UBS intends to pay its 2019 dividend as planned, the Swiss banking giant said today, despite guidance from Swiss authorities and international banking groups to limit payouts due to the catastrophic economic impact of coronavirus.
The bank’s proposed dividend of $0.73 (59p) in cash per share is an increase of almost six per cent on 2018’s figure, representing a total payment of $2.6bn and an almost eight per cent return on its share price, which has fallen some 30 per cent since February.
“UBS has a strong capital basis and is strategically well positioned, which is especially crucial in this difficult time,” the lender said in a statement. “UBS, as the largest Swiss bank, is in a position to support the economy while maintaining an appropriate dividend policy.”
The lender’s decision comes as regulators across the world urge banks to scrap or reconsider payouts in order to focus on maintaining capital levels and channeling finance to companies and consumers struggling with the impact of coronavirus.
The European Central Bank told eurozone banks on Friday to suspend dividend payments and share buybacks until October, suggesting that they should instead use their profits to support the economy as it grapples with the outbreak.
Banks including ABN Amro, the Bank of Ireland, ING, Rabobank, Commerzbank and Unicredit have all said they would scrap dividends following the ECB’s advice.
Mark Branson, chief executive of Swiss markets authority Finma, last week urged banks to exercise restraint on payouts.
“It is not a ban, it is an appeal,” Branson said, as the Swiss government announced a 20 billion franc (£16.8bn) lending programme for coronavirus-hit businesses.
“We are asking the boards to decide who needs the money more — Swiss clients or international and institutional investors.” The Swiss government has said it backs Finma’s recommendations.
UBS was rescued in 2008 by the Swiss federal government with a six billion Swiss franc capital injection during the financial crisis.
It is still facing an order by a French court to pay €4.5bn after being found guilty of laundering proceeds of tax evasion in 2019, a ruling it is appealing.
Chief financial officer Kirt Gardner said earlier this month that UBS was comfortable with its liquidity levels despite sharp falls in equity markets.