Bank Dividend Reprieve Comes With Warning in South Africa
- Regulator eases guidance to lenders about approving payouts
- Banks should still make preserving cash reserves a priority
The FirstRand Bank building in Cape Town.
Photographer: Dwayne Senior/BloombergThis article is for subscribers only.
South Africa’s banking regulator eased guidance to lenders that they shouldn’t pay dividends and executive bonuses -- though warned that protecting cash reserves must still take priority amid ongoing uncertainty from the Covid-19 pandemic.
Where boards approve such payouts, they should be “prudent and commensurate with the assessment of current conditions and potential future uncertainty,” Prudential Authority Chief Executive Officer Kuben Naidoo said in a note to the industry. Banks should also refrain from using proceeds from regulatory-relief measures for either of those purposes, he said.