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Banks cancel dividends

Barclays and Lloyd’s have announced today that they are cancelling dividend payments for this year.

31 March 2020
Barclays PLC (the “Company”)
Suspension of Dividend Payments on Ordinary Shares
In order to help Barclays serve the needs of businesses and households through the extraordinary challenges presented by COVID-19, the Board has decided that for 2020 the Company will not undertake any interim ordinary share dividend payments, accrual of ordinary share dividends, or share buybacks.
In addition, in response to a request from the UK Prudential Regulation Authority and to preserve additional capital for use in serving Barclays’ customers and clients, the Board has agreed to cancel the 6.0p per ordinary share full year 2019 dividend that was due for payment on 3 April 2020. The Board will decide on any future dividend policy and amounts at year-end 2020.
The Company still intends to publish its Q1 2020 Results Announcement on or about 29 April 2020.
Commenting, Nigel Higgins, Chairman, said:
“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, 
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Replies

  • edited 31 March 2020 at 9:57PM
    ThrugelmirThrugelmir Forumite
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    edited 31 March 2020 at 9:57PM
    Was expecting this news. Follows the ECB's decision last week to request banks to conserve cash. One would hope that bonuses are likewise cancelled. Bankers shouldn't profit from Government intervention. 

    Going to impact funds and investment trusts that have priced this income into their NAV in anticipation. . 
  • DoctorStrangeDoctorStrange Forumite
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    I agree this was necessary - any bank looking for cashflow help would meet a hostile public if shareholders and execs are withdrawing cash from the business.

    I think they remain a good bet though, with a 2 year horizon at least.
  • But they don't have cashflow problems as I understand it, rather they're in pretty good health
    This is just to avoid uninformed reactions from social media cretins 
  • edited 1 April 2020 at 8:58PM
    ThrugelmirThrugelmir Forumite
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    edited 1 April 2020 at 8:58PM
    But they don't have cashflow problems as I understand it, rather they're in pretty good health
    This is just to avoid uninformed reactions from social media cretins 
    Cash to be used to support the economy. More lending / credit facilties granted. There's the demand. With a high % of the shares held by overseas investors, dividends paid would simply result in the cash going abroad. Rather than being reinvested into and for the long term benefit of the UK economy. 
  • GreengageGreengage Forumite
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    I can understand this measure going forward, although I would question whether the motivation is not more PR than economics - but I do think it's unreasonable to withdraw dividends at the eleventh hour which were declared ex-Dividend months ago and which were due for payment in days. 
  • ThrugelmirThrugelmir Forumite
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    Banks aren't alone in cancelling dividends. Virtually across the board. Nothing to do with PR. 
  • GreengageGreengage Forumite
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    Both BP and Shell honoured their declared dividends last week; I believe GSK will do the same next week.
  • Aye, it's certainly not across the board
    If we take my little su set of 23
    Paying: AZN BATS MONY MRW
    Deferring: BNC HEAD HLCL SVS
    Cancelled: LAND MGGT
    Unconfirmed: 11 + 1 x non dividend payer + HHI who have said in an article that they have reserves to pay at least something
  • Move BNC to Cancelled
  • PrismPrism Forumite
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    A simple answer to the loss of the dividend is to sell the same percentage of shares. Do it on the original ex-dividend date if you really want the same effect.
    These dividend cuts will possibly make the banks stronger companies in the short term.
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