Sharechat Logo

NZ banks not allowed to pay dividends until recovery, RBNZ announces

Thursday 2nd April 2020

Text too small?

Stuff reported today that NZ banks have agreed with the Reserve Bank cancel dividend payments for now. However, the deputy Reserve Bank Governor Geoff Bascand sees this as an interim measure and once the economic outlook improves the dividend ban may be lifted. 

Banks have also agreed not to redeem any "tier-one" capital instruments according to the Reserve bank. This will prevent them from buying back any redeemable perpetual preference shares they had sold to investors.

These measures are being implemented to ensure banks retain any profits made in NZ to support lending to NZ customers during this turbulent time.

These measures would "further support the stability of the financial system during this period of economic uncertainty".   This all helps the banking system with liquidity.

Unfortunately for shareholders of bank shares it means no income from dividend from these investment for now and possible for one to two years. 

The Reserve Bank has also announced that it would introduce “a new type of low-interest, three-year loan to banks to help them provide funding to businesses through the Government's Business Finance Guarantee Scheme.”

This scheme “will see the Government take on 80 per cent of the default risk on up to $6.25 billion of loans that banks make to small and medium-sized businesses to tide them through the crisis.”

Paraphrased from: Stuff

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired
Auditors have a duty to be alert to fraud
Strong sales recovery but uncertainty remains over economic outlook and potential second wave of COVID-19
Auditors keep falling into the same trap
The great interruption continues
Update on Clutha Upper Waitaki Lines Project
Napier Port Welcomes Inland Port Funding
Auckland Airport provides details of Other Significant Items expected to impact 2020 financial results and an update on further organisational change

IRG See IRG research reports