Some of Britain’s largest banking institutions are set to halt billions of pounds in dividends to shareholders, in order to free up more cash for the economy.
Amid the coronavirus crisis, the banks, which include Barclays, Nationwide, HSBC, NatWest and Santander, were due to pay out billions to shareholders. However, in recent days they have all come under increased pressure to use the money to help with the ongoing crisis.
The banks’ reaction, which was initiated by a request by the Bank of England to hold onto the money, has resulted in shares in the banks to fall sharply this morning.
Barclays shareholders were expected to be paid £1.03bn; Lloyds shareholders would have received £1.58bn; and RBS had expected to pay its shareholders a total of £968m. However, £600m of this would have gone to HMRC, due to the government’s 62% stake in RBS.
The Deputy Governor of the Bank of England, Sam Woods, wrote: “Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption.”