NBM recommends banks to refrain from paying dividends

The National Bank of Moldova (NBM) recommends the licensed banks to refrain from distributing dividends to shareholders and other forms of capital distribution, at least until September 30, 2020. The decision was taken by the NBM’s Executive Board in a move to mitigate the effects of the COVID-19 pandemic so as to keep banks well-capitalized and stable, IPN reports.

The Board also approved measures to relax the requirements for capital buffers. Thus, the NBM allows banks to use temporarily (until a later date is communicated) the previously set capital conservation buffer.

The preserved capital can be used to absorb eventual worsening of the loan portfolio quality and to support the financing of the business community and the population.

In this connection, the banks are encouraged to continue promoting appropriate policies for recognition and coverage of non-performing exposures and to carry out sound capital and liquidity planning, as well a robust risk management.

These measures are in line with the best international practices and are similar to the decisions promoted the last period by most central banks of the European Union and of the region.

Starting with March 17, along with the declaring of the state of emergency in the country, the National Bank adopted a series of measures aimed at mitigating the impact of the coronavirus epidemic on the banking sector, population and the business community.

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