On 4 June, the Bank of England (“BoE“) published a Dear CEO letter that it had sent to all regulated UK Financial Market Infrastructures and Specified Providers (“FMIs”) setting out its expectations on the distribution of profits in light of Covid-19.
The letter explains that when UK FMIs’ boards are considering any distributions to shareholders or making decisions on variable remuneration, BoE expects them to pay close attention to the additional risks and potential financial and operational demands arising from Covid-19. BoE expects FMIs’ boards to discuss with them before making any distributions to shareholders.
More generally the letter also notes that, in the current circumstances, FMIs face greater risks to their financial and operational resilience. Consequently, it is critical that FMIs ensure their financial resources continue to be sufficient to maintain the services they provide and to absorb potential losses.