(Bloomberg) -- Shares in Singapore banks dropped after the country's regulator asked them to cap their 2020 dividends at 60% of last year's levels.
DBS Group Holdings Ltd. led Thursday's declines, with its shares dropping as much as 3.4%. Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. also fell.
The Monetary Authority of Singapore requested the curb on payouts because it wants to “ensure the banks' capital buffers remain ample in the face of significant uncertainties ahead, so they can sustain lending to the economy,” MAS Managing Director Ravi Menon said in a statement late Wednesday.
Other central banks including the Federal Reserve, the Bank of England and the European Central Bank have already announced curbs on their banks' dividend payments. A move by the MAS had been expected since Menon told a media briefing earlier this month that the MAS was in talks with the banks on their capital management.
The MAS said its stress tests have showed that the local banks remain resilient, and it made the request as a pre-emptive measure. It asked the Singapore banks to offer shareholders the option of receiving 2020 dividends in scrip in lieu of cash.
DBS is due to report its second-quarter results on Aug. 6, together with UOB. OCBC will report the following day.
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