Swiss banks bow to pressure to delay half of dividend payments

Best of neighbours: the HQs of UBS and Credit Suisse in Zurich. © Keystone / Gaetan Bally

Switzerland’s two largest banks, UBS and Credit Suisse, have asked shareholders to accept a delay of several months for half of their dividend payments this year. The move follows a request from the financial regulator to hold on to more cash during the coronavirus pandemic.

Both banks now want to split the distribution of dividends, each worth hundreds of millions of francs, into two tranches – the first batch to be paid out in a few weeks and the second in the autumn.

Shareholders will vote on the proposals at their respective annual general meetings later this month. A release of the second batch of payments would be subject to another vote at planned extraordinary general meetings to be held later this year.

The Swiss Financial Market Supervisory Authority (Finma) welcomed the newsExternal link that “fits into a united and internationally coordinated effort by all concerned to meet the challenges of the Covid-19 crisis.”

Finma wants the banks to hold on to cash reserves both as an enhanced buffer against possible losses and to have a greater stock of loans to issue to businesses struggling to keep afloat during the coronavirus-enforced shut down.

Switzerland is not the only country asking banks to hold back. Several banks in Britain have stopped dividend payments altogether under pressure from the Bank of England. The European Central Bank and regulators in European countries have also demanded restraint.

Credit Suisse said it wants to split its intended CHF678 millionExternal link ($698 million) dividend payment into two installments, each worth CHF0.1388 per share. UBS also divided its proposed CHF0.73 per share payment into two equal tranches worth CHF0.365 per shareExternal link.