(Alliance News) - The UK's major banks on Wednesday all confirmed the suspension of shareholder returns following a request from the Prudential Regulatory Authority.
The PRA late on Tuesday said it "welcomed" a decision by large UK banks to suspend dividends and buybacks until the end of 2020 and also cancel any dividends for 2019 yet to be paid.
This followed a request by the regulator for the banks to preserve cash amid the economic uncertainty posed by Covid-19. The PRA noted the banks are "strong" financially with the capacity to weather severe economic shock.
Putting out their own statements on Wednesday confirming the halting of returns were lenders HSBC Holdings PLC, Barclays PLC, Royal Bank of Scotland Group PLC, Lloyds Banking Group PLC, and Standard Chartered PLC. All are members of the FTSE 100 index.
HSBC has cancelled its USD0.21 per share dividend for the fourth quarter of 2019, which was due to be paid on April 14. No quarterly or interim dividend will be declared for 2020, and no buybacks will be carried out.
"Group performance has been resilient in the first quarter in difficult economic conditions and, so far, credit performance has held up well," said the lender.
"However, as a result of the global impacts of Covid-19, and its impact on interest rates, market levels and the forward economic outlook, we expect reported revenues to be impacted in insurance manufacturing, and credit and funding valuation adjustments in Global Banking & Markets, alongside higher expected credit losses," HSBC added.
Barclays confirmed no interim dividend for 2020 nor any buyback, cancelling the 6.0 pence per share final dividend planned for 2019. That was due to be paid on Friday this week.
Chair Nigel Higgins said: "These are difficult decisions, not least in terms of the immediate impact they will have on shareholders.
"The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now, and ensure that Barclays is well placed to continue doing what we can to help through this crisis."
RBS likewise said there will be no quarterly or interim payouts in 2020, nor any buybacks. The final and special dividends for 2019, 3p and 5p respectively, have been cancelled, saving RBS some GBP968 million.
Chief Executive Alison Rose commented: "RBS has a robust capital and liquidity position and we are focused on ensuring we support our customers and help them to navigate the immediate and longer-term challenges they are facing as a result of Covid-19.
"As we continue to build a purpose-led bank we are committed to balancing the needs of all our stakeholders. Helping people, families and businesses who need our support is the right thing to do at this time of significant uncertainty."
"The board remains committed to capital returns, will continue to review the situation and will look to resume distributions to ordinary shareholders in due course," she continued.
Lloyds had declared a 2.25p per share final dividend for 2019 in February. This has been withdrawn, and no quarterly or interim dividends will be paid in 2020 alongside the suspension of the buyback.
Lloyds said this decision was taken in response to the PRA request amid the "extraordinary challenges" posed by Covid-19.
StanChart confirmed the withdrawal of its USD0.20 final dividend for 2019 and the suspension of a buyback programme announced at the end of February.
No interim dividend will be declared for 2020, StanChart added.
The company said it is "well-capitalised", with low leverage and high levels of loss-absorbing capacity. Capital and liquidity metrics remain well above regulatory requirements.
By George Collard; georgecollard@alliancenews.com
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Barclays (BARC)
HSBC Holdings (HSBA)
Standard Chartered (STAN)
