Banks have been ordered to suspend dividends


Banks have been ordered to suspend dividends

BoT directive coincides with decision to cut credit card interest rates to ease financial hardship

The Bank of Thailand has asked commercial banks to focus on managing capital at a time when millions are feeling the pain of the Covid-19 economic shock. (Photo from Bangkok Post)

Commercial banks have been ordered to freeze interim dividend payments to shareholders and suspend share buybacks to preserve capital in an economy devastated by the coronavirus pandemic.

The Bank of Thailand’s move coincides with a directive to reduce interest rates on credit cards, personal loans and other forms of credit to help millions of people facing financial difficulties.

Bank of Thailand Governor Veerathai Santiprabhob said that since Covid-19 had had widespread effects on businesses and the general public, the central bank had ordered commercial banks to develop management plans for the three coming years.

While those plans are in the works, he said, payments due in the middle of this year and share buybacks are expected to be suspended.

Meanwhile, the central bank and nine financial institutions have agreed to “phase 2” of Covid-19 relief measures, including interest rate cuts, said Ronadol Numnonda, vice governor in charge of the stability of financial institutions. Repayment deadlines and minimum amounts would also be taken into account, he added.

Debt relief measures announced on Friday include interest rate cuts of 2 to 4 percentage points for credit cards and personal loans.

The maximum interest rate for credit cards will drop to 16% per annum from 18%, while rates for personal loans will be reduced to 24-25% from 28%, effective August 1, the BoT said. .

The new rates for revolving loans and installment loans will be 25%, and auto title loans will have a maximum rate of 24%.

The central bank also said lines of credit could be lifted for credit cards and personal loans for some good debtors from August through December.


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