Trustee news

Bank announcement on dividend payments

In 2018, the bank and trustee agreed that from 1 January 2020, the bank would make further contributions to the Group Fund of up to £1.5 billion in total (limited to an annual cap of £500m), linked to the bank making distributions to its shareholders.

In February, the bank declared its intention to pay a final dividend for 2019 subject to shareholder approval later in the year. This was expected to trigger the first instalment of the contributions to the Group Fund alongside the dividend payment. However, on 31 March the bank announced that it was taking additional measures to ensure it remains well placed to serve the needs of businesses and households through the unprecedented situation presented by Covid-19. One of those measures is that the bank has cancelled the 2019 final dividend payments to shareholders. As a consequence, the dividend-linked contribution which would have been paid to the Group Fund alongside the dividend is also cancelled. While the steps taken by the bank do impact the timing of the first instalment of the additional contributions, it does not change the commitment from the bank to pay the contributions in line with the existing agreement up to a total of £1.5 billion – these payments will begin when the bank is able to resume distributions to shareholders in the future.

The Group Fund has remained well funded through the recent market turbulence given the reduction in risk that took place in 2018 when the bank paid a lump sum contribution of £2 billion into the Group Fund. The Trustees will continue to monitor the Fund closely to ensure members’ benefits remain financially secure through this period of volatility.