26 Apr 2022 15:31

Russian govt instructs VTB not to pay dividends for 2021

MOSCOW. April 26 (Interfax) - The Russian government has instructed the Finance Ministry and the Federal Agency for State Property Management (Rosimushchestvo) not to support paying dividends for 2021 on ordinary and preferred shares of both types when drawing up a directive for participation in VTB's supervisory board.

The corresponding instruction was signed by Russian Prime Minister Mikhail Mishustin on April 23.

The decision not to pay dividends was taken "with the goal of ensuring sustainable lending to corporate clients and financial institutions of Russia."

The bank was planning to direct 50% of its net profit of 327.4 billion rubles to dividends in 2021 before being added to Western sanctions lists.

Russian Finance Minister Anton Siluanov announced proposals being prepared with respect to state bank dividends earlier. "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," Siluanov said.

The Central Bank has also elaborated recommendations for banks and non-credit financial institutions, suggesting they waive dividend payments in 2022, taking into account the difficult economic situation.

VTB head Andrei Kostin hopes that the situation will change in the future and the bank will be able to return to paying dividends to shareholders.

"Dividends are not determined by us, but by an annual meeting where the government has the controlling interest. There is an opinion today held by both the governor of the Central Bank and by the minister of finance, they have said publicly that banks shouldn't pay dividends, because they need capitalization. Under these conditions, I think that my opinion already may not count. I understand the concern, I feel a responsibility to shareholders, and we will hope that down the road the situation will change and we will be able to pay dividends," Kostin said last week.