Switzerland's financial regulator is turning the screws on banks which still want to pay dividends on last year's profits. The move comes as European banks rein in their payout promises.
As «lone voice in the wilderness,» as finews.com called him, Finma boss Mark Branson urged Swiss financial firms to be more prudent with their capital. Instead of paying rich dividends, banks and insurers should save for a rainy day given the crisis sparked by the coronavirus pandemic, he said.
Switzerland hasn't been as snappy as the European Central Bank in demanding that lenders and insurers freeze payouts to shareholders, but Branson as well as the Swiss government have been verbally intervening since last week. Meanwhile, the ECB appears poised to take action on banker bonuses amid the crisis.
Banks Taken to Task
On Tuesday, Branson subtly turned the screws on Swiss firms who still want to splash out on 2019 payouts: banks won't benefit from a key easing measure, Finma said in a clarification of last week's guidelines. Finma's loosening of those requirements freed up more than $20 billion in capital for emergency loans.
Specifically, banks who still opt to pay dividends after March 25 will not be able to claim relief on recently-eased leverage ratio requirements for the amount of money that goes out the door to shareholders. Finma also said it may set very specific rules for individual institutes if it sees fit.
Coordinated Verbal Intervention
Compared to his European and American peers, Branson as a watchdog is on a relatively short leash as goes dividends – as long as the banks fulfil capital requirements, Finma has no grounds for sanction or action.
Branson, a British-Swiss ex-UBS banker turned overseer, isn't alone with his calls: the Swiss government backed him as well as Switzerland's central bank, which is easing an additional capital requirement for mortgage lenders, on dividends and bonuses.
