The Bank of England has removed restrictions on bank dividend payouts introduced in the wake of the Covid-19 pandemic as the sector remains “well-capitalised” and “resilient”.
In March 2020, the Bank told lenders such as HSBC, Barclays and Lloyds to suspend dividends and share buybacks until the end of 2020. It also recommended the scrapping of bonuses for senior staff.
However, the BoE said on Tuesday that its stress tests had shown the sector was able to weather the rest of the pandemic and cope with payouts.
“Taking into account the interim results of the 2021 solvency stress test, the Prudential Regulation Authority judges that banks remain well capitalised and resilient to outcomes for the economy that are much more severe than the Monetary Policy Committee’s central forecast, and that they should therefore be able to support households and businesses through the economic recovery,” the Bank said.
“In addition, although considerable uncertainty remains, the level of uncertainty has decreased significantly since December 2020, in particular due to the progress of vaccination programmes.”