Shares of the multinational bank HSBC tumbles as the bank suspends its remaining 2019 dividends. Its upcoming dividends, accordingly, is supposed to be issued later this month.
The decision follows a request from the Bank of England to the UK-based HSBC to suspend its quarterly upcoming dividends. During the meeting to discuss the request, the boards agree.
From several sources, the discussion sparks debates over boards and executives. Following the debates, considerations to redomicile the bank back to Hong Kong emerges.
The move, furthermore, damages HSBC and their customers, especially in Asia for the region generates more than four-fifths of its profits. Additionally, retail investors in Hong Kong own a third of its shares, relying on the dividends as part of the income.
“For the regulators at the Bank of England to put a gun to the head of the board of directors is terrible,” said one director. “This should be a decision for the board to take. We should not be in the UK. The calls for redomiciling will increase.”
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Why HSBC Suspends Its Dividends
The move, in which is the first in 74 years, shocks numerous people. Accordingly, the reason of the suspension is due to the potentially crushing impact of the coronavirus outbreak.
In its announcement, HSBC says that it has “a strong capital, funding and liquidity position.” However, the bank adds that it is considering “significant uncertainties in assessing the time period of the pandemic and its impact.”
The bank’s suspension and stocks buybacks are the latest update of the bank after its announcement to cut expenses and increase efficiency. After their decision to “increase efficiency,” investors were not happy with it.
Moreover, the next decision to suspend dividends really puts HSBC’s name bad. Its shares, additionally, dropped by approximately 10% because of it.
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