(Adds details from shareholder news conference on Monday)
By Sumeet Chatterjee and Felix Tam
HONG KONG, April 6 (Reuters) - HSBC shareholders in
Hong Kong are considering calling for an extraordinary meeting
with management and taking possible legal action against the
bank's decision to scrap dividend payments.
HSBC and other top British banks on Wednesday announced the
suspension of dividend payouts after pressure from the regulator
to save their capital as a buffer against expected losses from
the new coronavirus crisis.
Founded in Hong Kong about 150 years ago as Hongkong and
Shanghai Banking Corp, Europe's biggest lender by assets has a
large number of small shareholders in the city who have long
benefited from the bank's stable dividend payments.
Some of the Hong Kong shareholders have come together and
created a dedicated Facebook page, which had more than 3,000
members as of Sunday, to discuss possible action against the
London-headquartered bank's dividend halt.
"At this stage, we must call an EGM (extraordinary general
meeting) to let the management explain to us," H.T. Chan, a
46-year-old retired driver who holds the bank's stock and is
part of the Facebook action group, told Reuters.
"For legal action, it depends on what they respond in the
EGM. Hopefully, we can call this meeting."
Shareholders of a company with at least 5% of the total
voting rights may require it to convene an extraordinary general
meeting, according to Hong Kong laws.
As of Sunday, the newly formed HSBC Shareholders Alliance in
Hong Kong had registered members with combined ownership of
about 2% of the bank's stock, Ken Lui, the convenor of the
alliance, told reporters on Monday.
"Our goal is to gather 5% of shareholding to call for an EGM
... we are very optimistic as we have only set up this alliance
four, five days ago."
HSBC Chief Executive Noel Quinn in a letter to Hong Kong
shareholders after the decision to suspend the dividend said the
bank's board would review the position once the economic impact
of the pandemic was better understood.
"We profoundly regret the impact this will have on you, your
families and your businesses. We are acutely aware of how
important the dividend is to our shareholders in Hong Kong."
Commenting on the possible legal action by the Hong
Kong-based shareholders, one London-based institutional investor
told Reuters he believed the group had little chance of
reversing the decision.
"I see the debate about the banks' dividends as a very short
one: regulator tells them what to do and they comply – end of
story."
Hong Kong is HSBC's single most important market, and it is
one of three note issuing banks there.
A spokeswoman for HSBC said on Sunday the bank was not able
to comment on any legal proceedings not yet commenced.
"I am following the majority action. This is a significantly
essential issue as you have promised substantial and persistent
dividend-paying, but you fail to do that," said Kingsley Chow, a
39-year-old unemployed man relying on dividend income.
"Our first demand, at least, you have to open EGM to explain
to us face-to-face, not just an apology letter!," he wrote on
the Facebook page, referring to Quinn's letter.
(Reporting by Sumeet Chatterjee and Felix Tam in Hong Kong and
Sinead Cruise in London; Editing by Mark Potter and Jane
Merriman)