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(Sharecast News) - British banks should use the ?7.5bn saved in scrapped dividends and bonuses to write off debt repayments for customers affected by the coronavirus, investment platform AJ Bell said on Wednesday.
The industry regulator on Tuesday pressured the banks to cancel dividends and stop any buyback plans, while the Bank of England (BoE) ordered executive bonuses to be shelved in a push to make sure they had enough cash to lend to struggling businesses and households.
In coordinated statements lenders including Barclays, HSBC, Lloyds, Royal Bank of Scotland and Standard Chartered agreed to stop payouts for 2019 and this year. Banks were also warned last week to keep the financial taps open and make sure there was no barrier to lending.
AJ Bell chief investment officer Kevin Doran said the money would "go a long way to providing debt relief for the individuals and businesses that will be unable to make interest payments over the next three to six months".
"Now would be the ideal time to repay the British public for the bailout the banks received during the (2008) financial crisis by writing of debt repayments for a period of time for those most affected by the Covid-19 crisis," Doran said.
UK businesses are struggling after the government ordered a lockdown earlier this month for all but essential shops such as supermarkets and pharmacists.
Finance Minister Rishi Sunak last month launched a ?350bn stimulus and package of loans and grants along with billions in wage support in an attempt to stave off company collapses, mass unemployment and a deep recession.
"The gross revenue generated by the UK banking sector from interest paid on debt by consumers and companies is around ?28bn per quarter on a total loan balance of around ?1.9trln," Doran said.
He argued that even if the entire ?56bn of interest income for six months was written off it would represent a provision against the loan book of just 3%.
"The alternative of seeing some businesses collapse would surely entail far greater losses on the loan books," he said.
Insurers, which face billions in claims, were also put on notice by the BoE over any intentions to pay dividends or bonuses to senior staff.
"We expect them to pay close attention to the need to protect policyholders and maintain safety and soundness, and in so doing to ensure that their firm can play its full part in supporting the real economy throughout the economic disruption arising from Covid-19," the BoE said a separate letter.
4 Jan 2024 14:01
UK dividends calendar - next 7 days
| Friday 5 January | |
| British Land Co PLC | dividend payment date |
| Hill & Smith PLC | dividend payment date |
| JD Sports Fashion PLC | dividend payment date |
| JPMorgan Global Growth & Income PLC | dividend payment date |
| Liontrust Asset Management PLC | dividend payment date |
| Lok'n Store Group PLC | dividend payment date |
| Real Estate Credit Investments Ltd | dividend payment date |
| RS Group PLC | dividend payment date |
| Tate & Lyle PLC | dividend payment date |
| Monday 8 January | |
| abrdn Equity Income Trust PLC | dividend payment date |
| Intermediate Capital Group PLC | dividend payment date |
| Tuesday 9 January | |
| no events scheduled | |
| Wednesday 10 January | |
| Assura PLC | dividend payment date |
| Bellway PLC | dividend payment date |
| Fidelity Special Values PLC | dividend payment date |
| LXi REIT PLC | dividend payment date |
| Severn Trent PLC | dividend payment date |
| Volex PLC | dividend payment date |
| Vp PLC | dividend payment date |
| Thursday 11 January | |
| AJ Bell PLC | ex-dividend payment date |
| Ashtead Group PLC | ex-dividend payment date |
| BlackRock Latin American Investment Trust PLC | ex-dividend payment date |
| CMC Markets PLC | dividend payment date |
| dotdigital Group PLC | ex-dividend payment date |
| Ecora Resources PLC | ex-dividend payment date |
| European Assets Trust PLC | ex-dividend payment date |
| Foresight Group Holdings Ltd | ex-dividend payment date |
| GSK PLC | dividend payment date |
| ICG-Longbow Senior Secured UK Property Debt Investments Ltd | ex-dividend payment date |
| JPMorgan Asia Growth & Income PLC | ex-dividend payment date |
| Keystone Positive Change Investment Trust PLC | ex-dividend payment date |
| LondonMetric Property PLC | dividend payment date |
| Murray International Trust PLC | ex-dividend payment date |
| National Grid PLC | dividend payment date |
| Primary Health Properties PLC | ex-dividend payment date |
| Sage Group PLC | ex-dividend payment date |
| Smiths News PLC | ex-dividend payment date |
| SSE PLC | ex-dividend payment date |
| Supermarket Income REIT PLC | ex-dividend payment date |
| TR Property Investment Trust PLC | dividend payment date |
| Walker Crips Group PLC | ex-dividend payment date |
| WH Smith PLC | ex-dividend payment date |
| Worldwide Healthcare Trust PLC | dividend payment date |
| XPS Pensions Group PLC | ex-dividend payment date |
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