Australia’s big banks have received a phone call from their regulator, which warned executives not to pay out too much in dividends.
According to The Australian Financial Review APRA called banks, following up on a letter which told them they should maintain adequate capital buffers.
Here’s a quote from a senior banking exec from the story — by Andrew Cornell and John Kehoe — which sums things up:
“The letter was a bit weaselly, let’s say cautiously phrased, but the phone follow-up made it clear we shouldn’t consider paying out more capital in dividends as the prudential charge was going to be more onerous than we thought.”
Investors will be following this news closely, as the big dividends the banks were expected to fork out were part of the reason their shares have been on such a tear.
The prudential regulator wants the them to keep cash on-hand as it is preparing to announce new capital requirements for banks.
There’s more here.