BOT orders commercial banks to hold off on interim dividends, bans share buy back

[rooster59]

BOT orders commercial banks to hold off on interim dividends, bans share buy back

By The Nation

 

BOT governor Veerathai Santiprabhob/ File photo

 

The Bank of Thailand (BOT) has told commercial banks to strengthen their capital ratio in response to the Covid-19 fallout and banned them from paying interim dividends for this year or buying back bank shares.

 

 

BOT governor Veerathai Santiprabhob said on Friday (June 19) that the impact of the Covid-19 pandemic has been deep and widespread, affecting both consumers and businesses. The situation at present is highly uncertain and this may have an impact on the quality of commercial banks’ assets.

 

“Hence, the Bank of Thailand is telling commercial banks to come up with a plan on their capital ratio for the next one to three years, by taking into account economic trends and the potential of debtors to run their businesses in the post-Covid era,” he said in a statement released on Friday.

 

During this period, banks have been told to not pay interim dividends for 2020 or buy back banks’ shares. These actions aim to strengthen the bank’s capital, allowing them to continue doing business continually. The actions are in line with steps taken by other central banks to stem risks from uncertainty created by the pandemic, he added. 

 

Meanwhile, Pipat Luengnaruemitchai, assistant managing director at Phatra Securities, told the Nation that the BOT statement reflects belief that risks from the impact of Covid-19 will rise. 

 

“Before novel coronavirus arrived, Thai banks were resilient with a solid capital base, but now we don’t know for sure. So far, we don’t know the reality of bad debts, as many debtors are being given the option of delaying their debt payments,” he said. 

 

Bank profit is inflated by practice, so the central bank insisting that interim dividend not be paid is reasonable. The order prohibiting the buying back of share aims to prevent banks from circumventing the no-dividend payment order, he said. 

 

The central bank’s latest measures are expected to have a seriously adverse impact on bank shares in Monday’s trading, after banks have already been hit by the contraction of the economy. 

 

According to Phatra Security’s forecast, the Thai economy will fall by 9 per cent this year, and unemployment hit 10 per cent. 

 

“We are pessimistic about the economic outlook as tourists have almost all gone, while consumption, investment and exports are all being impacted by the outbreak,” he said.

 

Source: https://www.nationthailand.com/business/30389947

 

-- © Copyright The Nation Thailand 2020-06-20

 

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[Bender Rodriguez]

the economy is weak, bank give even less interest on deposits but still demand disgusting high rates for loans and now they don't have to pay dividends???

[RichardColeman]

5 hours ago, rooster59 said:

The Bank of Thailand (BOT) has told commercial banks to strengthen their capital ratio in response to the Covid-19 fallout and banned them from paying interim dividends for this year or buying back bank shares.

Translation : we're preparing to blame the banks for the dire state of the economy and people running out of cash