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Central Bank seeks dividend data from lenders

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The Central Bank (BC) asked lenders to report in advance dividend plans. Monetary officials want to be aware if there are plans to make distributions beyond the minimum percentage established in the Corporate Law of Brazil and company bylaw, Valor has learned.

The closer scrutiny appears amid a broader - and worldwide - discussion on dividends this year due to the economic impacts of the coronavirus pandemic. Specifically, for banks, there are regulatory concerns about keeping enough liquidity to protect the entire system.

The European Banking Authority (EBA) and the Bank of England (BoE) asked banks in their jurisdictions not to distribute dividends or repurchase sales to protect a robust capital position. Bank for International Settlements (BIS) Director-General Agustín Carstens also called for freezing bank dividends, among other measures. The BIS is known as the "central bank of central banks."

The matter becomes particularly relevant because banks have become large dividend payers in Brazil. The four large publicly listed banks - Itaú Unibanco, Bradesco, Santander and Banco do Brasil - distributed R$52.2 billion last year. That's 67% of the net profit booked by all of them in 2019 or 60% of adjusted earnings.

Asked by Valor whether it had issued banks any guidance on dividends this year, the BC's press officials said the institution would not comment.

So far, that has been no indication in this sense, according to a source connected to a large bank. There was only a request to state in advance to the authority any decision to distribute dividends beyond the legal or regulatory minimum.

Brazilian corporate law sets a 25% floor for dividends. But most bylaws of listed companies include more generous distribution policies.

Bradesco bylaws include 30% of the net profit going to shareholders, for instance. Other banks, while stating the legal minimum on...

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