The Bank of England is imposing dividend limits on UK banks
LONDON (AP) – The Bank of England on Tuesday put limits on banks to pay dividends to their shareholders first introduced at the start of the coronavirus pandemic as part of a package of measures to accelerate the British economy .
The bank’s Monetary Policy Committee, which monitors financial stability risks, said the limits were “no longer necessary.” But it stressed that lenders need to provide continued economic support, not least because the government ends its salary support scheme in September and emergency business loans are starting to pay off.
The bank stopped dividends in the sector in March last year when the pandemic spread, but said in December that banks could pay limited dividends.
Although the committee said in its quarterly Financial Stability Report that the economic outlook has improved as a result of the rapid launch of vaccines in the UK, it warns that risks remain that could negatively affect small businesses, many of them saw the level of debt rising during the pandemic.
Bank governor Andrew Bailey said the lenders were well positioned to “provide that support” and it was in their collective interest to do so, given that their financial results and long -term stability were closely attributed to the fate of the wider economy.
The report showed that the debt level of small businesses has risen by 25% since the end of 2019 by tapping into emergency loans provided by the British government to land the pandemic scourge. The committee warned that in sectors that could be hit such as hospitality, 11.8% of small companies were already behind on debt repayment or formally defaulted in January.
The committee also called for measures to protect against financial stability risks from banks and financial firms that move core services to cloud computing companies and rely on a small number of provider guidelines. .
A major concern is the level of secrecy and lack of transparency among cloud computing providers, with firms keen not to be left open to their cyber attacks.
It warns that the rising, 18 -month trend in a dependence on companies like Amazon, Google and Microsoft could pose a threat to financial stability, due to the small number of providers and the overwhelming data and services. which has been outsourced.
Bank governor Bailey said “increasing reliance” on a small number of cloud service providers and others “could increase financial stability risks without greater direct oversight. in controlling the services they provide. “
“We don’t want hackers to get the guide book,” Bailey said. “We need to correct.”