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 email@example.com
(END) Dow Jones Newswires
December 11, 2020 02:13 ET (07:13 GMT)
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