With December being a very busy month for most, we expect a few of the headlines might have slipped under the radar. Here’s a short summary of the stories that caught our eye over the Christmas period.
The return of dividends
- The Bank of England confirmed in December that UK Banks can start paying shareholders dividends again.
- These have been put on hold since March following pressure from the PRA, but this is no longer deemed necessary.
- Whether banks decide to make dividend payments will be a good indicator of confidence to the market, particularly within the current trading environment.
Is the fall in regulatory fines permanent?
- The number of fines by the FCA in 2020 has reduced by half from 2019 figures, however we don’t expect this trend to continue into 2021.
- While this may be partially attributable to difficulties caused by the pandemic, other factors in the year also contributed to the significant reduction – a change in Chief Executive and focus on business post-Brexit.
- The FCA will be no less stringent in ensuring regulations are fully adhered to and we see clear conduct risks emerging as a result of COVID-related customer treatments. Banks and Building societies would be wise to spend time getting things in order in readiness for the regulator, particularly after such a disruptive year.
And in case you missed it…
- The Co-operative Bank have called off sale talks with Cerberus. Despite this shift in Co-op’s strategy, we still expect some merger activity to take place this year in the sector, particularly with interest for TSB increasing.
- Natwest Bank has purchased Metro Bank’s £3bn mortgage portfolio, in a move that benefits both parties.
- A number of high-street banks closed business account applications to new customers in an effort to prevent bounce back loan fraud. We still see this as a significant risk to the SME lenders.
Each month we send out a regular email summary of the latest headlines from across the Banking sector that have caught our eye. If this sounds like something that interests you, please sign up to our monthly Banking Headlines here.