BOE THUMBSCREWS - PRA CEO Sam Woods pulled the trigger4 Apr 2020 23:25
Britain's banks were in effect given little choice on dividends by the Bank of England's Prudential Regulation Authority, which threatened to take supervisory action against them if they did not.
"The PRA stands ready to consider use of our supervisory powers should your group not agree to take such action," PRA CEO Sam Woods said in a letter to each bank's chief executive.
The BoE moved quickly because some payments were imminent. It wrote to banks on Tuesday afternoon and told them to make a decision within hours, which they did. That was because Barclays was due to make its payment on Friday, one person at a rival bank said.
HSBC was hardest hit by the news, as it prides itself on its ability to pay dividends, and investors, especially in Hong Kong, rely on its reliable income. HSBC had been due to pay a US$0.21 dividend on April 14. The bank made 55% of its profit in Hong Kong last year, and about 40% of its shareholders are retail investors in the territory.
"Although the decisions taken today 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," the PRA said.
It said the banks were well capitalised but "the extra headroom should help the banks support the economy through 2020".
https://www.ifre.com/story/2308687/bonfire-of-the-bank-dividends-l8n2bq2ye