Seven of the largest systemically important UK deposit-takers to suspend dividends and share buybacks and to cancel payments of any outstanding 2019 dividends.
By Rob Moulton and Anna Lewis-Martinez
On 31 March 2020, the PRA published a statement on deposit takers’ approach to dividend payments, share buybacks, and cash bonuses in response to COVID-19. The PRA said that it “welcomes the decisions by the boards of the large UK banks to suspend dividends and buybacks on ordinary shares until the end of 2020, and to cancel payments of any outstanding 2019 dividends”.
The PRA 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 in the coming months.
The PRA states that, although these decisions will result in shareholders not receiving dividends, they are a sensible precautionary step in the current climate.
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