Swiss banking groups UBS and Credit Suisse have decided to delay paying out a portion of their 2019 dividends after succumbing to regulatory pressure for the same due to the Covid-19 pandemic.
UBS now plans to offer the proposed $0.73 dividend in two tranches.
The bank will offer half of the payout as a regular dividend and the remaining as a special dividend.
The special dividend has to get the nod of shareholders separately on 19 November 2020 following its Q3 results.
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UBS anticipates a net profit of approximately $1.5bn in Q1 2020.
The bank also expects strong operating performance in all units.
Besides, the bank also expects its CET1 capital and CET1 leverage ratios to be in line with its targets and well above regulatory requirements in Q1.
UBS chairman of the board of directors Axel Weber said: “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.”
Credit Suisse intends to make a cash distribution of CHF0.1388 per share, which is half its original plan.
It plans to make a second distribution of the same amount. This amount has to be cleared by an extraordinary shareholder meeting in Q3 2020.
Credit Suisse said: “While the Board remains of the opinion that Credit Suisse’s financial strength would have continued to support the original dividend proposal made to our shareholders, we believe that this response to FINMA’s request, in alignment with the similar decisions made by our peers, is a prudent and responsible step to preserving capital in the face of the challenges posed by the COVID-19 pandemic and will allow for a fuller evaluation of the extent of the economic impact of this crisis later in the year.”
The Swiss financial regulator FINMA has welcomed the move by the two banks.