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BL Premium reports that the SA Reserve Bank (SARB) has urged banks to halt dividend payouts and bonuses to shore up capital and continue lending to businesses and households pummelled by the Covid-19 national lockdown.
The recommendation, which is nonbinding, comes about a week after the central bank said it would allow lenders to dip into their regulatory capital reserves to support efforts to cushion the economic impact of the stay-at-home order on businesses and households. The Prudential Authority (PA), which is the SARB’s banking-supervision unit, said in a statement: “The PA is of the view that capital resources must continue to be available to support the real economy and to absorb losses in the immediate and medium to long term, and as such the PA expects that no distribution of dividends on ordinary shares and no payment of cash bonuses to executive officers and material risk takers should take place in 2020.” Last week, the SARB freed up at least R320bn in lending, saying it would give banks a break if they breached their liquidity coverage ratio.
- Read the full original of the report in the above regard by Tiisetso Motsoeneng and Lukanyo Mnyanda at BusinessLive (paywall access only)
Get other news reports at the SA Labour News home page