Coronavirus: boss bonuses banned in exchange for virus loans

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Large companies borrowing from the British taxpayer will be banned from paying premiums and dividends, according to the Treasury and the Bank of England.

The limit for the Coronavirus large business interruption loan program has been raised from £ 50 million to £ 200 million.

Businesses wishing more than £ 50 million will be restricted until the loan is repaid.

The Bank of England will apply the restrictions on the program it manages and look for a letter from companies wishing to borrow for more than a year.

He said that large companies that need loans from the Bank’s Covid Corporate Financing Facility (CCFF) for a period beyond May 19, 2021 “should provide a letter to HM Treasury which undertakes to demonstrate withholding on payment of dividends and other capital distributions. and on high wages. “

The Bank said, “These commitments are intended to create incentives and promote the ability of businesses to repay their loans.”

In addition to limiting dividends and bonuses to senior management – unless announced before applying for the government loan – companies will not be able to buy back shares.

The Treasury and the Bank of England have also announced that from June 4 they will publish a weekly list of companies that have accessed the Covid Corporate Financing Facility and how much they have borrowed.

They said, “This change will make the system more transparent and allow participating businesses to demonstrate access to the system. “

The facility is designed for large British companies, classified as those “making a significant contribution to the British economy”.

As part of the Coronavirus Large Business Interruption Loan Program, the Treasury has said that companies will be able to borrow 25% of their turnover up to a limit of £ 200 million.

The largest loans will be available from May 26.

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