Because the Bank of England makes Barclays and HSBC cheer on dividends and more
What the Bank of England Financial Stability Report Says. The article by Daniele Meloni
End of limits on the distribution of bank dividends and positive outlook for the British economy. These are the two key recommendations of the Bank of England (BoE) Financial Stability Report, published this morning by Threadneedle Street. All to the delight of great UK lenders such as HSBC and Barclays.
"The rapid progress of the vaccination program has dramatically improved the outlook for our economy," according to BoE Governor Andrew Bailey. During the pandemic, the Bank had recommended lenders to stop dividend distribution, curb buy-backs and freeze bonuses for senior executives. Now, from the stress tests conducted by its structures, the BoE has highlighted a comforting picture for British banks that would lead to optimism for the management of any future crises. However, the risks associated with the coronavirus remain according to Bailey, and it is "essential that institutions act on the market with caution".
"Banks" – reads the report – are emerging from the crisis linked to Covid in health and are able to fulfill the demands of businesses and consumers in the moment of economic recovery ". This is a flattering judgment that comes just as the Tory government announced the end of the measures to contain the spread of infections and, consequently, also of the state intervention measures that have supported UK workers and entrepreneurs. The so-called “furlough” leave will end in September, while loan programs for companies affected by the pandemic are also coming to an end.
One of the critical points of the report is that of the indebtedness of small businesses, which has increased substantially since March 2020, much more than that of medium-large companies has increased in the corresponding period.
Three weeks ago the Bank of England announced the maintenance of interest rates with a reference rate set at 0.1%, at an all-time low. The decision was unanimously made by the nine board members of the institute.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/bank-of-england-stabilita-finanziaria-regno-unito/ on Tue, 13 Jul 2021 12:05:02 +0000.