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Bosses' bonuses banned in trade-off for crisis loans

Large firms utilising pandemic-related financial support will be banned from paying bonuses and dividends, according to the Treasury and the Bank of England.

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A list of the companies who have accessed the Covid Corporate Financing Facility will be published
A list of the companies who have accessed the Covid Corporate Financing Facility will be published

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides financial support to mid-sized and larger UK businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

 

The limit on the CLBILS has recently been lifted from £50m to £200m, but firms who want more than £50m will face restrictions until the loan is repaid.

 

The Bank of England will implement the restrictions on the scheme it runs, as well as seeking a letter from firms who wish to borrow for more than a year.

 

It said big companies who require loans from the Bank’s Covid Corporate Financing Facility (CCFF) for a term beyond May 19 2021 "will be expected to provide a letter addressed to HM Treasury that commits to showing restraint on the payment of dividends and other capital distributions and on senior pay”.

 

It added: "These commitments are intended to create incentives for, and promote the ability of, businesses to repay their borrowings."

 

The Treasury and the Bank of England also announced that from June 4, they will publish a weekly list of the companies who have accessed the CCFF and how much they have borrowed.

 

They said: "This change will make the scheme more transparent and enable participating businesses to demonstrate their access to the scheme.”

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