By Christopher Bjork
MADRID--The Bank of Spain said Thursday it had told lenders to
limit the distribution of dividends, due to the difficult economic
environment and uncertainties about the outlook for Spain and the
euro zone.
In a press release the central bank said it had sent a letter to
the country's banking associations, recommending that banks in 2013
cap their cash dividends at a maximum of 25% of net profit.
The Bank of Spain also said that paying some dividends in new
shares, a strategy most Spanish banks adopted during the crisis of
recent years, should be in line with profit generation.
Dividend policy must "observe the principle of caution and aim
at all times to ensure an adequate level of capitalization," said
the banking regulator.
"This requirement is particularly necessary in a situation like
that at present, marked by persisting uncertainty about economic
performance in both Spain and the euro area as a whole, as well as
in other countries in which Spanish firms operate," the central
bank added.
Write to Christopher Bjork at christopher.bjork@wsj.com