Egypt’s central bank has told banks it was banning them from distributing profits to shareholders to protect capital amid the COVID-19 crisis.
Governor Tarek Amer said in its circular the central bank would “not permit banks to distribute cash from the general profit or retained earnings to shareholders to confront risks that may stem from the continuing COVID-19 crisis.”
Banks would be allowed to distribute employee bonuses and compensation to board members, he said in the circular sent out late on Monday.
Allen Sandeep of Naeem Brokerage said the move was not a surprise given the possible impact of the coronavirus pandemic on the ability of borrowers to repay loans.
Earlier in the pandemic, the central bank temporarily allowed borrowers to delay loan repayments. That program ended in September.
“Now that the moratorium has ended, the central bank certainly wants banks to shore up on balance sheet liquidity to be on the safe side,” Sandeep said.