HSBC scraps dividends at BoE's request

HSBC has cancelled its fourth-quarter dividend and agreed not to pay dividends or buy back shares in 2020 after the Bank of England told the bank to conserve capital during the Covid-19 crisis.

Europe's biggest bank said the BoE's Prudential Regulation Authority had written to it requesting the scrapping of the fourth interim dividend and that the board had cancelled the $0.21 per share payout, which was scheduled for 14 April.

HSBC said it would review its dividend policy and payments for 2020 once the impact of the coronavirus crisis was clearer but that there would be no return of capital to shareholder in 2020.

In a brief trading update HSBC said performance had been resilient in the first quarter of 2020 in difficult economic conditions and credit quality had held up well so far. But it warned reported revenue for the three months to the end of March would suffer in insurance manufacturing and credit and funding valuation adjustments in global banking and markets alongside higher credit losses.

"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," the bank said. "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 FTSE 100 company said it recognised the effect cancelling the dividend would have on shareholders in Hong Kong and the UK but that by strengthening its ability to support customers in the crisis it would be better able to grow its business in the long run.