Financial regulator issues position on dividends in financial institutions for 2022

Recently, the Polish Financial Supervisory Authority (PFSA) issued its annual Position on dividend policy of financial institutions for 2022 (Position). Although considered a 'soft-law', the PFSA's yearly Position strongly influences dividend payout decisions taken by financial institutions.

The financial institutions affected by the Position

The Position is addressed to the following institutions:

• banks (commercial, cooperative and affiliating);
• insurance undertakings, reinsurance undertaking, insurance and reinsurance undertakings;
• investment fund management companies;
• general pension companies; and
• brokerage houses.

What does the Position contain?

The Position sets out the maximum amount of dividends that may be paid out by financial institutions in 2022 and the conditions that financial institutions must meet to make these payments. Despite the ongoing COVID-19 pandemic, the PFSA has allowed all financial institutions indicated above to pay out their profit for 2021 (if requirements set out by the PFSA are met). This decision has been a relief to commercial banks since the PFSA recommended last year to suspend dividend payments for the first half of 2021.

The Position of the PFSA remains, in principle, consistent with dividend policy published in recent years. This means that once the conditions set out in the Position are met:

• commercial banks, general pensions companies and brokerage houses may pay out up to 100% of the 2021 net profits;
• co-operative and affiliating banks may pay out up to 10% of 2021 profits;
• insurance undertakings, reinsurance undertaking, insurance and reinsurance undertakings may pay out up to 100% of 2020 profits and up to 50% of 2021 profits;
• investment fund management companies may pay out more than 100% of 2021 net profits.

For further information on the Position and its impact on the dividend policy of financial institutions for 2022, contact CMS experts – Ewa Świderska, Sylwia Raszplewicz-Czyżewska, Patrycja Sikorska-Tuğcu.