Banks Cancel Dividends to Preserve Capital

Britain’s largest banks HSBC Holdings, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered have scrapped dividend payments after pressure from the Bank of England’s Prudential Regulation Authority to preserve capital. The banks have agreed to cancel remaining payouts for 2019, not pay any other dividends this year and suspend any share buyback programmes.

Barclays chairman Nigel Higgins says: “These are difficult decisions, not least in terms of the immediate impact they will have on shareholders. The bank has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support, to take these steps now.”

Oil group BP is reducing its organic capital spending for 2020 by about 25% to $12bn and proposing $2.5bn of cash cost savings by the end of 2021, compared with 2019.

It says the “challenging environment” for oil and gas is expected to impact its first quarter results and there is “uncertainty around how long current depressed commodity pricing and weakness in product demand will continue”. BP expects to take a non-cash, non-operating charge of about $1bn in its first-quarter results.

Chief executive Bernard Looney says: “This may be the most brutal environment for oil and gas businesses in decades, but I am confident that we will come through it.”

Auto Trader Grouphas announced a placing of up to 46 million shares – 5% of its share capital – to strengthen its balance sheet. Separately, the company says it will furlough some employees, while its board directors have offered to forgo at least half of their salaries or board fees for “the foreseeable future”. The group’s executive directors have also requested that their bonuses for 2020 are waived.

Housebuilder Taylor Wimpey has cancelled a 2% salary increase for executives and scrapped their annual bonuses for this year. Board directors are also taking a voluntary 30% reduction in base salary, pension and fees for the duration of the Government-imposed UK lockdown.

Defence company QinetiQ Group has postponed a decision on paying a final dividend for 2020 until the end of the year. The company says in a trading update that it is performing in line with expectations but the coronavirus crisis is affecting all its key markets and it has seen disruption to customer trials and product shipments.

Property agency Savills has withdrawn dividends that it announced on March 12 and deferred its annual general meeting from May 6 until June 25.

Finally, self-storage operator Big Yellow Group has secured £35m of new funding from Aviva in a deal that takes its total debt facilities from the insurance group to £117m.

Andrew Cave

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