Regulatory Alerts2020-12-23
Added · Updated
Circular Letter No. CC/2020/00000072: Recommendation on Distributions During the COVID-19 Pandemic
The Banco de Portugal extends restrictions on dividend distributions, ordinary share buybacks, and variable remuneration commitments for less significant credit institutions and investment companies until September 30, 2021. Institutions must ensure that any distributions do not reduce the quantity or quality of own funds, adhering to limits of 15% of accumulated profits from 2019 and 2020 or a 20 basis point reduction in Core Tier 1 capital. Entities with 2020 losses are prohibited from proposing distributions, and interim profits for 2021 must not be distributed. Furthermore, institutions are expected to refrain from assuming new variable remuneration commitments for 2020 performance, particularly for staff with material impact on the institution's risk profile.
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