Bank dividend ban should stay, says top regulator 

Regulators stopped banks making payouts to investors at the start of the pandemic over fears of a sharp economic downturn

A top regulator has argued that the bank ban on shareholder payouts should remain in place as it is too early for bankers to take a "victory lap" over their response to the pandemic. 

Fund managers and bankers have been pushing for regulators to lift the ban on dividends following a strong third quarter.

The restriction was imposed by global regulators at the start of the pandemic so banks were in a better position to support households and businesses.

However the head of the Basel committee of regulators, Carolyn Rogers, told the Financial Times that lenders must be patient as the scale of loan losses was still unclear and it was "their job" to absorb shocks. 

"Banks are not pulling back credit like they did [during the 2008 financial crisis] to save themselves at the expense of the broad economy," she said.

"That’s a good thing - we can give them a gold star and a pat on the back, but we should also remember this is part of their job. 

"Banks are supposed  to absorb and not amplify shocks and downturns to the economy. This is the business they are in and for most of them it makes them a lot of money. It is important they are well capitalised and not over-leveraged." 

UK bankers gave heavy hints during the third quarter results season that they were ready to payout if the ban was lifted.

Barclays chief Jes Staley said the bank’s balance sheet was the healthiest it had been in “modern history”, while Sir Howard Davies, the NatWest chairman, has repeatedly said restrictions should be removed to attract investment. 

Neither the Bank of England not the European Central Bank have decided whether to lift the ban next year, although the ECB has hinted that it may let some banks pay dividends.

Sweden said last week that if the economy continued to stabilise then profitable bank shareholders could receive payouts next year.