Banks Asked Not To Pay Cash Bonuses
The PRA welcomes the decisions by the boards of the large UK banks to suspend dividends and buybacks on ordinary shares until the end of 2020, and to cancel payments of any outstanding 2019 dividends in response to a request from us.
“The PRA also expects banks not to pay any cash bonuses to senior staff”… pic.twitter.com/g1Fh53uo4p
— Faisal Islam (@faisalislam) March 31, 2020
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 regard to the accrual, payment and vesting of variable remuneration over coming months.
In the assessment of the Financial Policy Committee and the Prudential Regulation Committee, the banks enter this period with strong capital positions, more than sufficient to accommodate the combined simultaneous impact of severe UK and global recessions and a financial markets shock – as demonstrated through their performance in our recent stress tests.
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, alongside the extraordinary measures being taken by the authorities. We do not expect the capital preserved to be needed by the banks in order to maintain adequate capital positions, but the extra headroom should help the banks support the economy through 2020.
High Pay Centre response to major banks agreement to scrap dividends and cancel executive bonuses:
Generous bonus payments impose big costs on banks that one would think they'd be keen to limit at a time of great economic uncertainty. 1/ pic.twitter.com/BgW9ZMyhBa
— High Pay Centre (@HighPayCentre) April 1, 2020
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