09/16/2020 | News release | Distributed by Public on 09/16/2020 04:31
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: