Polish watchdog advises banks against dividends until EU court verdict

ING Bank Slaski SA

17/03/2023 15:41

GDANSK, March 17 (Reuters) - Poland's Financial
Supervision Authority (KNF) recommended some banks should
withhold dividend payouts for 2022, until a final verdict from
the Court of Justice of the European Union (CJEU) on Swiss franc
mortgages. 
    Thousands of Polish borrowers took out mortgages in Swiss
francs more than a decade ago to benefit from low interest
rates, but then faced ballooning repayments when the zloty
weakened sharply against the Swiss currency. 
    Many mortgage-holders took banks to court. While some have
reached settlements, the Polish regulator has said long-running
legal action could cost the country's banks 100 billion zlotys 
($22.65 billion). 
    KNF sent the recommendation on Friday to PKO BP  PKO.WA ,
Santander Bank Polska  SPL1.WA , and INB Bank Slaski  INGP.WA ,
the banks said, even though, the watchdog confirmed that they
met requirements for 2022 dividend payouts.
    The Polish unit of Netherlands-based ING Groep  INGA.AS 
said its management recommended withholding dividend payment,
and to present the annual general meeting of shareholders (AGM)
a proposition to allocate 513.9 million zlotys to reserve
capital intended for dividend payouts.
    It said the aim was to maintain capital security until the
bank can confirm the scale of potential risks.
    Should no significant risk materialise, it said in a
statement management would consider paying an advance on the
2023 dividend.
    Even after the CJEU's verdict, which is expected this year,
Poland's KNF advised against paying out dividends without prior
consultation with it.
    KNF said the banks should also consult it before carrying
out operations beyond standard business if they could lower
funds, including the potential pay out of dividends from
previous years' retained earnings, or buybacks of their own
shares.
($1 = 4.4203 zlotys)

 (Reporting by Adrianna Ebert; Translation by Mateusz Rabiega;
Editing by Barbara Lewis)
 ((Mateusz.Rabiega@thomsonreuters.com; +48 58 769 67 57;))