The Croatian National Bank (HNB) issued a decision on the temporary restriction of distributions, requesting banks not to pay dividends – including in 2021 – to boost the resilience of credit institutions and maintain the financial system’s stability amid the COVID-19 pandemic.
The HNB has limited distributions until 31 December 2021, including the payment of dividends, treasury stock repurchases and other forms of distributions.
The central bank recalled that the COVID-19 pandemic had caused negative consequences for economic activity in Croatia, which were alleviated by a set of support measures for credit institutions and their clients, including monetary policy measures aimed at maintaining favourable conditions for financing, and public measures for the country’s worst-hit sectors.
However, uncertainties regarding the impact of the current extraordinary health and economic circumstances on the operation of banks in Croatia remains high, the bank added.
In such circumstances, a temporary restriction of distributions boosts the lenders’ resilience to possible losses associated with the materialisation of credit risk in their balance sheets. (Željko Trkanjec | EURACTIV.hr)