Credit Suisse and UBS postpone dividend payments following excessive pressure from FINMA

Credit Suisse and UBS postpone dividend payments following excessive pressure from FINMA

  • Credit Suisse and UBS bow to FINMA's request and postpone dividend payments.
  • UBS says it has provided £1.77 billion in liquidity to over 16,000 SME so far.
  • UBS forecasts a significant increase in Q1 net profit to be announced on April 28th.

The Coronavirus pandemic pushed several financial institutes in Europe into suspending dividends. Following excessive pressure from authorities, Credit Suisse (SWX:CSGN) and UBS (SWX:UBSG) have also submitted to delaying the lenders’ payout until later in 2020.

The regulators have been actively recommending the European lenders to focus on directing their profits and capital to support the economy. While many of the prominent banks had complied to the request in recent weeks, Credit Suisse and UBS were the last remaining to have not suspended their dividend payments before Wednesday.

Credit Suisse And UBS Bow To FINMA’s Request

Credit Suisse and UBS are two of the largest banks in Switzerland. Both the financial institutes commented on Wednesday that their liquidity and capital was strong enough to support their clients and the economy at large without suspending the dividend payments. However, the banks have now decided to postpone the payouts in respect of FINMA’s (Swiss financial markets watchdog) request.  

According to Chairman Axel Weber of UBS:

“Our financial strength well above regulatory requirements and prudent risk management allow us to deliver on our current capital returns policy. Nevertheless, at FINMA’s request, we have adjusted the 2019 dividend payout proposal given the high and unprecedented uncertainty.”

The regulator had previously recommended banks to conserve capital and postpone dividends to offer financial support to the companies that are hit hard due to the health crisis.

Credit Suisse also called compliance with FINMA’s request a “prudent and responsible step.”

Both the Swiss banks are participating in the government approved emergency loan scheme. According to UBS, it has so far provided £1.77 billion in liquidity to over 16,000 SME (small and medium sized enterprises).

UBS Forecasts A Significant Increase In Q1 Net Profit

UBS also expressed confidence on Wednesday that its Q1 net profit to be released on April 28th will climb to £1.21 billion from £890 million that was recorded in the same quarter last year. Credit Suisse was also previously reported upbeat regarding its financial performance in March.

Following the announcement, both the Swiss banks were reported trading around 4% up in extended trading on Wednesday. In terms of year to date decline, Credit Suisse is currently around 35% down in 2020 while UBS is roughly 25% down.

At the time of writing, Credit Suisse has a market cap of £17.63 billion while UBS is valued at £28.28 billion.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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