Announcement by the Central Bank of Cyprus: dividend distributions and share buy-backs

Following the recommendation of the European Central Bank to the Significant Credit Institutions and the National Competent Authorities dated 27 March 2020, in respect to dividend distributions and share buy-backs during the COVID-19 pandemic, the Central Bank of Cyprus (CBC) issued a new circular on 6 April 2020 addressing the Less Significant Credit Institutions (LSCIs) who are operating in the Republic of Cyprus.

The CBC recommends all LSCIs, until 1 October 2020, refrain from:

• any dividend distribution
• issuance of irrevocable commitments to pay out dividends for the financial years 2019 and 2020
• any own share buy-backs aimed at remunerating shareholders

CBC emphasises that LSCIs which are not in a position to comply with the above recommendations should promptly provide the reasons for non-compliance to CBC.

For further analysis on the effects of the COVID-19 pandemic on the banking sector and credit acquiring companies can be found in our article here.

The announcement of the CBC dated 6 April 2020 can be found here (only available in Greek).

The recommendation of the European Central Bank dated 27 March 2020 on dividend distribution during the COVID-19 pandemic can be found here.

If you have any questions, please contact George Apostolou or your usual Harneys contact.