Uncertainty is decreasing, and the economy is continuing to recover. Therefore, the recommendation regarding restrictions on dividends will not be extended. The recommendation ends on 30 September 2021.
"Given that the exceptional uncertainty from last spring has passed at the same time as the Swedish economy has entered into a clear recovery phase, there is no need to keep the restriction in place," says Director General Erik Thedéen. "But we are making the assumption that the banks will take into account that the pandemic is still making future economic outlooks uncertain and they will allow for this in their capital planning."
Finansinspektionen's (FI) recommendation that is in place until 30 September of this year entails that banks and other financial firms must be restrictive in decisions regarding dividends and share buy-backs. The current recommendation was communicated by FI at the end of 2020 following a decision by the European Systemic Risk Board (ESRB) to update its previous recommendation that no dividends should be paid in 2020. We took the position then that it should be possible for banks and other financial firms to pay dividends in 2021 but that it was necessary to continue with a restrictive stance.
FI noted at the same time that the recommendations should be viewed as exceptional measures in very uncertain times and they would be removed as conditions continued to improve. Since the uncertainty regarding the Swedish economy, and thereby the banks' stability, has decreased, it is reasonable to now remove the recommendation.
This means that FI will return to the normal supervision procedure for assessing the banks' risks and capital needs. The banks' boards of directors bear responsibility for assessing the capital buffers that they should hold over and above the capital requirements set by FI and propose dividends to their annual general meetings given these capital requirements.
At the same time, due to the combination of remaining systemic risks and the economic recovery, FI will raise the countercyclical capital buffer in 2021. This was communicated already in the stability report at the beginning of June and is something that the banks must take into account.