T. Nidetzký k výplatě dividend

Interview of the Deputy Governor Tomáš Nidetzký
By Krystof Chamonikolas (Bloomberg 16. 9. 2020)

The owners of Czech banks will have to live without dividends until after the government takes the economy off its current life support, according to central bank Deputy Governor Tomas Nidetzky.

In March, the regulator told the financial industry to halt dividend payments as the country went into a coronavirus lockdown. Lifting of that measure will be gradual and can’t be done while the state is keeping borrowers afloat with temporary rescue programs, Nidetzky said in an interview on Monday. While Czech banks entered the global pandemic with a surplus of liquidity and capital, a resurgence in coronavirus cases is clouding the outlook for the recovery. Prime Minister Andrej Babis’s government is keeping unemployment low and propping up consumption with an unprecedented spending spree. It also approved an option for up to six-month moratorium on debt repayments.

“We need to wait for the government’s measures to expire first so that we can assess the impact,” 50-year-old Nidetzky said. “We won’t let all banks resume dividend payments at the same time. It will be done on an individual basis, and each institution will have to persuade us that they are well- capitalized.”

He said the central bank had begun talks about potential dividend payments with insurance companies, which appear to be less affected by the coronavirus. Discussions with the banking sector could start early next year.

Nidetzky’s other comments on banks and financial stability:

• A record volume of new mortgages is positive as banks remain able to provide credit while sticking to strict approval standards.
• “We’re not worried about this too much, and we’re certainly not thinking about stepping into the mortgage market by tightening our macro-prudential policy.”
• Lending is probably driven by wealthier clients, many buying for investment, as well as by newly-finished and more expensive homes in cities like Prague and Brno.
• While the central bank has significantly relaxed mortgage regulation, it has kept the 90% loan-to-value limit because the Czech housing market “remains overheated.”