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
Comment:
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:

Stride Property Ltd & Stride Investment Management Ltd (NZX: SPG) Office Acquisition Now Unconditional
Scott Technology Limited (NZX: SCT) Announces Strategic Partnership with Savoye
TIL Logistics Group Limited (NZX: TLL) Pacific Fuel Haul Receives Notice of Industrial Action
Vista Group International Limited (NZX: VGL) Vista Group Acquires 100% of Cinema Intelligence
Fonterra Shareholders' Fund (NZX: FSF) Q1 performance and Milk Price update
IPO Offer: New Zealand Rural Land Co
Infratil Limited 6-year Infrastructure Bonds
Cannasouth Limited (NZX: CBD) United Nations Vote to Reschedule Cannabis
Westpac Banking Corporation (NZX: WBC) Enters into Enforceable Undertaking with APRA
Tower Limited (NZX: TWR) Reaches Agreement for Club Marine Boat Customers

IRG See IRG research reports