SINGAPORE (Apr 3): The deputy governor of the Bank of England, Sam Woods, has written to some banking bosses, asking them to suspend dividend payments, according to the BBC. He asked them to confirm their decision by March 31. Hence, the likes of HSBC Holdings and Standard Chartered – which are also listed on the Hong Kong Exchange – have announced the suspension of dividends and share buybacks.
In a statement, the Prudential Regulation Authority, which is part of the Bank of England, said: “Although the decisions taken [on March 31] will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption.” HSBC, Royal Bank of Scotland Group, Standard Chartered, Barclays and Lloyds Banking Group axed their outstanding FY2019 dividends and said there would be no payments in 2020. The British banks also agreed to suspend share buybacks. The logic of the deferral or cancellation is to preserve capital to save the economy.
Between them, Lloyds, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered were expected to pay a total of £15.6 billion ($27.5 billion) to shareholders, according to analysts.
Locally, DBS Group Holdings announced that it was postponing its annual general meeting (AGM) for FY2019, which was to be held on March 31, 2020. The postponement was due to new Ministry of Health (MOH) measures to prevent the spreading of Covid-19. Final dividends require shareholders’ approvals, and as a result, DBS said that its final dividend payout would also be postponed. A dividend of 33 cents was to have been paid on April 21, 2020.
As a result of MOH measures, Singapore Exchange Regulation (SGX RegCo) had earlier announced measures to give time extensions for companies with Dec 31, 2019 year-ends to hold their AGMs by June 30, 2020. On March 31, the Ministry of Law and the Ministry of Finance have announced that there will be upcoming legislative provisions to help entities which find it challenging or are unable to hold meetings where personal attendance is provided for. The provisions will be introduced at the April Parliament sitting (on or around April 7).
Acra, SGX RegCo and MAS say in a joint statement that companies can choose to defer AGMs. For those which proceed with AGMs before April 30, they must: provide opportunity for shareholders to ask questions, provide for the meeting to be shown by “live” webcast, and allow for proxy voting. With the new regulations, and SGX RegCo and MAS’ new guidance, AGM dates are likely to be announced soon for the banks, and heavyweights such as CapitaLand and City Developments.
So far, one SGX listing, Bonvests Holdings, has rescinded its one-cent final dividend that it announced with its year-end results on Feb 28, 2020.
We have compiled a list featuring components of the Straits Times Index, excluding REITs (see table). Those with Dec 31 year-ends have sufficient retained earnings to pay out their dividends. In the absence of regulatory guidance on deferring final dividends, these are likely to be paid once shareholders’ approvals have been received at AGMs.
