Bank dividends and bonuses to hit £10bn

BRITAIN’s banks are to reveal a £10bn payout in shareholder dividends and staff bonuses when they update on trading this week.

Lloyds Bank is thought to be seeking approval from the Bank of England to pay shareholders more than £2bn, which will grow to £2.9bn including bonuses.

Barclays bonus and dividends are expected to amount to £2.75bn while the equivalent for HSBC is £5.2bn, bringing the grand total to more than £10bn.

The payouts come despite the storm raging in the global economy and a raft of FTSE 100 giants taking an axe to their dividends.

Miner Anglo American and British Gas owner Centrica have both unveiled cuts.

Banking shares have lost billions in value since the start of the year amid fears they may not hold enough capital to withstand a slowdown in global growth.

HSBC will kick off the reporting today and all eyes will be on its dividend. It has faced pressure from Chinese economic turmoil and the low cost of borrowing, as central banks react to slowing economic growth and deflation by cutting interest rates deeper into negative territory.

However, Laith Khalaf from broker Hargreaves Lansdown said HSBC was one of their preferred plays in the banking sector given recent moves to cut its exposure to risky areas.

Analysts at UBs added: ‘We think the dividend is rela- tively safe.’ It expects HSBC to increase annual profits to £14.9bn from £13bn a year ago.

HSBC’s figures will be followed by Lloyds Banking Group on Thursday and Royal Bank of scotland on Friday. Analysts predict Lloyds will have to withstand a £2bn charge for payment protection insurance (PPI) mis- selling in its fourth quarter, followed by a £1.1bn hit for the year 2016/17.

RBs will post its eighth year of annual losses. Last month it said it was taking a £2.5bn hit including continued payouts for the misselling scandals.

RBs, which is 73pc owned by the Government, is setting aside another £500m for PPI claims, and £1.5bn to cover Us legal action on mortgage-backed bonds sold before the financial crisis.

Barclays will report the following week.