EU REGULATORS WARN OF POSSIBLE ‘MARKET CORRECTION’

EU financial regulators have called for “conservative policies on dividends” as it warned of possible market volatility due to uncertainty over the pandemic and vaccine supplies. A joint assessment report from the three main European supervisory authorities (EIOPA, EBA and ESMA) warned of possible “further market corrections,” saying that Covid-19 uncertainties weigh heavily on the prospects of a short-term economic recovery. In light of these risks and uncertainties, the bodies called for firms and regulators to prepare for an expected deterioration of asset quality. Insurers, in particular, should also prepare for changes in interest rates and re-emerging inflationary pressures, the report said. The report also urged firms to follow conservative policies on dividends and share buy-backs. “Any distributions should not exceed thresholds of prudency,” it said.