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* BoE lifts 'guardrails' on banks dividends and buy-backs
* CCyB risk buffer kept at zero percent to boost lending
* BoE warns some asset prices look stretched
* Bailey sees risk from banks' reliance on cloud providers
(Adds BoE comments on bonus guidance, cloud providers)
By Huw Jones and David Milliken
LONDON, July 13 (Reuters) - The Bank of England scrapped its
remaining pandemic curbs on dividends paid by HSBC, Barclays and
other top lenders with immediate effect on Tuesday, saying its
stress tests showed they could cope with the fallout from COVID
on the economy.
Bank of England Governor Andrew Bailey said Britain's rapid
vaccination rollout had led to an improvement in the economic
outlook, allowing the central bank to relax its controls on how
much lenders can pay to shareholders.
"But risks to the recovery remain. Households and businesses
are likely to need continuing support from the financial system
as the economy recovers and the government's support measures
unwind over the coming months," Bailey said in a statement.
Shares in British lenders rose, with HSBC, NatWest
, Barclays, Standard Chartered and
Lloyds all up by between 1% and 2%, compared with a
0.3% gain for the FTSE 100 index.
As Britain shut down much of its economy for the first time
in March last year, the BoE told lenders to suspend dividends
and share buy-backs until the end of 2020 and it also
recommended scrapping bonuses for senior staff.
The BoE initially eased its curbs last December as the
pandemic's fallout became clearer, saying payouts could resume
within "guardrails".
The BoE's Financial Policy Committee (FPC) said the
"extraordinary guardrails on shareholder distributions are no
longer necessary" following its annual stress test of banks'
financial health.
The U.S. Federal Reserve said in June that large banks would
no longer face coronavirus crisis restrictions on how much they
can spend in buying back stock and paying dividends.
The European Central Bank's plans to let euro zone lenders
resume payouts to shareholders from October, barring a new
economic slump.
Bailey told a news conference on Tuesday that, unlike its
move on dividends, the BoE had no plan to lift its guidance on
bonuses. But Deputy Governor Sam Woods said it was important to
get back to a "more normal setting" for bankers' pay.
BOE WATCHING CRYPTO, THE CLOUD
In its twice-yearly Financial Stability Report, the
regulator sounded a new note of caution on cryptocurrencies,
saying there were signs of larger institutions starting to get
involved, which could lead to spillovers into the wider economy.
The BoE urged giant cloud computing firms not to be
secretive about their operations. It fears that could hinder its
checks on the stability of the banking sector, which is
increasingly using firms such as Amazon, Microsoft and Google to
improve efficiency and cut costs.
The central bank also said asset prices looked stretched as
investors increasingly took risks and underwriting standards for
some loans slipped.
The FPC confirmed it would keep the counter-cyclical capital
buffer (CCyB) for major banks at zero percent until at least
December, meaning any subsequent increase would not take effect
until the end of 2022 at the earliest.
The buffer is intended to rise and fall over the course of
the economic cycle to limit lending at the top of a boom and
boost it during a downturn.
"The FPC expects banks to use all elements of their capital
buffers as necessary to support the economy through the
recovery," the BoE said.
(Additional reporting by Iain Withers
Editing by William Schomberg and Gareth Jones)
