He directed that a request be submitted to him before announcing it from the banks’ boards of directors

The Central Bank: 3 conditions for approving the distribution of profits to shareholders

The Central Bank follows up and approves the financial results of banks before announcing them.

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The Central Bank has set three basic conditions for approval of banks distributing dividends to shareholders or carrying them over for another period.

This came in a circular sent by the Central Bank to all national banks and branches of foreign banks operating in the country, and Emirates Today obtained a copy of it.

The majority of national banks listed on the financial markets in the Emirates annually provide profits to their shareholders, thanks to the strong profits they achieve, as the value of these distributions exceeded, last year, 17 billion dirhams, with the support of strict procedures and regulations imposed by the Central Bank, to ensure the safety of the banking sector and maintain Funds of depositors and shareholders.

According to the regulations in force for years, the Central Bank follows up, annually, the financial results of banks, and approves them before announcing them, as it is the competent authority to monitor and supervise the banking sector and the insurance sector in the country.

And the Central Bank indicated, in its circular, that there are procedures that banks must take to agree to announce or carry forward dividends.

In the details of the circular, the “Central” said, “With regard to dividend distributions or their carry-over, please note that the Central Bank will review all requests received in this regard and respond to them.”

He added, “Banks must submit a request to the Central Bank to obtain approval in principle to publish or announce any proposed dividends or carry forward profits, before their boards of directors agree to publish or announce.”

And he indicated, “In order to decide whether the size of the dividends or carry-over of profits is appropriate, the Central Bank will evaluate the request according to three criteria: the first, the capital adequacy ratio, after the proposed dividends or carry-over, must be higher than the minimum requirements.

Secondly, the bank must comply with the requirements of the Central Bank regarding provisions, whether specific or general.

Thirdly, and finally, that the bank achieves 50% or higher in the evaluation of the banks’ dashboard, knowing that the result of the stress test will be taken into account within the results of the banks’ dashboard.

And the Central Bank stressed, in its circular, that “the above must be taken into account when submitting a request to announce distributions or carry forward profits,” noting that “when the three criteria are met, the approval of the Central Bank can be issued quickly within five days.” a job".

He asked the banks to communicate with him regarding the aforementioned procedures, in the event of any inquiries, to ensure that these standards are understood and taken into account.

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