UK Banks including Lloyds, RBS, Barclays, HSBC and Standard Chartered have cut their cut dividends after advice from the Prudential Regulation Authority (PRA).

The PRA advised banks to scrap all outstanding dividends from 2019 and suspend all further pay outs in 2020 to maintain high levels of cash through the coronavirus health crisis.

In a letter to Barclays CEO Jes Staley the Bank of England’s PRA said the “The PRA welcomes the consideration given by you and your firm to suspending dividends and buybacks on ordinary shares until the end of 2020.”

The letter also detailed instructions on how Barclays should release the news to the market which saw UK banks make an almost coordinated series of releases.

Barclays were due to pay investors £1 billion in dividends on Friday, which will now be cancelled.

In addition to cutting dividends, banks were advised not pay cash dividends to senior staff.

Lloyds said in a statement:

“In order to help us to serve the needs of businesses and households through the extraordinary challenges presented by Covid-19, the board has decided that until the end of 2020 we will undertake no quarterly or interim dividend payments, accrual of dividends, or share buybacks on ordinary shares.

“In addition, in response to a request from the PRA and to preserve additional capital for use in serving our clients, the board has agreed to cancel payment of the final 2019 dividend in relation to ordinary shares.  Accordingly, resolution 17 in relation to the declaration of that dividend will be withdrawn from the AGM, scheduled to take place on 21 May 2020.  Our board will decide on any dividend policy and amounts at year-end 2020.”

Shares in the UK banks were all down over 6% in early trade on Wednesday with HSBC the most heavily hit, down over 8%.

HSBC managed to avoid many of the worst effects of the financial crisis and today’s cut in dividend will be a big shock to investors.

Banks are set to report updates to the market at the end of April.