UK markets close in 2 hours 50 minutes

Swiss bank watchdog toughens stance on dividends

By Brenna Hughes Neghaiwi
Swiss Financial Market Supervisory Authority Chief Executive Branson attends a news conference in Bern

By Brenna Hughes Neghaiwi

ZURICH (Reuters) - Switzerland's bank watchdog on Tuesday toughened its line against banks paying dividends, saying that capital relief to promote lending during the coronavirus crisis would be cut for any new dividend payments approved after March 25.

Regulators around the world have been urging banks to limit shareholder payouts during the coronavirus crisis to conserve capital and boost lending.

Mark Branson, who heads the Swiss regulator FINMA, told reporters last week: "We are asking the boards to decide who needs the money more - Swiss clients or international and institutional investors."

On Tuesday, FINMA said banks whose shareholders approved 2019 dividends or other payouts after March 25, or who planned to seek shareholder approval, would have their capital relief reduced by the amount of the dividends or payouts.

UBS <UBSG.S> and Credit Suisse <CSGN.S> on Monday said they planned to go ahead with their previously proposed 2019 dividend payments, citing strong capital positions.

UBS on Tuesday said it took note of FINMA's statement, while Credit Suisse did not immediately respond to a requests for comment on whether the announcement by FINMA would affect 2019 dividend plans.

Julius Baer <BAER.S> said its dividend proposal remained unaffected, noting its leverage ratio of 4.4% at end-2019 was very significantly above the 3.0% minimum. It declined to comment on the FINMA statement.

"The financial industry is currently being rescued with state-secured guarantees," Cedric Wermuth, Vice President of the Social Democratic Party, who sits on Swiss parliament's commission for the economy and taxes, said on Tuesday. "Suspending dividend payments would be the minimum thing to do."

Swiss banks have loaned out billions as part of a 20-billion-Swiss-franc ($20.4 billion) government-backed emergency scheme to help companies hit by coronavirus disruption. Authorities have eased capital and liquidity requirements, and introduced an unlimited COVID-19 refinancing facility, to help cope with the fallout.

(Reporting by Brenna Hughes Neghaiwi; editing by Thomas Seythal and Jane Merriman)