...July 13, 2021 LONDON (S&P Global Ratings) July 13, 2021--S&P Global Ratings believes that today's removal of regulatory constraints on U.K. banks' shareholder distributions is a sign of the sector's resilience and the strengthening economic recovery. The Prudential Regulation Authority (PRA) allowed modest payouts to restart in December 2020 and has now fully lifted its restrictions. Our outlook revisions on U.K. banks last month already assumed that they would announce sizable dividends and buybacks when they report second-quarter earnings in the coming weeks (see Various Rating Actions Taken On U.K. Banks On Recovering Economy, published on June 24, 2021). The PRA's decision to withdraw its constraints on shareholder distributions was based on a desktop solvency stress test conducted by the Bank of England (BoE). The exercise assessed the eight largest banking groups' aggregate capacity to absorb losses in the event of a further economic shock. The underlying scenario assumed a 37% cumulative...
