UK banks warned 'cut dividends still further'

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The Bank of England has warned UK banks will have to slash dividends and rein in bonuses for years to come if they are to boost reserves and ready their balance sheets for strict new rules.

Tough standards on capital and liquidity are due to be introduced later this year and banks are being urged to start preparing now by setting aside more profits as a buffer against bad debts, the Telegraph reports. Under pressure from the Bank of England and the FSA, banks last year cut dividends and reduced the amount paid in bonuses as a proportion of revenue. However, the Bank of England is now calling for more to be done to "sustain lending to the real economy". "This would require banks to double their efforts to contain discretionary distributions to shareholders and staff," the...

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