Macroprudential restriction on leasing companies' profit distribution

In light of the impact of the Covid-19 epidemic on the real economy and the financial system, Bank of Slovenia is recommending a temporary restriction on the distribution of distributable profit and retained earnings generated in 2019 and 2020 by leasing companies, with the aim of increasing the resilience of the financial system to financial shocks, maintaining financial stability, preventing disruptions to the financial system in Slovenia and reducing the build-up of systemic risks.

Pursuant to the first paragraph of Article 31 of the Bank of Slovenia Act (Official Gazette of the Republic of Slovenia, Nos 72/06 [official consolidated version], 59/11 and 55/17), and Articles 4 and 17 and point 16 of the first paragraph of Article 19 of the Macroprudential Supervision of the Financial System Act (Official Gazette of the Republic of Slovenia, No 100/13), and Recommendation OFS/2020/1 of 6 April 2020, the Governing Board of the Bank of Slovenia has approved a macroprudential recommendation on the restriction of profit distribution by leasing companies for earnings generated in 2019 and 2020.

The recommendation relates to leasing companies that generated at least EUR 1 million in new leasing business in 2019, where finance leasing accounted for at least 50% of the total new business, and whose total assets exceed EUR 10 million. It includes a temporary restriction on profit distributions to shareholders/members, the distribution of paid-up capital surplus related to capital instruments, retained earnings, accumulated other comprehensive income, other reserves and provisions, and the use of earnings for other purposes, e.g. bonuses for members of the senior management.