LONDON - UK banks have agreed to cancel almost £8 billion worth of dividends as a response to the economic impact of the coronavirus (Covid-19) pandemic.
In addition, the Bank of England has also instructed banks to cancel cash bonuses for executives and prioritise preparations ahead of a possible recession.
As reported by The Guardian, a number of major UK banks including Barclays plc, HSBC Holdings plc, Lloyds Bank plc, Royal Bank of Scotland Group plc, and Standard Chartered PLC have confirmed that dividend payments and share buybacks for 2019 and throughout 2020 will be suspended after discussions with the Bank of England.
“The [Bank of England’s] PRA (Prudential Regulation Authority) also expects banks not to pay any cash bonuses to senior staff, including all material risk takers, and is confident that bank boards are already considering and will take any appropriate further actions with regard to the accrual, payment and vesting of variable remuneration over coming months,” said Bank of England Deputy Governor and PRA Head Sam Woods in a letter to bank CEOs.
In an official statement, Barclays said that the decision to cancel the 2019 dividend payout, which was due to take place on Friday (2/4), aims to “preserve additional capital for use in serving Barclays’ customers and clients”.
“The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now, and ensure that Barclays is well placed to continue doing what we can to help through this crisis,” said Barclays Chairman Nigel Higgins. (MS)