Polish bank watchdog to relax dividend limits

By bne IntelliNews October 9, 2013

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Poland's financial regulator said on October 8 that it may relax dividend limits on the best capitalized banks to allow them to raise payouts, in a sign that concern over funding both the sector and the wider economy is receding.

The Polish Financial Supervision Authority (KNF) is likely to keep its 75% restriction in place with regard to dividends on 2013 profit for most lenders, but banks with the best capital positions may be freed. "The rules for all markets will probably be maintained at the current levels," KNF head Andrzej Jakubiak told PAP news agency. "Additionally, for banks with high ratios, we will consider the possibility of a 100% of profit as dividend."

With the majority of the Polish banking sector in the hands of Eurozone-based groups, the watchdog has capped dividend payouts since 2009, in a bid to close off a major potential contagion route for the crisis. However, apart from in Hungary - where they're struggling under punishing policy from Budapest - deleveraging and capital outflows by major European banks has remained more limited than feared in Central Europe.

According to Reuters, analysts suggest the two banks most likely to pay higher dividends are Citibank's Bank Handlowy and Pekao - the country's second largest lender, owned by UniCredit Group. In November, the KNF defined sufficient solvency for paying dividends as a capital adequacy ratio of 12%, with Tier 1 over 9%.

UniCredit has raised the highest profile objections to the dividend limits in the past, and is reported to be sitting on a pile of cash. At the same time, Pekao said this month it has bid for BGZ, with the Dutch-owned agricultural lender thought to be valued around €1bn.

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