of the Finnish FSA and, by extension, the ECB, it said.<\/span><\/p>\n

The Finnish FSA will \u201cengage\u201d with lenders that ignore the ECB\u2019s guidance, Helenius said. \u201cIt\u2019s very exceptional that a bank would disregard our recommendation,\u201d he said.<\/span><\/p>\n

Helenius is now urging the financial industry to be patient. Once the ECB repeals its recommendation, set to be in place through September, \u201cat least in Finland it will be possible then for banks that have enough capital to pay dividends for both 2019 and 2020,\u201d he said.<\/span><\/p>\n

The ECB directly oversees the biggest\u00a0euro-zone\u00a0lenders while national regulators in the bloc supervise smaller banks, some of which have been allowed to pay dividends. German regulator BaFin has said it will permit payouts if financial firms have sufficient financial strength.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

(Bloomberg) — Finland\u2019s financial watchdog is trying to figure out how to respond after a lender it oversees explicitly disregarded the European Central Bank\u2019s guidelines on shareholder rewards. The decision by Alandsbanken Abp,\u00a0announced\u00a0on Jan. 1, to pay almost four times the dividend cap set by the ECB is \u201cunfortunate,\u201d\u00a0Jyri Helenius, head of banking supervision at<\/p>\n","protected":false},"author":1,"featured_media":10435,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-19514","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=19514"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19514\/revisions"}],"predecessor-version":[{"id":19515,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/19514\/revisions\/19515"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/10435"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=19514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=19514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=19514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}