RECOMMENDATION OF THE EUROPEAN CENTRAL BANK

of 28 January 2015

on dividend distribution policies

(ECB/2015/2)

(2015/C 51/01)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 127(6) and Article 132 thereof,

Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 34 thereof,

Having regard to Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (1), and in particular Article 4(3) thereof,

Having regard to Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) (2),

Whereas:

HAS ADOPTED THIS RECOMMENDATION:

I.

For the payment of dividends (7) in 2015 for the financial year 2014, the ECB recommends that:

Category 1 : Credit institutions which satisfy the applicable capital requirements as referred to in recital 3(i) and (ii), and which have already reached their fully loaded ratios as referred to in recital 3(iii) as at 31 December 2014, should only distribute their net profits in dividends in a conservative manner to enable them to continue to fulfil all requirements even in the case of deteriorated economic and financial conditions;

Category 2 : Credit institutions which satisfy the applicable capital requirements as referred to in recital 3(i) and (ii) as at 31 December 2014 but which have not reached their fully loaded ratios as referred to in recital 3(iii) as at 31 December 2014 should only distribute their net profits in dividends in a conservative manner to enable them to continue to fulfil all requirements, even in the case of deteriorated economic and financial conditions. In addition, they should in principle only pay out dividends to the extent that, at a minimum, a linear (8) path towards the required fully loaded ratios as referred to in recital 3(iii) is secured;

Category 3 : Credit institutions (9) which under the 2014 comprehensive assessment have a capital shortfall that would not be covered by capital measures by 31 December 2014, or credit institutions in breach of the requirements referred to in recital 3(i) or (ii), should in principle not distribute any dividend (10).

II.

This recommendation is addressed to significant supervised entities and significant supervised groups as defined in Article 2(16) and (22) of Regulation (EU) No 468/2014 (ECB/2014/17).

This recommendation is also addressed to the national competent and designated authorities with regard to less significant supervised entities and less significant supervised groups. The national competent and designated authorities are expected to apply this recommendation to such entities and groups, as deemed appropriate.

(1)  OJ L 287, 29.10.2013, p. 63.

(2)  OJ L 141, 14.5.2014, p. 1.

(3)  Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).

(4)  Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

(5)  This includes for example the buffers referred to in Articles 458, 459 and 500 of Regulation (EU) No 575/2013, and any buffer already adopted by national competent and designated authorities but with a later implementation date, to the extent they are applicable at the time of dividend distribution.

(6)  See footnote 5.

(7)  Credit institutions may have various legal forms, e.g. listed companies and non-joint stock companies such as mutuals, cooperatives or savings institutions. The term ‘dividend’ as used in this recommendation refers to any type of cash pay-out that is subject to the approval of the General Assembly.

(8)  In practice, this means that over a period of 4 years, credit institutions should in principle retain at least 25 % per year of the gap towards their fully loaded Common Equity Tier 1 capital ratio, their Tier 1 capital ratio and their total capital ratio, as referred to in recital 3(iii).

(9)  Including less significant supervised entities that were subject to the comprehensive assessment.

(10)  Credit institutions that consider that they are legally required to pay out dividends exceeding this amount should contact their joint supervisory team without delay. Less significant supervised entities that consider that they are legally required to pay out dividends exceeding this amount should contact their national competent authority without delay.