Trading places

1 April 2020 By Liam Proud Follow @liamwardproud

The Bank of England expects Barclays, HSBC and Standard Chartered to show restraint on future payouts. It’s ambiguous, but enough to worry bankers who profited handsomely from market moves in March. Unless the pandemic ends quickly, big bonuses will be hard to justify next year.

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The Bank of England on March 31 said lenders should not pay any cash bonuses to senior staff, “including all material risk takers”, without specifying a clear time limit on the restrictions. Britain’s chief financial supervisor also said banks should “take any appropriate further actions with regard to the accrual, payment and vesting” of bonuses in the coming months.

The central bank’s Prudential Regulatory Authority issued the guidance in a letter to the chief executives of lenders including Barclays, HSBC and Standard Chartered. It also said banks should cancel the payment of any outstanding dividends, and that the PRA “stands ready to consider use of our supervisory powers should your group not agree to take such action”.

HSBC and Barclays confirmed that they would cancel 2019 dividends, but made no mention of a change in bonus policy for 2020. Standard Chartered said its 2020 pay decisions “will be taken in the light of the group's overall performance and the challenges faced by the group's various stakeholders resulting from the spread of Covid-19”.

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