On 13 July 2021, the PRA issued a statement that provides an update on shareholder distributions by large UK banks.
The PRA previously issued a statement last December on capital distributions by large UK banks and set out certain guardrails for distributions to ordinary shareholders in relation to full-year 2020 results.
The PRA has reviewed its approach to shareholder distributions and in this latest statement concludes that the guardrails within which it asked bank boards to determine the appropriate level of distributions in relation to full-year 2020 results are no longer necessary and have been removed with immediate effect.
The statement also adds that in the meantime it is essential that banks continue to support households and businesses through the economic recovery and as the Government’s support measures unwind over the coming months, including in the event that economic outcomes are more severe than currently expected. Bank boards should therefore continue to exercise an appropriate degree of caution around the level of any shareholder distributions.