BoE and PRA on ESRB Recommendation for Payout Restrictions Amid Crisis
BoE and PRA issued a joint statement on the ESRB recommendation for restriction of dividend distributions and other relevant voluntary payouts during the COVID-19 pandemic. The statement refers to the ESRB recommendation that was issued on June 08, 2020 and is applicable to the UK authorities during the transition period, which is a part of the withdrawal of UK from EU. The statement highlights that BoE and PRA have previously announced a number of measures to ensure the resilience of the financial system and financial market infrastructures, support bank lending through this period, and maintain the safety and soundness of firms, which are consistent with the objectives of the ESRB recommendation. Therefore, BoE and PRA do not consider it necessary to extend the guidance further at this time.
ESRB recommended that the relevant authorities should request financial institutions under their supervisory remit to refrain—at least until January 01, 2021—from undertaking the actions that have the effect of reducing the quantity or quality of own funds at the EU group level (or at the individual level where the financial institution is not part of an EU group), and, where appropriate, at the sub-consolidated or individual level. The actions to be refrained from include dividend distribution, buy-back of ordinary shares, and creation of an obligation to pay variable remuneration to a material risk-taker.
Related Links
Keywords: Europe, EU, UK, Banking, Insurance, COVID-19, Brexit, Dividend Distribution, FMI, PRA, BoE
Featured Experts

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
BDE Updates Reporting Instructions for Banks in June 2020Related Articles
EBA Issues Erratum for Phase 2 Package of Reporting Framework 3.0
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
EBA Updates Lists of Entities for Use in Capital Calculations under SA
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
MAS Amends Notice on Related Party Transactions of Banks
MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.
ECB Amends Guideline on Euro Short-Term Rate
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.
EBA Consults on Standards Related to FRTB-SA
EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).
PRA Proposes Rules Related to IRB Approach for Credit Risk
PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.
BoE Outlines Regulatory Treatment of Recovery Loan Scheme of UK
The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.
FSB Addresses G20 on COVID Measures, TBTF Reforms, and Climate Risks
FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.
OSFI Unwinds Temporary Increase to Covered Bond Limit for Banks
OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.
EU Amends CRR and Securitization Regulation in Response to Pandemic
To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).