Hong Kong investors threaten legal action as UK banks drop their dividends

Regulators have insisted that British banks scrap their dividend payouts. HSBC’s shareholders are particularly cross.

Shareholders in Hong Kong are angry with HSBC © iStockphoto

Retail investors in Hong Kong have threatened legal action against HSBC after UK regulators persuaded it to cancel its dividend, says the Financial Times. HSBC was one of five UK-based lenders that last week “bowed to pressure” from the UK’s Prudential Regulation Authority (PRA) to withhold its annual payments to shareholders. However, although the bank is headquartered in London, a third of its shares are owned by individual investors in Hong Kong, many of whom rely on the bank’s dividends for income. The decision has “reignited the debate”over whether HSBC’s headquarters should move to Asia.

You can see why HSBC’s shareholders and executives are cross, says Alec Macfarlane on Breakingviews. But not only does the agitation “lack class”, it is also short-sighted given that HSBC is also the “biggest provider of credit cards and mortgages” in Hong Kong and a “big lender” to small businesses, many of which are “under strain” thanks to the crisis. In any case, not only is the law very clear that HSBC can withdraw payouts “as and when it pleases”, but it’s also clear that “flying in the face” of HSBC’s regulators would harm shareholders even more.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri