HSBC's chairman's remarks due to the regulator's failure to pay dividends to Bank of America

Financial news

Written by: Zhang Weilun

2020-04-02 11:05

HSBC Holdings (0005), known as Lion King, issued an announcement yesterday, stating that it had received a notice from the Prudential Regulation Authority of the Bank of England, asking the bank to cancel the dividend for the fourth quarter of last year, and announced that it would not pay dividends or repurchase this year. After the news was announced, the stock price plummeted, and today it even lost 38 yuan. It is rumored that HSBC's board of directors is angry at the regulatory agency's efforts to prevent dividend payments, and has once again raised the issue of relocation.

The bank pointed out in the announcement that after discussing the written request of the Prudential Regulatory Authority, the board of directors decided to cancel the fourth quarter of 2019 dividend which was originally scheduled to be distributed at $ 0.21 on the 14th of this month, and also pointed out that the cancellation of the dividend would affect shareholders regret.

The Prudential Regulation Authority pointed out that it welcomed the decision of British banks not to pay dividends and stop repurchase. It also pointed out that bank shareholders need to understand that banks are in a time of economic collapse, and they must play a supporting role and cooperate with the authorities' unconventional policies.

Researched and moved in 2015

After HSBC cancelled the dividend payment at the request of regulators, the issue of the lion king's registration has again become a topic of discussion among market participants.

In the report, Bank of America pointed out that since the Hong Kong operation brought US $ 12 billion in pre-tax profit to HSBC last year, the contribution from the UK business's pre-tax profit contributed US $ 1.7 billion. In addition, 28% of registered shareholders are Hong Kong retail investors and 11% are mainland individuals. Bank of America pointed out that HSBC has a higher proportion of shareholders in Asia than UK shareholders. After Brexit, the UK's strategic position has changed, and HSBC also intends to reduce its wholesale business in the UK. Therefore, it is considered that HSBC's registration in the UK is becoming increasingly outdated. The issue of whether to relocate will be hotly debated again.

However, some media pointed out that HSBC Chairman Du Jiaqi pointed out in a conference call yesterday that the bank had no intention to study the relocation temporarily.

HSBC studied whether to register in 2015. After 10 months of research, it decided not to change the registration place.

Unexpected when dividends will resume

On the other hand, HSBC suddenly announced the cancellation of dividends, which surprised investors. However, during yesterday's conference call, the bank's management pointed out that due to the difficult development of the epidemic, it is unknown when the dividend can be resumed, but stressed that the bank has a strong balance sheet and abundant capital, and is confident that it can return to the normal dividend policy after the epidemic.

Du Jiaqi added that the future level of the bank's dividend payout will depend on the development of the epidemic situation. It is difficult to decide whether the dividend payout will be adjusted. It is expected that the results will be announced early next year before finalization.

After stopping dividends, HSBC can save some funds. The chief financial officer expects to stop paying dividends for the fourth quarter of last year and the first three quarters of this year, which will save US $ 9 billion, which will help 1% of the common equity Tier 1 capital ratio. He also stated that the bank had no intention of a rights issue.

[Continuous update] HSBC Holdings' stock price has worn 38 yuan and the HSI has lost 23,000 points

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