Britain’s top banks have axed dividend payments after pressure from the regulator, saving their capital as a buffer against expected losses from the economic fallout from the coronavirus.

Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Standard Chartered and the British arm of Spain’s Santander all halted payouts in a co-ordinated industry response to a request from the Prudential Regulatory Authority (PRA) on Tuesday. The lenders had been due to pay out over 8 billion pounds ($9.93 billion) between them in 2019 dividends, with HSBC the biggest payer at $4.2 billion.

The PRA also asked banks and insurers not to pay senior staff bonuses this year, although none of the banks opted to provide details on how they would comply with this second request.

The British lenders also held off announcing changes to their executive pay policies.

Shares in domestic-focused lenders Lloyds and Barclays shed more than 5% each in early trading, while HSBC and Standard Chartered saw their stocks fall 7.7% and 6% respectively.

Hong Kong shares of HSBC fell as much as 9.9% to their lowest since March 2009, while StanChart dropped 7.4% in the morning trade on Wednesday. The broader Hong Kong market index was down 0.4%.

The PRA said banks entered the pandemic, which has put Britain into lockdown, with strong capital positions, enough to withstand a severe UK and global recession.

Banks pay out dividends as a means of rewarding shareholders and disposing of excess profits, but they have the option to retain the earnings instead to preserve their capital levels.

While suspending investor distributions was described as prudent by the lenders, analysts at Jefferies said the move had “structurally bearish ramifications” for the sector, including raising the cost of equity.

“It is not beyond the wit of man that some banks might need rights issues and all of this uncertainty in our view ultimately weakens prospective investment propositions.”

 The statements from British lenders come after the European Central Bank (ECB) last week asked euro zone lenders to skip dividend payments and share buybacks until October at the earliest, and use their profits to support the economy.

Several of Europe’s largest lenders, including UniCredit , and Societe Generale, have already announced they will hold off paying 2019 dividends for now.

However, there are some hold outs. Swiss banking giants UBS and Credit Suisse have both said they plan to press ahead with 2019 dividends despite their home regulator urging caution over payouts.

The move to scrap 2019 shareholder distributions is expected to free up capital that banks can instead lend to businesses and consumers rocked by the coronavirus pandemic.

But some analysts believe cancelling dividends could actually harm the supply of credit to the real economy.

Reuters