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Lloyds, Barclays, HSBC and other UK banks move higher as dividend ban lifted

The Bank of England's Prudential Regulation Authority said the banks remained "well capitalised and resilient” and as a result the restrictions on payouts were being lifted with immediate effect

Lloyds Banking Group - Lloyds, Barclays, HSBC and other UK banks move higher as dividend ban lifted

Shares in several of the UK’s major banks moved higher on Tuesday after the Bank of England scrapped a ban on dividend payments introduced during the Coronavirus pandemic.

In a statement on Tuesday morning, the BoE’s Prudential Regulation Authority (PRA) said that the UK’s banks “remain well capitalised and resilient” and that uncertainty around the economy and the pandemic had “decreased significantly” since December last year.

READ: Lloyds fined £91mln over insurance renewals

As a result, the PRA said the “guardrails” on dividends introduced in 2020 have been “removed with immediate effect” as part of the central bank’s intention to “transition back to its standard approach to capital-setting and shareholder distributions through 2021”.

The BoE initially forced banks to suspend dividend payments in March last year as the onset of the pandemic caused global markets to tumble. The central bank also announced in December that for 2021 banks could announce dividends but not pay them.

Despite the removal of the restrictions, the BoE warned that the banks should “continue to support households and businesses through the economic recovery”, and as a result bank boards should “continue to exercise an appropriate degree of caution around the level of any shareholder distributions”.

However, the return of dividends boosted bank shares in early trading, with Lloyds Banking Group PLC (LON:LLOY) up 1.3% at 47.8p, while Barclays PLC (LON:BARC) rose 0.7% to 173.9p, HSBC Holdings PLC (LON:HSBA) climbed 1.6% to 419.3p, Standard Chartered PLC gained 1% to 459.5p and NatWest Group PLC (LON:NWG) ascended 1.9% to 210.7p.

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