Britain’s biggest banks are to halt billions of pounds in dividends to shareholders to free up more cash for the economy in the wake of the coronavirus crisis.
Barclays shareholders were expected to be paid £1.03bn on Friday, Lloyds shareholders would have pocketed £1.58bn while RBS had expected to pay its shareholders a total of £968m – £600m of which would have gone to the Treasury because of the government’s 62% stake in RBS.
Standard Chartered, NatWest, Santander, Nationwide and HSBC have also agreed to cancel dividends and share buybacks.
It follows a request from the Bank of England’s Prudential Regulation Authority (PRA) that they suspend all plans to return money to shareholders for the next nine months.
The PRA also said it expects banks not to pay any cash bonuses to their top members of staff.
The PRA said it welcomes the decisions of all the UK’s biggest banks to suspend dividends and share buybacks until the end of 2020, and cancel any outstanding payments.
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 financial crisis the rules governing banks were tightened to make sure they retained more capital to mitigate against severe financial shocks.
The PRA said it believes Britain’s banks have enough capital to weather severe recessions caused by the coronavirus pandemic in both the UK and globally.
RBS chief executive Alison Rose said: 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 said: These are difficult decisions, not least in terms of the immediate impact they will have on shareholders.
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.
(c) Sky News 2020: Coronavirus: Big banks stop shareholder dividends until the end of 2020