| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Bond Market News

BoE Follows Fed, ECB in Removing Dividend and Buyback Restrictions

July 14, 2021

The Bank of England (BoE) removed bank dividends and share buyback restrictions that were introduced during the pandemic. Stress tests and lower than expected loan losses were cited as the reason behind the removal. “My view remains the case that [the ban] was an appropriate step to take with the crisis we faced…Bank capital positions today are as high as they have ever been, partly due to government support shielding the system from pain it otherwise would have taken. Headwinds will emerge but will be manageable,” said BoE governor Andrew Bailey.

The BoE follows the most recent movements of the US Federal Reserve and the ECB announcing plans to remove such restrictions. Shares rose after the announcement, including those of Barclays, HSBC, Lloyds, NatWest and Standard Chartered, with the FTSE 350 banking index rising to 1.2%. The BoE pushed banks to suspend £7.5bn ($10.4bn) of dividends to preserve lending capacity and absorb potential losses in April 2020 to address the pandemic’s impact on banks. The BoE relaxed such restrictions in December 2020, whilst maintaining a limit on pay-outs to 25% of quarterly profit and only permitting 2021 dividends to be accrued.

For the full story, click here

Related Posts:
Registered office: 8 Marina View, #43-062 Asia Square Tower 1, Singapore 018960
© Copyright BondbloX 2024, All Rights Reserved.