Finnish FSA to follow up on Ålandsbanken's dividend defiance – Bloomberg

Finland's Financial Supervisory Authority will "engage" with banks that defy the ECB's guidance on shareholder returns following Ålandsbanken Abp's decision to pay nearly 4x the recommended dividend cap, Jyri Helenius, head of banking supervision at the FSA, told Bloomberg News.

Ålandsbanken's board on Jan. 1 approved a dividend payout of €1 per share in respect of its 2019 earnings, a decision that Helenius said was not approved by the FSA, according to the Jan. 3 report. Although Helenius said the bank's decision was unfortunate, he acknowledged that the ECB's recommendation is not legally binding.

In December 2020, the ECB lifted its previous recommendation to suspend capital distributions while urging banks to keep dividends and share buybacks below 15% of their combined 2019-2020 profits and not higher than 20 basis points of their common equity Tier 1 ratios, whichever is lower, until the end of September 2021.

A total dividend of €1 per share is equivalent to 59% of Ålandsbanken's earnings for 2019, the report noted.

Ålandsbanken, which is not under the ECB's direct supervision due to its relatively small size, said the recommendations "do not distinguish between the strongest and the weakest bank in Europe" and that its board has carefully weighed the risks amid the pandemic.