Regulator Allows UK Banks to Restart Dividend Payouts, Share Buybacks

By Adria Calatayud

The U.K.'s Prudential Regulation Authority said late Thursday that there is scope for U.K. banks to restart some capital distributions, after lenders suspended dividends and buybacks earlier this year due to the coronavirus pandemic.

The regulator said it believes an extension of the exceptional action taken in March isn't necessary, allowing boards of large U.K. banks to restart dividend payouts and resume share buybacks if they choose to do so.

However, the PRA asked banks' boards to operate within a framework of temporary guardrails. Under the new framework set out by the regulator, distributions by large U.K. banks for 2020 shouldn't exceed 20 basis points of risk-weighted assets as of the end of 2020 or 25% of cumulative eight-quarter profits covering 2019 and 2020 after deducting prior shareholder distributions over that period, it said.

The PRA said any distributions should be prudent, reflecting high uncertainty and the need for banks to continue to support households and businesses through the continuing economic disruption. It also said banks are expected to exercise a high degree of caution and prudence in determining the size of any cash bonuses granted to senior staff.

The regulator said it plans to go back to its standard approach to capital-setting and shareholder distributions through 2021.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

December 11, 2020 02:13 ET (07:13 GMT)

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