All five of the UK’s top banks have suspended dividend payments after a request from the Bank of England to preserve cash during the coronavirus crisis.
Lloyds Banking Group PLC (LON:LLOY) Barclays PLC (LON:BARC), HSBC PLC (LON:HSBA), Royal Bank of Scotland PLC (LON:RBS) and Standard Chartered PLC (LON:STAN) had been expected to pay out more than £8bn in the next two months.
Sam Woods, the Bank’s deputy governor, however, wrote to them and Spanish group Santander asking for dividend payments to be suspended.
The Bank also asked for bonuses paid to staff to be curbed.
It added that it did not expect the cash would be needed in of fears that a swathe of business will go under due to the impact of the coronavirus restrictions.
In a statement, its regulation arm the Prudential Regulation Authority said the move was a sensible precautionary step ’given the unique role the banks need to play in supporting the wider economy through a period of economic disruption’.
All five banks put out statements this confirming their compliance with the request.
Barclays, which was expected to pay a £1bn/6p dividend on Friday, said it had been a difficult decision to make but it was right and prudent and means it can support businesses during the crisis.
Lloyds, which had already come under fire for demanding business owners use their properties as collateral for emergency loans – a policy it has now stopped – said it would halt all quarterly and interim payments until the end of 2020. Last year, Lloyds paid out around £2.3bn in total.
RBS has cancelled its final dividend of 3p and special dividend of 5p, which with dividend-linked contributions would have cost it £1.33bn, of which around two-thirds would have gone to the exchequer which still owns 62%.
Alison Rose, chief executive, said it would review the situation and look to resume payments in due course.
HSBC is the largest payer and has cut its fourth quarterly payment of 0.21c, which would have cost it £3.4bn.
The Asia-focused bank added that trading in the first quarter had held up well but going forward it expects reported revenues to be impacted in insurance manufacturing and credit and funding valuation adjustments in Global Banking & Markets, alongside higher bad debts.