Recession fears drove the Bank of England to call the U.K.’s largest banks, including HSBC and Standard Chartered, to scrap dividends and share buybacks.
Alongside Lloyds, Royal Bank of Scotland and Barclays, the two largest British lenders in Asia made statements to temporarily halt shareholder payouts and share buybacks for 2019 and throughout 2020 following discussion with the Bank of England. The five largest banks in the U.K. had originally planned for 7.4 billion pounds ($9.3 billion) in dividend payments over the next two months.
In addition, the BoE also ordered banks to scrap cash bonuses to prepare for a likely recession.
The PRA also expects banks not to pay any cash bonuses to senior staff, including all material risk-takers, and is confident that bank boards are already considering and will take any appropriate further actions with regards remuneration over coming months, said the BoE’s head of prudential regulation authority Sam Woods in a statement.
Whilst workers will undoubtedly feel the brunt of the economic malaise, numerous efforts are being made to shift some of the burden to others including corporates and their shareholders.
In addition to dividend cuts, banks have also committed to retaining jobs with HSBC, as well as a raft of global banking giants, recently announcing temporary halts to job cutting. The measures will retain costs that were due for unloading and over 60,000 jobs.