British Regulator Also Lifts Dividend Restrictions for Banks

Banks in the United Kingdom are allowed to return profits to their shareholders. In addition, the special corona restrictions on the level of the dividend will end immediately, the Bank of England (BoE) announced.

 

Like regulators in the eurozone and the United States, the British central bank more or less banned lenders from paying dividends. That way, banks would keep enough capital in cash to withstand extreme economic shocks during the corona pandemic.

The BoE’s supervisory department now concludes from interim results of a stress test for British banks that their buffers are strong enough. In addition, the economic outlook has improved as the UK, and other countries are well advanced in their vaccination campaigns to contain the coronavirus.

Recently, the US Federal Reserve already allowed banks to determine the dividend themselves and buy back their own shares.

The British central bank already relaxed its own rules somewhat in December. For example, banks were allowed to set dividends separately but not yet pay them. The regulator used an upper limit of 25 percent of the profit, but that ceiling is now also disappearing.

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