The UK’s largest banks have agreed to scrap dividend payments to shareholders and bonuses to senior staff as part of their response to the coronavirus outbreak.
The deputy governor of the Bank of England, Sam Woods, wrote to banking chief executives asking them to suspend dividend payments. He asked them to confirm their decision by Tuesday evening.
The banks – HSBC, Santander, Standard Chartered, Barclays, RBS, Lloyds and building society Nationwide – had been due to pay out to shareholders, but will instead hold onto the cash.
Woods also said he expects the banks not to pay any cash bonuses to senior staff.
The Prudential Regulation Authority, part of the Bank of England, said in a statement: “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.”
It added that it does not expect the capital preserved to be needed by the banks in order to maintain adequate capital positions, but the extra headroom “should help the banks support the economy through 2020”, it said.