The Bank of Jamaica is once again allowing financial holding companies and deposit taking institutions to declare and distribute dividends to large shareholders.
The Central Bank announced the decision in a media release this afternoon, nearly a year after the initial suspension.
However, despite the announcement it’s still calling for prudence on the part of companies as Jamaica’s medium to long term economic outlook remains uncertain.
Wayne Walker has that story.
The Bank of Jamaica says the decision comes into immediate effect.
It was arrived at after meeting with representatives from deposit taking institutions, DTIs and Financial Holding Companies, FHCs, last Thursday.
It means the boards of FHCs and DTIs can choose to resume the distributions of dividends to shareholders owning more than one per cent of issued shares which had been declared for their 2019 and 2020 financial years.
Likewise, dividends for 2021 can be declared and distributed to shareholders owning more than one per cent of issued shares.
This follows a decision in May of 2020 to suspend same, due to concerns about capital liquidity at the height of the COVID-19 economic fallout.
The same month, the BOJ limited dividend payouts to small shareholders only, defined as those who owned total issued shares of less than one per cent
However, despite the relaxing of the suspension, the BOJ still warns of significant uncertainties, urging financial institutions to remain prudent in their decisions to declare and distribute dividends.
It says the agreement to resume dividend declaration and distribution reflects the fact the Central Bank believes that the worst of the impact of the pandemic on the economy is behind the nation.
In this context, the Bank of Jamaica says it’s of the view that the financial system has adequate capacity to absorb unexpected losses that could arise as the crisis unwinds.