OSLO (Reuters) - Norway’s financial regulator told its banks on Monday to reconsider their dividend plans and share buybacks in light of the economic disruption caused by the coronavirus outbreak.
Most banks have proposed payments for 2019 and are due to hold shareholder meetings in coming weeks to approve the plans.
“In the time since boards made their proposals, the assumptions on which they were based have completely changed ... the chance of a serious economic setback internationally and in Norway must be taken into account,” the FSA said in a letter.
“In this situation, it’s important that banks are able to absorb the significant losses that could arise from their lending in the time ahead, while at the same time being able to lend to credit-worthy clients,” it added.
The FSA said all banks were given a March 23 deadline to outline their revised plans.
Norway has invoked emergency powers to close a wide range of public and private institutions, including schools, to combat the spread of coronavirus, while the central bank has cut rates and offered liquidity to banks.
Shares in DNB (DNB.OL), Norway’s biggest bank, were down 11% at 1255 GMT, underperforming a 9.7% drop in Norway’s benchmark stock index .OSEBX.
“We cannot comment on this at the moment. The board will reply to the FSA within the deadline set,” a DNB spokesman said.
Finance Norway, the finance industry lobby, said Norwegian banks and insurance companies were “very solid”.
“We have full confidence that the boards will make good, responsible and ongoing assessments of the market situation,” Finance Norway Managing Director Idar Kreutzer said in an emailed statement to Reuters.
Editing by Alexander Smith