The banking supervision authorities of the European Union, which cooperate in the Single Supervisory Mechanism (SSM) under the European Central Bank’s (ECB) lead, have decided, based on the most recently conducted macroeconomic analyses as well as economic forecasts, to repeal the recommendations to refrain from the distribution of dividends, share buybacks as well as variable remuneration with effect from 30 September 2021. In the interest of ensuring fair competitive conditions in the Austrian financial and capital market on a cross-sectoral basis, the FMA will also repeal the restrictions on distributions it has also extended to cover other financial service providers at the same time.
Cautious and forward-looking capital planning remains the order of the day
“The de facto ban that was imposed by supervisory authorities towards financial service providers on the distribution of dividends and bonuses in the wake of the massive economic turbulence created by the COVID-19 pandemic, has proven itself,” remarked the Executive Directors of the Austrian Financial Market Authority (FMA), Helmut Ettl and Eduard Müller: “It has played a significant contribution towards ensuring that the capital base of Austrian providers, in spite of the massive economic challenges, was not diluted, but in some cases was even able to be strengthened.” This is a significant condition to allow financial service providers to able to provide powerful support to companies as well as private households along the way out of the crisis.
The FMA’s Executive Directors nevertheless warn financial service providers “to also continue to take a cautious and forward-looking approach to capital planning that takes into account the sustainability of their business models and the increased risk arising from economical challenges as well as imminent losses once government assistance measures expire.” The FMA will also communicate this expectation directly to affected institutions.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)676/882 49 516