Call to protect system
Pressure mounts on banks to scrap £7.5bn dividends
The Bank of England has been asked to act
The Bank of England is under pressure to order Britain’s banks not pay out £7.5 billion of dividends to protect the financial system.
Banks are due to return cash to shareholders over the course of the next two months despite a large number of companies cancelling or deferring their payouts to preserve cash.
Barclays is scheduled to hand out £1 billion on 3 April. HSBC will follow with a $4.2bn payout due on 14 April. Royal Bank of Scotland shareholders are in line for £968m on 14 May and Lloyds Banking Group will pay £1.58bn on 27 May.
Sir John Vickers, former chairman of the Independent Commission on Banking, believes these dividends should be blocked by the Bank of England.
“For the sake of the health of the financial system, dividend payouts by banks should now be totally out of the question. I am surprised the Bank has not yet put a stop to them. It should do so at once,” Vickers told The Times.
“As well as further weakening banks’ ability to bear the losses that they face [from the coronavirus-related downturn], dividend payouts would dilute the Bank of England’s measures to support lending.