All banks are expected to put their profits where they will most benefit the banking sector’s stability and security so it can face the likely negative consequences of the coronacrisis, according to a press release by the National Bank.
The central bank doesn’t expect that the country’s banks would lower their already high level of prudence in redistributing their revenue, the release reads.
According to the national monetary authority, it has been in intense communication with all the banks and their supervisory and management boards regarding their readiness to deal with any potentially bad outcomes caused by the COVID-19 pandemic.
In its capacity as the banking industry’s supervisory and regulatory body, the central bank has told them they need to ensure they can continue offering their services to their business and individual clients.
“The National Bank has indicated that it expects them, just as before, to show a high level of prudence in their decision making, including where they distribute their profits made last year,” the release reads.
“Banks should build on their capital and financial potential beyond the minimum statutory and supervisory requirements, i.e., create extra space.
“As they were told, all of the banks should not only be able to satisfy loan demands but also cover any potential credit losses caused by the COVID-19 damage to households and businesses.”
This high level of prudence in making profit-distribution decisions will contribute towards further successful maintenance of the banking sector’s security and stability.
This, in turn, will maintain the entire country’s financial stability, according to the National Bank.