HSBC shareholders in Hong Kong are considering legal action and calling for a meeting with the bank’s management after it scrapped its dividend last week.
HSBC and the UK’s other leading banks announced last Wednesday that they were cancelling their dividends after pressure from the Bank of England to conserve cash.
Some of HSBC’s Hong Kong shareholders have formed a Facebook group which has over 3,000 members to discuss possible responses to the dividend suspension.
“At this stage, we must call an EGM (extraordinary general meeting) to let the management explain to us,” H.T. Chan, a 46-year-old retired driver and HSBC shareholder who is part of the Facebook action group, told Reuters.
“For legal action, it depends on what they respond in the EGM. Hopefully, we can call this meeting.”
Shareholders of a company with at least five per cent of the total voting rights may require it to convene an extraordinary general meeting, according to Hong Kong laws.
As of yesterday, the newly formed HSBC Shareholders Alliance in Hong Kong had registered members with combined ownership of about two per cent of the bank’s stock, Ken Lui, the convenor of the alliance, told reporters today.
“Our goal is to gather five per cent of shareholding to call for an EGM … we are very optimistic as we have only set up this alliance four, five days ago.”
Read more: The impact of coronavirus on dividends
HSBC chief executive Noel Quinn in a letter to Hong Kong shareholders after the decision to suspend the dividend said the bank’s board would review the position once the economic impact of the pandemic was better understood.
“We profoundly regret the impact this will have on you, your families and your businesses. We are acutely aware of how important the dividend is to our shareholders in Hong Kong.”
Hong Kong is HSBC’s single most important market, and it is one of three note issuing banks there.
Last week the Financial Times reported that the pressure from UK regulators to cancel its dividend had restarted a debate at the bank about whether to move its headquarters to Hong Kong – although the bank denied this was being considered.
HSBC declined to comment.