Bank of England won't let banks raise dividends due to capital easing: Carney

Bank of England governor Mark Carney speaks during a news conference at the Bank of England in London, Britain July 5, 2016. REUTERS/Dylan Martinez

LONDON (Reuters) - Bank of England Governor Mark Carney said banks would not be allowed to increase dividends after the BoE eased capital requirement for lenders, part of its response to the shock decision by voters to leave the European Union

Carney told reporters that supervisors at the central bank “will ensure that no bank increases dividends or distributions to shareholders as a result of this action.”

He said Tuesday’s announcement that the BoE was reversing its previous decision to increase the amount of capital banks must hold against cyclical upturns in the credit cycle represented a “major change”.

“It means that three quarters of UK banks, accounting for 90 percent of the stock of UK lending, will immediately have greater flexibility to supply credit to UK households and firms,” Carney said in a statement at the start of a news conference.

Reporting by Huw Jones and David Milliken; writing by William Schomberg, editing by Andy Bruce