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Will Israel’s banks distribute no dividends for the third quarter of this 12 months, even if they’re anticipated to report sturdy outcomes? Up to now few days, the Banking Supervision Division of the Financial institution of Israel has been signaling such a improvement. Up to now, there isn’t any written instruction, however quite a message from the Supervisor of Banks to the impact that within the present state of affairs, within the mild of the quick results of the battle on the south of Israel and the strain within the north, and the overall uncertainty, the banks are anticipated to chorus from paying dividends.
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In a Zoom assembly held yesterday between Supervisor of Banks Daniel Hahiashvili and the heads of the banks, the topic of dividends was raised, indicating that the Financial institution of Israel is decided that the banks ought to weigh the matter significantly.
This message got here a number of days after the Banking Supervision Division made clear that it anticipated the banks to extend their credit score loss provisions. Financial institution Leumi has already introduced that it’ll make a provision of between NIS 800 million and NIS 1.1 billion.
The Financial institution of Israel’s demand for larger credit score loss provisions and for restraint on dividend funds is meant to make sure that that the banks may have enough capital to proceed to offer credit score on cheap phrases.
Financial institution shares fell sharply on the Tel Aviv Inventory Alternate as we speak, and the TA-Banks5 Index closed 2.82% off.
In March 2020, after the outbreak of the Covid-19 pandemic, the Financial institution of Israel’s instructed the boards of the banks to rethink their dividend insurance policies. Accordingly, the banks didn’t pay dividends in 2020. Solely in July 2021 did the Financial institution of Israel change its strategy, stating that there was no objection to the banks paying dividends, however including {that a} dividend of greater than 30% of 2020 earnings wouldn’t be thought-about prudent.
Printed by Globes, Israel enterprise information – en.globes.co.il – on October 31, 2023.
© Copyright of Globes Writer Itonut (1983) Ltd., 2023.
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