UK regulators consider allowing banks to restart paying dividends

Bank of England in discussions to let banks make shareholder payments next year

The Bank of England in London, Britain. REUTERS/Hannah McKay/File Photo

UK regulators are considering plans to allow banks to start paying dividends again next year, it has been reported.

The Bank of England and commercial banks are "bartering" a deal to let banks make shareholder payouts if their capital buffers are strong and they continue to extend credit to the real economy, The Times said on Monday.

Under a plan being considered, the regulator will end its dividend ban for as long as capital ratios do not drop below an agreed floor and net lending continues to rise, the report said.

The Bank of England did not immediately respond to a request for comment.

Late in July, it said it would assess whether to extend a suspension on payouts and share buybacks by banks beyond the end of the year because of the Covid-19 pandemic.

Under pressure from the central bank, Britain's lenders agreed in March to suspend payouts this year and preserve capital to help companies and households hit by Covid-19 lockdowns. Bonuses to senior staff were also scrapped.

The central bank said in July that its Prudential Regulation Authority would undertake in the fourth quarter an assessment of distribution plans at banks beyond the end of 2020.