CBR recommends that banks, non-credit financial institutions waive dividend payments in 2022

MOSCOW. April 15 (Interfax) - The Central Bank of Russia (CBR) has recommended that banks and non-credit financial institutions waive dividend payments in 2022, the regulator said in a statement.

"The Bank of Russia draws the attention of lenders to the fact that non-compliance with capital adequacy ratio surcharges is allowed in current conditions. It is not non-compliance with regulations, but the bank should limit payments of dividends and bonuses to management. In case of non-compliance with surcharges, the bank should also draw up and submit to the Bank of Russia a simplified plan to restore the amount of capital with a specific list of measures," the Central Bank said in a statement.

"Given the difficult economic situation, the CBR recommends waiving dividends in 2022 for banks complying with surcharges, as well as non-credit financial institutions," the regulator said.

Earlier, Finance Minister Anton Siluanov announce proposals in preparation with respect to state bank dividends. "We as the Ministry of Finance propose waiver of dividends by banks for 2021, despite the fact that last year was probably the most successful in recent times," the minister said.

"We believe that the issue of banks' dividends is almost, we can say, resolved in favor of banks, because they need a capital base, we understand it well, the banks have lost quite a lot in the current environment. And I'm not even talking about those banks which are simply in the SDN," Siluanov said.

The largest banks with state participation - Sberbank and VTB - planned to allocate 50% of the net profit for 2021 to dividends before being included in Western sanctions lists.

Last year, Sberbank boosted its net profit to IFRS 1.6-fold to 1.246 trillion rubles. VTB earned 327.4 billion rubles in profit to IFRS, which is up 4.3-fold compared to the previous year.

VTB is waiting for the government's general decision on state banks' dividends amid a need for capital, VTB head Andrey Kostin said earlier.

Kostin and the head of Sberbank Herman Gref sent a letter to Prime Minister Mikhail Mishustin in mid-March where they presented estimates of potential losses from participation in government programs to support the economy: the combined losses of the two largest banks, which themselves are under severe restrictions, could amount to nearly 600 billion rubles. The letter also noted that, according to CBR estimates, losses of the banking system in 2022 will be from 3.5 trillion to 5.8 trillion rubles without taking into account negative revaluation of securities totaling about 2 trillion rubles.