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Law360, London (March 24, 2020, 10:53 AM GMT ) Sweden's financial watchdog told banks on Tuesday to scrap dividend payments to shareholders so they can channel money into households and businesses during the coronavirus crisis.
Swedish financial companies have been told by the regulator to stop handing cash to shareholders amid the spread of coronavirus. (AP)
The watchdog said it will write to banks and other lenders to ask that their boards "change their dividend proposals immediately," which would mean they do not pay out at their spring general meetings.
"It is important that the banks now act responsibly and strengthen their resilience in this critical situation," Erik Thedéen, director general at the regulator, said on Tuesday.
Banks must hold enough capital to ensure they are resilient and can supply credit to the economy during the pandemic, the Swedish regulator said. The measure will ensure that the money does not end up in the pockets of shareholders rather than being distributed among consumers and businesses.
"The purpose is to ensure that these companies have continued good resilience to any credit losses and the capacity to maintain credit supply," FI said in a statement.
Swedish lender SEB said Thursday that it will delay its annual general meeting because of the outbreak of COVID-19. It should have been held on March 23 but will now be held before June 30, the bank said.
"The board's dividend proposal for 2019 was motivated by the bank's strong capital position as well as a solid financial result, but given the exceptional global developments it is today difficult to assess to what extent SEB's customers will need further financing and support," the bank said in a Thursday statement.
Swedbank also said last week that it will delay its AGM, which was scheduled for March 26, because of the coronavirus. The lender said on Friday that it will hold the meeting by June 30 at the latest and will "monitor the situation closely and thereafter evaluate the proposal for dividend for 2019."
Sweden's financial regulator fined Swedbank a record 4 billion Swedish krona ($390 million) last week for serious money laundering failures at its Baltic operations.
--Additional reporting by Joanne Faulkner. Editing by Ed Harris.
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