Hong Kong regulator says no grounds to pursue action against HSBC for scrapping dividend

Hong Kong’s securities regulator has said it will not take action on HSBC’s decision to scrap its dividend payment this year, after protests by the bank’s shareholders.

“There is at present no grounds on which regulatory action should be pursued … in respect of the cancellation and the suspension,” the Securities and Futures Commission (SFC) said in a statement on Friday.

The commission said it “has received a large number of enquiries and complaints from the investing public and professional bodies in Hong Kong”, and, although it does not usually comment on individual cases, was issuing the statement due to “significant public interest”.

Hong Kong retail investors own about a third of the bank’s total shares, and lost US$1.28 billion from the dividend cancellation. Many rely on the shares as a form of regular income.

The SFC said it had raised the shareholders’ concerns with HSBC and the Prudential Regulation Authority (PRA), an arm of the Bank of England that requested the dividend suspension. The PRA’s request, it said, was made in consideration of factors such as the economic implications of the novel coronavirus, and the need for early action to help boost firms’ capital positions. Any refusal of the request would not have best served HSBC or its shareholders, it added.

An HSBC spokesman said the bank was aware of the SFC’s statement. “The board will review our dividend policy at, or ahead of the year-end results for 2020, when the economic impact of the pandemic is better understood,” he said.