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Screenshot of a breaking news alert e-mail from Q2 2017
Polish financial supervision authority commission Komisja Nadzoru Finansowego (KNF) issued directives yesterday to the country’s brokerage houses regarding dividend policy.
The KNF recommended that the dividend in 2018 should only be paid by brokerage houses which meet the following criteria in aggregate:
A. dividend in the amount not higher than 75% of the net profit for 2017:
(i). for entities subject to capital adequacy requirements in accordance with Regulation 575/2013 as at 31 December 2017:
- ratio common equity Tier I capital was at least 6%;
- ratio Tier I capital was at least 9%;
- the total capital ratio was at least 14%;
(ii). for entities not subject to capital adequacy requirements in accordance with Regulation 575/2013 as at 31 December 2017 ratio being the share of the amount of equity in the total assets is at least 50%;
(iii). the supervisory assessment granted in the BION process conducted in 2017 is 1 or 2;
(iv). in 2017, the entity did not violate the regulations regarding capital requirements contained in Regulation No. 575/2013 and the Act on Trading in Financial Instruments (Public Journal of Laws of 2017 item 1768 as amended) and provision regarding large exposure limits.
B. dividend in the amount not higher than 100% of the net profit for 2017:
(i). fulfills all the criteria listed in the letter A;
(ii). for entities subject to capital adequacy requirements in accordance with Regulation 575/2013 the criteria referred to in point A(i) are fulfilled at the end of each quarter of 2017;
(iii). for entities not subject to capital adequacy requirements in accordance with Regulation 575/2013 the criteria referred to in point A(ii) are fulfilled at the end of each quarter of 2017.
In addition, the KNF indicated that brokerage houses should take into account additional capital needs when deciding on the amount of dividend in the perspective of twelve months from the moment of approval of the financial statements for 2017 and pointed out that brokerage houses obliged under applicable law to maintain additional capital requirements increase ratios referred to in A(i) by the amount additional capital requirements.
The one main Retail FX broker affected by the KNF’s directives, XTB.com via Warsaw-based parent company X Trade Brokers Dom Maklerski SA (WSE:XTB), indicated that it was granted the supervisory rating 3 [2.97], and therefore in the KNF’s view, XTB does not meet the criteria for dividend payment for 2017. In any event, as we reported previously, XTB already indicated that it planned to keep its 1H-2017 profits of zl 24.5 million as Reserve Capital.
We would note that the KNF dividend directives are not binding legal acts, but rather of instructional value, however they can constitute a significant recommendation for statutory bodies of supervised entities.