Britain’s banking regulator is preparing to pave the way for the resumption of dividend payments by Britain’s biggest lenders next year.
Sky News has learnt that the Prudential Regulation Authority (PRA), which sits within the Bank of England (BoE), could announce as early as Thursday evening a series of criteria on which it will assess banks’ ability to resume shareholder payouts alongside their full-year results in early 2021.
Sources said that a statement from the PRA was likely to be made after the market close on Thursday or, at the latest, before the open on Friday morning.
The announcement is expected to be greeted with relief by banks’ boards and shareholders following the ban on dividends announced when the COVID-19 pandemic hit in March.
It prevented Barclays, HSBC, Lloyds Banking Group, NatWest and Standard Chartered paying billions of pounds to their shareholders, accentuating the squeeze on income funds reliant on some of the biggest dividend-payers in corporate Britain.
Banks including HSBC said at their third-quarter results that they would be keen to pay conservative dividends for 2020 as impairment charges for bad loans appeared to be lower than expected.
Third-quarter results for all of the major UK banks were stronger than City forecasts, increasing the pressure on regulators to allow them to resume payments.
Precise details of the criteria the PRA will use to assess banks’ dividend proposals were unclear on Thursday.
Resuming shareholder payouts will also enable banks to take a more bullish approach to bonus payments than would otherwise have been the case, according to insiders.
The PRA did not respond to a request for comment, while none of the banks contacted by Sky News would comment.