Norway’s central banker and its finance minister have called on the country’s commercial banks to boost their own capital, to better meet financial turmoil. It remains unclear whether the call will be heeded, since the boss of Norway’s biggest bank, DNB, is non-committal about cutting dividends to retain funds.
Øystein Olsen, chief of Norway’s central bank (Norges Bank), asked the banks to take more responsibility themselves, by strengthening their capital. “Norwegian banks have delivered good results,” Olsen acknowledged. “But they are also affected by the rising turmoil in the international financial markets.”
Olsen’s remarks came in connection with the release this week of Norges Bank’s latest report on financial stability. The global financial turmoil and signs of lower growth make the Norway’s financial system more vulnerable now than earlier.
Despite their strong profits, much of which is paid out to shareholders in the form of dividends, the central bank thinks Norway’s banks can face short-term challenges because of their reliance on foreign finance sources. Finance Minister Sigbjørn Johnsen also said the banks “have an independent responsibility to be solid and to contribute to their having a good capital base.”
DNB chief executive Rune Bjerke, however, told NRK that he had no plans to recommend any dividend cuts that would preserve bank profits instead of paying them out to investors. He said the bank’s directors would review the situation at the end of the year, and then decide whether any changes were deemed necessary.
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