The Bank of England (Bank) and the Prudential Regulation Authority (PRA) note the Recommendation made on 8 June 2020 by the European Systemic Risk Board (ESRB) on the restriction of distributions during the Covid-19 pandemic. In the context of the UK’s withdrawal from the EU, this Recommendation applies to UK authorities during the transition period.
In this respect, the Bank and the PRA have previously announced a number of measures to ensure the resilience of the financial system and financial market infrastructures, support banks’ lending through this period and maintain the safety and soundness of firms, which are consistent with the objectives of the ESRB’s recommendation. In particular, the Bank and PRA have published:
- On Tuesday 31 March 2020, letters from Sam Woods to UK deposit-takers on ‘Dividend payments, share buybacks and cash bonuses’, a PRA statement on ‘Deposit-takers’ approach to dividend payments, share buybacks and cash bonuses’ , and a letter from Sam Woods to insurers on ‘Distribution of profits’.
- On Wednesday 8 April 2020, a PRA statement on ‘Decision by insurance companies to pause dividends’.
- On Thursday 4 June 2020, a letter from Sir Jon Cunliffe to regulated UK Financial Market Infrastructures and Specified Providers on ‘Distribution of profits’.
The Bank and PRA do not consider it necessary to extend this guidance further at this time.