The Monetary Authority of Singapore called on national banks to moderate their dividends, from fiscal year 2020, to 60 percent to increase their lending capacity.
The Monetary Authority of Singapore urged local banks to limit their dividends from fiscal year 2020 to 60 percent.
They assured that this measure aims to allow national banks to maintain their capital and increase their lending capacity to companies or individuals.
In its statement, the Monetary Authority of Singapore pointed out that the world faces an uncertain scenario and that it is necessary to guarantee sustained loans in the city-state.
Banks will resist risks
It highlighted that in previous years, national financial institutions accumulated a large capital that will allow them to resist the risks that are coming due to the economic crisis cause by the pandemic.
“We are fortunate that banks in Singapore entered the COVID-19 pandemic with strong capital positions” said Ravi Menon, Managing Director of MAS.
In addition to this, the Managing Director also called on all the national banks to properly maintain and manage their capital.
"Given the uncertainties that lie ahead and that global economies still show no signs of recovery, it would be prudent for local banks to reserve a larger share of profits during this period," he said.
The MAS assured that this initiative will strengthen the capacity of all local financial entities to continue supporting the credit needs of companies and consumers.
As well as it considers that it will help to absorb the economic impacts in the event that a more adverse scenario materializes.