HSBC shareholders in Hong Kong mull legal action over dividend scrapping, Banking News & Top Stories

HONG KONG (REUTERS) – The shareholders of HSBC in Hong Kong are calling for an extraordinary meeting with management and taking possible legal action against the bank’s scraping of dividend payments.

HSBC and other top British banks on Wednesday (1 April) announced the postponement of payments following regulatory pressure to protect their capital as a buffer against expected losses from economic losses from the coronovaire epidemic.

Founded in Hong Kong nearly 150 years ago as Hong Kong and Shanghai Banking Corp, Europe’s largest 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 shareholders in angry Hong Kong have come together to create a dedicated Facebook page that had more than 3,000 members as of Sunday, to discuss taking action against the London-headquartered bank’s dividend halt.

“At this stage, we should call an EGM (Extraordinary General Meeting) so that the management can explain to us,” H.T. Chan, a 46-year-old retired driver who owns the bank’s stock and is part of the Facebook Action Group, told Reuters.

“For legal action, it depends on what they respond to in the EGM. Hopefully we can call this meeting.”

By Hong Kong laws, shareholders of a company with at least 5 percent of the total voting rights may be required to call an extraordinary general meeting.

In a letter to Hong Kong shareholders following the decision to pay dividends, HSBC chief executive Noel Quinn said the bank board would review the stance once the economic impact of the epidemic is better understood.

“We deeply regret the impact this has had on you, your families and your businesses. We are fully aware of how important dividends are to our shareholders in Hong Kong,” he said.

Hong Kong is the single most important market for HSBC, and is one of the three note-issuing banks there.

A spokesman for HSBC said on Sunday that the decision to cancel the 2019 dividend was taken at a “direct request” from the British regulator, and the bank was not able to comment on any legal proceedings that had not yet started.

The 39-year-old unemployed man relied on the dividend income saying, “I am following the majority action. This is a very necessary issue.”

“Our first demand, at least, you have to open the EGM to convince us face to face, not just an apology letter !,” he wrote referring to Quinn’s letter on the Facebook page.

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