The Russian government has instructed the Ministry of Finance and Rosimushchestvo not to provide for the payment of dividends for 2021 on ordinary and preferred shares of both types when preparing directives for participation in the supervisory board of VTB (MCX:VTBR). The corresponding order was signed by Russian Prime Minister Mikhail Mishustin on April 23.

The decision not to pay dividends was taken “in order to ensure sustainable lending to corporate clients and financial organizations of the Russian Federation”.

Before being placed on the sanctions lists of Western countries, the bank planned to allocate 50% of its net profit for 2021, which amounted to 327.4 billion rubles, to dividends.

Earlier, the forthcoming proposals on dividends of state banks were voiced by the head of the Ministry of Finance Anton Siluanov. “We as the Ministry of Finance will propose to refuse to pay dividends by banks for 2021, despite the fact that last year was probably the most successful in recent times,” – said the Minister.

The Central Bank also formulated recommendations to banks: the regulator recommended banks and non-credit financial organizations to refuse to pay dividends in 2022 given the difficult economic situation.

VTB head Andrei Kostin hopes that in the future the situation will change and the bank will be able to return to paying dividends to shareholders.

“Dividends are determined not by us, but by the annual meeting, where the government has a controlling stake. There is today the opinion of both the chairman of the Central Bank and the Minister of Finance, they have expressed publicly that banks should not pay dividends because they need capitalization. Under these circumstances, I think my opinion may no longer count. I understand the concern, I feel responsible to the shareholders, let’s hope that in the future the situation will change and we will be able to pay dividends,” he said last week.