Why banks should be allowed to pay dividends again

Curbing payouts to shareholders never made much sense and the policy is crimping the economy, says MAtthew Lynn.

Banco Santander Chairman, Ana Patricia Botin
Ana Botin: end the ban on payouts
(Image credit: © Pablo Blazquez Dominguez/Getty Images)

The Bank of England is working out the details of a deal that will allow the retail banks to start giving money to their shareholders again. So long as net lending continues to grow, and capital ratios remain robust, they will be allowed to restore their dividends. That is a significant reversal. At the height of the Covid-19 crisis in the spring, the Prudential Regulation Authority wrote to the main banks asking them to cancel any remaining payouts for 2019 and for the whole of 2020. In recent weeks both Barclays boss Jes Staley and Santander’s Ana Botin have called for an end to the ban in public, and now it looks as if, subject to a few conditions, that will be allowed. HSBC said this week that it was likely to start paying a dividend again soon.

A monstrous imposition

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.