HSBC Holdings Share News (HSBA)

(Sharecast News) - HSBC Chairman Mark Tucker apologised for the bank's cancelled dividend at an annual general meeting held behind closed doors because of the Covid-19 crisis.
The bank was told to scrap its $0.21 fourth-quarter payout and rule out dividends and share buybacks during 2020 by the Bank of England at the end of March.

The decision caused uproar among small shareholders, particularly those in Hong Kong who hold the shares as sources of income. About 40% of HSBC shares are owned by individual investors, with about three quarters of those in Hong Kong.

In his statement to shareholders Tucker stressed that the decision was forced on the board by the BoE. Reports said HSBC and other banks were reluctant to pull their dividends without being told to do so by the central bank.

Tucker said: "We are acutely aware of how important the dividend is to you ... We recognise that many shareholders are deeply disappointed by the cancellation of the dividend and we profoundly regret the financial consequences that the cancellation will have on shareholders, their families and their businesses.

"This action was not taken lightly and reflects the view of our group's lead regulator that extra prudence is needed in these unprecedented times, so that banks like ours can help support customers, both now and in the long-term."

The dividend decision is said to have reignited a debate at HSBC about whether to remain based in the UK or to switch back to Hong Kong, which was its domicile until the 1990s. Some retail investors in Hong Kong threatened to take legal action against the bank over the decision.

Chief Executive Noel Quinn also said he was sorry for scrapping the dividend.

Quinn said in his statement: "I am also aware of the strain being placed on our shareholders, particularly our retail shareholders, following the request from our lead regulator to cancel our fourth quarter dividend payment for 2019. I share the deep regret that Mark expresses in his statement about the impact that this will have on you, your families and your businesses."

HSBC's bosses made their statements as the bank held a skeleton AGM at its London headquarters with no shareholders present because of Covid-19 restrictions. The bank normally has its meeting at a public venue where hundreds of shareholders gather to listen to the board answer questions.

The AGM puts the seal on a chaotic year for HSBC in which Tucker fired John Flint as CEO in August after less than 18 months in charge. The board then appointed HSBC veteran Quinn as interim CEO and let him announce a radical restructuring while considering other candidates. Quinn got the job permanently after UniCredit's Jean Pierre Mustier ruled himself out in late February.

Tucker said: "The process of searching for a new group chief executive began in August 2019 and was the subject of much interest. The board was determined to run a comprehensive and rigorous search, identifying and evaluating world-class candidates from both inside and outside the bank.

"Following this, the board unanimously concluded that Noel Quinn was the best candidate. The circumstances that have unfolded in the first quarter of 2020 - and the way that HSBC is responding - make it even clearer that Noel is the right person."