Britain’s greatest banks are to halt billions of kilos in dividends to shareholders to liberate extra cash for the economic system within the wake of the coronavirus disaster.
Barclays shareholders have been anticipated to be paid £1.03bn on Friday, Lloyds shareholders would have pocketed £1.58bn whereas RBS had anticipated to pay its shareholders a complete of £968m – £600m of which might have gone to the Treasury because of the government’s 62% stake in RBS.
Standard Chartered, NatWest, Santander, Nationwide and HSBC have additionally agreed to cancel dividends and share buybacks.
It follows a request from the Bank of England’s Prudential Regulation Authority (PRA) that they droop all plans to return cash to shareholders for the subsequent 9 months.
The PRA additionally stated it expects banks to not pay any money bonuses to their prime members of employees.
The PRA stated it “welcomes” the selections of all of the UK’s greatest banks to droop dividends and share buybacks till the tip of 2020, and cancel any excellent funds.
It added: “Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption, alongside the extraordinary measures being taken by the authorities.”
Following the 2008 monetary disaster the foundations governing banks have been tightened to ensure they retained extra capital to mitigate in opposition to extreme monetary shocks.
The PRA stated it believes Britain’s banks have sufficient capital to climate extreme recessions attributable to the coronavirus pandemic in each the UK and globally.
RBS chief government Alison Rose stated: “RBS has a robust capital and liquidity position and we are focused on ensuring we support our customers and help them to navigate the immediate and longer-term challenges they are facing as a result of COVID-19.”
Barclays chairman Nigel Higgins stated: “These are difficult decisions, not least in terms of the immediate impact they will have on shareholders.
“The financial institution has a powerful capital base, however we expect it’s proper and prudent, for the numerous companies and those who we help, to take these steps now, and be certain that Barclays is nicely positioned to proceed doing what we are able to to assist by way of this disaster.”