The Reserve Bank prohibits the payment by NZ-registered banks of distributions to their shareholders
Heartland Group Holdings, the parent company of Heartland Bank, is still considering whether it would pay a final dividend to its shareholders.
Heartland Group Holdings confirmed that it would announce its decision on the final dividend issue along with its delayed June financial results on September 17 as it continues to weigh its options.
“The prohibition does not prevent Heartland from paying dividends to its own shareholders, and Heartland continues to consider whether it will pay any final FY20 dividend. Heartland's decision will be announced at the time of Heartland’s FY20 results announcement,” Heartland Group Holdings said, as reported by Interest.co.nz.
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On April 02, the Reserve Bank of New Zealand (RBNZ) amended the standard conditions of registration for banks to prohibit payment by all New Zealand banks of distributions to their shareholders.
Commenting on the central bank's decision, Heartland Group Holdings said: “The distribution [dividend] restriction applies to Heartland Bank, and not to Heartland. Heartland's Board will consider the impact (if any) of the restriction on its own, separate, dividend policy, and when considering the dividends that it may wish to declare (if any) to its shareholders in due course.”
Other locally incorporated New Zealand banks do not plan to pay a dividend so far due to the restrictions. However, the RBNZ clarified that Heartland Group Holdings is not restricted from paying a dividend.
“The dividend restriction policy applies to banks regulated by the Reserve Bank. I.E. Heartland Bank is restricted from paying a dividend, but the policy does not restrict its parent company. In this instance, Heartland Group approached us prior to issuing its market update, and we provided confirmation of this,” a Reserve Bank spokesman told Interest.co.nz.
“The Reserve Bank has not changed its policy on the withholding of payment of dividends on ordinary shares, or the redemption of non-common equity tier one capital instruments, issued in April in response to the economic uncertainty caused by the COVID-19 pandemic. We will be providing an update on our policy on this by the time of the November Financial Stability Report.”
