May 19, 2020 / 7:20 AM / 11 days ago

BoE imposes dividend, pay caps on longer-term corporate borrowers

LONDON, May 19 (Reuters) - Large businesses which want to borrow from the Bank of England for more than a year under an emergency coronavirus support scheme will have to show restraint on dividends and executive pay, the central bank said on Tuesday.

So far the BoE has bought 18.8 billion pounds ($23.0 billion) of short-term debt, known as commercial paper, from 55 large companies, and has authorised a further 38.8 billion pounds of lending if needed.

The scheme is due to close to new borrowing in March 2021, and the BoE said it would impose extra conditions on borrowing that extends beyond May 19, 2021.

“Firms ... will be expected to provide a letter addressed to HM Treasury that commits to showing restraint on the payment of dividends and other capital distributions and on senior pay during the period in which their commercial paper is outstanding,” it said. ($1 = 0.8167 pounds) (Reporting by David Milliken Editing by William Schomberg)

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