MAS urges finance companies to moderate dividends for the financial year

The Monetary Authority of Singapore (MAS) has called for finance companies incorporated in Singapore to cap their total dividends per share for the financial year 2020 at at 60% of 2019’s level.

MAS also encouraged finance companies to offer shareholders the option of receiving the dividends to be paid for FY2020 in scrip in lieu of cash.

The move is a part of MAS’ strategy to ensure market remains strong in the face of the pandemic.

“Capital positions of the finance companies remain strong and the dividend restriction is a pre-emptive measure to bolster the finance companies’ ability to continue to support the credit needs of businesses and consumers in the current business environment,” the regulator said in a statement.

“MAS had similarly called on locally-incorporated banks headquartered in Singapore to moderate their dividends last week. The dividend restriction for finance companies balances the objective of capital conservation to sustain lending with the interests of shareholders who may rely on this income.”

This is not the first initiative launched by the regulator to protect the market. For instance in April MAS revealed a $87m support package to strengthen financial services and FinTech sectors during the coronavirus crisis. The funds would be used to position financial institutions and FinTechs for strong growth once the threat of the virus recedes and economic activity returns to normal.

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