Bank of England relaxes COVID curbs on bank dividends and bonuses
- The BoE told Britain's seven biggest lenders in March to suspend dividends and share buy-backs until the end of 2020, and to cancel payments of any outstanding 2019 dividends.
LONDON: Britain's banks can resume paying some dividends and bonuses as they appear well capitalised and resilient to any further fallout from the coronavirus pandemic, the Bank of England said on Thursday
The BoE told Britain's seven biggest lenders in March to suspend dividends and share buy-backs until the end of 2020, and to cancel payments of any outstanding 2019 dividends.
It also expected banks and building societies to scrap cash bonuses for senior staff to help maintain capital buffers and continue lending to companies and households going into economic lockdown to fight the pandemic.
On Thursday the BoE said the time had come to relax this advice for lenders including HSBC, Barclays, Lloyds and NatWest.
"The Prudential Regulation Authority judges that an extension of the exceptional and precautionary action taken in March is not necessary and that there is scope for banks to recommence some distributions should their boards choose to do so," the BoE said in a statement.
Any distributions for this year should be "prudent" and fall within temporary "guardrails" published by the BoE on Thursday.
"In the meantime, for 2021 dividends the PRA is content for appropriately prudent dividends to be accrued but not paid out and aims to provide a further update ahead of the 2021 half-year results of large UK banks," it said.
Under the guardrail, dividends should not exceed 0.2pc of a bank's risk-weighted assets at the end of 2020, or 25pc of cumulative profits over 2019 and 2020, after deducting prior shareholder distributions over that period.
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