Warning on greed: Bankers to face penalties if they attempt to use emergency money to hike divis or bonuses
Greedy bankers have been warned they will face penalties if they attempt to use any of the money freed up by the emergency stimulus package to hike dividends or bonuses.
The Bank of England’s Prudential Regulation Authority said it ‘expects firms not to increase dividends and other distributions in response to this policy action and will monitor firms’ distributions against this expectation’.
Andrew Bailey, who is currently head of the Financial Conduct Authority and who starts as the Bank’s new Governor on Monday, said there were ‘no excuses’ for lenders to fail to help out businesses and households.
The Bank of England said it ‘expects firms not to increase dividends and other distributions in response to this policy action and will monitor firms’ distributions against this expectation’
He added: ‘We expect them to treat customers fairly, and that’s what must happen. They know that.’
The central bank decided to reduce the ‘rainy day’ counter-cyclical capital buffer to 0 per cent to help with the slowdown caused by Covid-19.
This means that, rather than having to hold a chunk of cash back for emergency, lenders can now use this money to make more loans to households and businesses.
Across the whole of the UK banking system, the freed-up cash could amount to £190billion.