The Bank of England leaves pandemic-era limits on bank dividends by Reuters

By Huw Jones and David Milliken

LONDON (Reuters) – Bank of England pushes limits on HSBC’s dividend pandemic Barclays (LON 🙂 and other major lenders with immediate effect said on Tuesday that its stress test showed that the sector was capitalized to deal with the downturn COVID had in the economy.

The Governor of the Bank of England, Andrew Bailey, said the rapid expansion of the UK vaccination program has led to an improvement in the economic outlook in recent months.

“But there are still risks to the recovery. Households and businesses will need continued support from the financial system as the economy recovers and government support measures are dismantled in the coming months,” Bailey said.

Shares of British lenders rose in early London trading as HSBC and NatWest rose 2%. Barclays, Standard Chartered (OTC 🙂 and Lloyds (LON:) also rose more than 1%, with gains of 0.2%. HSBC shares traded in Hong Kong also gained new gains after the gain, up 4%.

When Britain introduced the first blockade against COVID-19 in March last year, the BoE called on MPs to suspend dividends and share purchases until the end of 2020. He also recommended the cancellation of bonuses for senior staff.

The goal was to ensure that banks had enough capital to sustain lending to companies that had experienced a severe economic downturn of 300 years as the pandemic unfolded.

As the BoE calmed down as the fall of the pandemic that calmed down last December became clearer, payments could be recovered within the “railings”.

The BoE’s Financial Policy Committee (FPC) said on Tuesday that “there is no extra need for shareholder distributions” that they are no longer necessary after examining the year-on-year stress on banks ’financial health.

However, the regulator is still expected to observe improvements for senior bankers to remain cautious.

The U.S. Federal Reserve said in June that large banks would not have pandemic-era restrictions on how much they could spend to buy stock and pay dividends.

Ms Enria, head of the European Central Bank, said this month that the ECB intends to restart payments to shareholders from eurozone lenders from October, except for the new economic downturn.

CCYB OPERATED

The Commission also maintained the countercyclical capital cycle (CCyB) of major banks at zero percent until at least December, which means that the subsequent increase would not take effect until the end of 2022.

Buffer wants to go up and down during the economic cycle, limiting loans at the top of a boom and pushing for a downturn.

“The FPC expects banks to use all elements of capital amortization as needed to help them through economic recovery,” the BoE said.

However, the central bank issued a cautionary note on asset prices every two years in its Financial Stability Report.

“There is evidence of increased risks in the financial markets and some asset prices appear to be stretched,” he said.

He said the risks to cryptocurrencies – the BoE has long been a concern – were piling up among small investors, but that they were signs of involvement from larger institutions, which could lead to spills in the wider economy.

Bailey said he did not want to release the regulation because Britain wants to remain one of the world’s major financial centers after London’s Brexit.

“The UK’s reputation for strong standards, independent regulation and financial stability has been and will continue to be an integral part of its attractiveness to internationally active financial institutions,” Rishi Suna wrote to the finance minister in his regular letter.