Some of UK’s biggest banks have agreed on cutting dividend payments and instead keeping the money for rainy days brought by the coronavirus crisis.
The Bank of England (BoE) embraced the decision to stop payments to shareholders and advised other banks to suspend bonuses to senior staff as well.
Banks including NatWest, Santander and Barclays had billions to pay to their shareholders due but have also come under pressure to keep the money instead.
The deputy governor of the BoE, Sam Woods contacted other bank executives to ask them to cut dividend payments and to confirm by Tuesday evening.
Prudential Regulation Authority, part of BoE, stated:
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.
Lloyds, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered were expected to pay around £15.6 which will not be retained until the end of the year which according to the BoE, “should help the banks support the economy through 2020”.
Chief executive for UK finance, Stephen Jones, said that banks were considering these actions even before it was suggested by the BoE.
Stephen Jones stated:
It’s very prudent for banks to be retaining capital rather than distributing it in the current environment.
It’s important that the banks are given as much firepower as they can to support the economy.
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