PRA welcomed decisions by the boards of 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. 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 actions with regard to the accrual, payment, and vesting of variable remuneration over the coming months. In this context, Sam Woods of PRA issued letters to CEOs of UK insurers and to the seven largest systemically important UK deposit-takers.
In the assessment of the Financial Policy Committee and PRA, 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 the recent stress tests. Although the decisions 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. PRA does not expect the capital preserved to be needed by the banks to maintain adequate capital positions; however, the extra headroom should help banks support the economy through 2020.
Keywords: Europe, UK, Banking, Insurance, Dividend Distribution, Remuneration, COVID-19, Stress Testing, Regulatory Capital, PRA
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APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
ESMA announced that it will recognize three central counterparties (CCPs) established in the UK as third-country CCPs, from January 01, 2021.
PRA published Version 02.04 of the PRA110 liquidity metric monitoring tool (PRA110 LMM tool).
FSB confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System (GLEIS) as the International Governance Body for the globally harmonized identifiers used to track over-the-counter (OTC) derivatives transactions, with effect from October 01, 2020.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
EBA launched the seventh annual transparency exercise for banks in EU.
The EBA Single Rulebook question and answer (Q&A) tool updates for this month include answers to 32 questions.
MAS published amendments to the Notice 652 on net stable funding ratio (NSFR), along with the related reporting template.
EC published the action plan to enhance the Capital Markets Union in EU over the coming years.