Several major UK banks will stop dividends in order to shore up their balances during the crisis with NatWest, Santander and Barclays, amongst others, following advice from the Bank of England to suspend dividend payments.

In a statement, the Prudential Regulation Authority (PRA), which is part of the Bank of England, said: “In the assessment of the Financial Policy Committee and the Prudential Regulation Committee, the banks enter this period with strong capital positions, more than sufficient to accommodate the combined simultaneous impact of severe UK and global recessions and a financial markets shock – as demonstrated through their performance in our recent stress tests. Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption, alongside the extraordinary measures being taken by the authorities. We do not expect the capital preserved to be needed by the banks in order to maintain adequate capital positions, but the extra headroom should help the banks support the economy through 2020.”

The PRA also had a note for banking staff bonuses, possibly mindful of the issues that surrounded such payments during the last financial crisis: “The cancellation of dividends also piles on the pressure for other sectors that have received money for furloughing workers - or even more direct government backing - to also consider scrapping their dividend payouts.”

Such moves will have a knock on effect for other sectors too, with Government bailouts and payment of wages it will likely see many companies coming under close scrutiny for their remuneration packages too.

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