Statement of the Financial Supervision Committee 30 June 2021
According to the Financial Supervision Committee’s statement of 13 January 2021, significant uncertainty about near-term economic developments lay ahead, and the Committee emphasised that financial institutions should demonstrate the utmost caution as regards their capital position. Financial institutions were instructed to have certain points as guideposts when deciding on dividend payments or share buybacks. Those instructions remain in effect through 30 September 2021. Furthermore, insurance companies were urged to observe the utmost caution in managing their equity, in view of the uncertainty.
It now appears that the COVID-19 pandemic will affect financial institutions less than was feared at the beginning of the year, partly because of the authorities’ economic response measures. The systemically important banks are strong, their capital and liquidity are well above regulatory minima, and they have ready access to liquidity in both krónur and foreign currencies. Thus they are highly resilient, as is discussed in the Central Bank’s Financial Stability report, issued in April.
In view of this and today’s statement from the Financial Stability Committee, the Financial Supervision Committee (FMEN) considers it appropriate to revoke its instructions on financial institutions’ dividend payments and share buybacks. Nevertheless, the FMEN urges financial institutions, as well as insurance companies, to continue observing the utmost caution in decisions to pay dividends and preparation of plans to buy back their own shares.
Nr. 17/2021
30. June 2021