The NBB requests that Belgian credit institutions and (re)insurers do not pay dividends for the time being

The National Bank of Belgium urges Belgian credit institutions and (re)insurers to suspend their dividend payments until at least 1 January 2021 and encourages them to maintain a cautious attitude towards variable remuneration and profit sharing.

Given the persistent uncertainty regarding both the short and long term impact of COVID-19 and the perpetuation of significant downside risks, maintaining a resilient financial sector – through sufficient capital reserves – remains of great importance. These reserves should – if necessary – be first and foremost used to absorb losses and ensure the continuity of financial intermediation, and more specifically of lending and insurance activities in favour of the real economy.

Against this background, on 27 May the European Systemic Risk Board (ESRB) issued a recommendation calling on the competent and relevant prudential authorities to take the necessary actions to, inter alia, suspend dividend payments at least until 1 January 2021. In its recommendation of 27 July 2020 the ECB, in its capacity as prudential supervisor, followed this recommendation.

As micro- and macroprudential supervisor, the National Bank of Belgium extends its previous recommendation to the Belgian financial institutions[1] (credit institutions and (re)insurance companies subject to its supervision) to suspend their planned dividend payments until at least 1 January 2021. Furthermore, the Bank reiterates its call to adopt a prudent and conservative attitude towards variable remuneration and profit sharing. This is in line with the ESRB recommendation (ESRB/2020/07) of 27 May 2020.

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[1] For macroprudential reasons, this communication applies to all credit institutions and (re)insurance companies under Belgian law.