The Bank of England has removed restrictions on bank dividends and share buybacks imposed during the pandemic, judging the sector to be resilient enough to absorb any further Covid-19 shocks.
“Extraordinary guardrails on shareholder distributions are no longer necessary”, the BoE said in its latest financial stability report, published on Tuesday.
The central bank cited the results of recent stress tests and lower-than-expected levels of loan losses. “The banking sector remains resilient… [and] has the capacity to continue to provide that support.”
The BoE’s decision follows those of the US Federal Reserve and the European Central Bank, which both relaxed their shareholder payout limits earlier in the year.
Last April as the pandemic spread through Europe, the BoE banned dividends to preserve lending capacity and absorb potential losses during the pandemic. The BoE started to relax the restrictions in December, but…