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HSBC
BusinessBanking & Finance

HSBC and Standard Chartered shares plunge after cancelling dividends, suspending buy-backs as coronavirus pandemic batters economies

  • UK banking regulator asked HSBC, Standard Chartered and other lenders to axe planned payments to investors
  • HSBC shares plumb lowest point since March 2009 in Hong Kong trading

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Pedestrians walk past an HSBC branch in Central district, Hong Kong, China, on February 19, 2020. Photo: EPA-EFE
Chad Bray

HSBC and Standard Chartered said on Wednesday they would cancel their dividends and not launch any share buy-backs in 2020 after a financial regulator in the United Kingdom asked the country’s biggest lenders to suspend payments to investors and not pay cash bonuses to senior staff in light of the coronavirus pandemic roiling economies worldwide.

The moves sent their stocks into a tailspin. HSBC’s shares plunged 9.5 per cent to close at HK$39.95 in Hong Kong on Wednesday, the lowest point since March 2009. Meanwhile, Standard Chartered’s shares dropped 7.6 per cent to HK$39.90.

The banks, which are based in London, but generate much of their revenue in Asia, were among six lenders who said they would suspend their dividends as part of a coordinated response following a request by the Prudential Regulation Authority (PRA), a regulatory arm of the Bank of England.

“The board recognises the current and potential material impact on the global economy as a result of the coronavirus pandemic and the important role that HSBC has in helping its customers to manage through the crisis and to have resources to invest when recovery occurs,” HSBC said in a statement. “HSBC has a strong capital, funding and liquidity position; however, there are significant uncertainties in assessing the time period of the pandemic and its impact.”
The novel coronavirus, known as SARS-CoV-2, has infected more than 846,000 people worldwide and has likely sent the global economy into a recession. It has uprooted daily life across Asia, Europe and the United States, with several countries instituting lockdowns, airlines grounding much of their fleets and millions of people losing their jobs.

“The board fully recognises the importance of dividends to the group’s owners,” Standard Chartered said in a stock exchange filing on Wednesday. “However, suspending shareholder distributions at this time will allow the group to maximise its support for individuals, businesses and the communities in which it operates whilst at the same time preserving strong capital ratios and investing to transform the business for the long term.”

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