LONDON (Reuters) – UK-listed companies could cancel about $60 billion in dividend payments this year following Britain’s lockdown and calls from regulators to preserve cash during the coronavirus crisis, according to a report by analytics company Link Group.
As Britain battles to curb the spread of virus, the report published on Thursday showed that a record 41% of dividend payouts by the country’s listed companies were under threat if the situation worsens.
Link Group, which provides shareholder management services as well as analytics, said it based its UK Dividend Monitor findings on publicly available data from companies listed on Britain’s main stock market, and consensus analyst forecasts.
Companies had already announced a staggering 23.8 billion pounds ($29.5 billion) of dividend cuts and delays by April 5, it said, warning that a “UK recession is already underway, but duration and severity are unknowable at this stage”.
British banks led the way as top lenders scrapped or postponed 13.6 billion pounds in planned payouts after the Bank of England asked them to halt dividends, while also encouraging them not to pay executive bonuses.
Barclays <BARC.L>, HSBC <HSBA.L>, Lloyds Banking Group <LLOY.L>, Royal Bank of Scotland <RBS.L>, Standard Chartered <STAN.L> and the British arm of Spain’s Santander <SAN.MC> all put their payouts on ice in a co-ordinated industry response earlier this month.
The next largest batch of potentially frozen dividends came from the mining sector, led by heavyweight Glencore <GLEN.L>, which deferred to August a decision on its proposed $2.6 billion payout for this year while it weighed the impact of the COVID-19 pandemic on its business and on the economy.
The total amount of investor payouts being scrapped this year could nearly double, as an additional 23.9 billion pound worth of dividends could be at risk, Link said adding that half of the amount could come from an oil sector hit by a price war between the world’s top oil producers Saudi Arabia and Russia.
But much of that could depend on a meeting on Thursday, when the Organization of the Petroleum Exporting Countries and its allies led by Russia, the group known as OPEC+, will discuss a potential big output cut to shore up crude prices that have also been hammered by the coronavirus pandemic.
($1 = 0.8080 pounds)
(Reporting by Joice Alves; Editing by Emelia Sithole-Matarise)