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HSBC, Standard Chartered likely to resume dividends next year after UK regulator gives OK
- Prudential Regulation Authority asked HSBC, Standard Chartered to suspend dividends, buyouts earlier this year
- Dividend suspension sparked a rebellion among shareholders; stock prices have recovered recently
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HSBC and Standard Chartered could restart their dividends as soon as early next year after their chief financial regulator in the United Kingdom said it felt comfortable with the country’s biggest lenders resuming payouts as economies continue to recover from the fallout of the coronavirus pandemic.
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The announcement sent the shares of both banks higher early in Hong Kong’s trading session on Friday, but their shares gave up much of their gains over the course of the day. HSBC’s shares declined 0.6 per cent to close at HK$41.65 (US$5.37), while Standard Chartered’s shares rose 0.2 per cent to end the day at HK$49.
The banks, which are based in London, but generate much of their revenue in Asia, were among six UK lenders who agreed earlier this year to cancel their final 2019 payments and suspend further dividends and share buy-backs this year as part of a coordinated response following a request by the Prudential Regulation Authority (PRA), a regulatory arm of the Bank of England.
While economic uncertainty as a result of the pandemic remains “high” and banks in the UK are likely to face “some headwinds” in their capital positions next year, the PRA said it believes lenders remain well capitalised and able to support the economy.
“Weighing those considerations, and consistent with the PRA’s view that distributions are an important and necessary part of the functioning of the banking system, the PRA judges that an extension of the exceptional and precautionary action taken in March is not necessary and that there is scope for banks to recommence some distributions should their boards choose to do so, within an appropriately prudent framework,” the PRA said in a statement early on Thursday.
02:02
Fourth wave of coronavirus cases in Hong Kong prompts tougher Covid-19 measures
Fourth wave of coronavirus cases in Hong Kong prompts tougher Covid-19 measures
The move to suspend payouts sparked a rebellion among the Hong Kong shareholder bases for both HSBC and Standard Chartered with some investors calling for the lenders to ditch their London headquarters in favour of Hong Kong.
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