UPDATE 1-Bank of England to consider extending suspension of payouts by banks

(Adds more detail)

LONDON, July 28 (Reuters) - The Bank of England will assess
whether to extend a suspension on payouts such as dividends and
share buybacks by banks beyond the end of the year due to the
COVID-19 pandemic, it said on Tuesday.

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

The Bank of England (BoE) said on Tuesday its Prudential
Regulation Authority (PRA) would undertake in the fourth quarter
an assessment of distribution plans at banks beyond the end of
2020.

"The assessment will be based on the current and projected
capital positions of the banks and will take into account the
level of uncertainty about the future path of the economy,
market conditions and capital trajectories prevailing at that
time," the BoE said in a statement.

Britain's lenders are due to publish second quarter earnings
that are expected to show more hefty provisions for loans hit by
fallout from the pandemic.

The BoE said payouts were an important and necessary part of
the functioning of the banking system, but that suspending them
was a "sensible precautionary step given the unique role of
banks in supporting the wider economy through the period of
economic disruption".

Separately on Tuesday, the European Central Bank said it had
extended until January 2021 its recommendation to euro zone
lenders not to pay dividends.

The BoE said it noted the ECB's announcement.
(Reporting by Huw Jones; Editing by Mark Potter)