HSBC Annual Results 2019 media release

[PinkDalek]

... as mentioned earlier (with a link for those who can access):

viewtopic.php?p=296742#p296742

[Dod101]

The last time I looked the HSBC share price was under £4 which surely has to be a bargain for anyone who wants a decent punt. I think that once the income seekers of the world have been shaken out we should see the price stabilising and then rising if we have any confidence in the future. That is why I have decided to keep my HSBC shares for now. They have just been converted by Sam (Bully) Woods from an income share to a value share.

DYOR though!

Dod

[spiderbill]

The last time I looked the HSBC share price was under £4 which surely has to be a bargain for anyone who wants a decent punt. I think that once the income seekers of the world have been shaken out we should see the price stabilising and then rising if we have any confidence in the future. That is why I have decided to keep my HSBC shares for now. They have just been converted by Sam (Bully) Woods from an income share to a value share.
Dod

I'm hanging on too, although I fear it may drop further if there's any truth in this Bloomberg article this morning.
https://uk.finance.yahoo.com/news/hsbc-refugees-may-stable-home-233255652.html

Suggests that holders in Hong Kong may jump ship to Chinese alternatives, which would surely cause the price to drop. May also make the board consider a change of home base.

Spiderbill

[Dod101]

I did not know that HSBC was held as to more than 35% by retail investors. Clearly they have/had a big individual following in Hong Kong because during most of my time in Hong Kong, Hong Kong Bank as it was known was the bank of last resort in the absence of any central bank in the territory and every time a local bank went bust (quite a regular occurrence) HSBC would step in, buy it, and make good on the deposits, thus developing great respect and confidence from the local population. That I guess is why HSBC in its announcement on Tuesday evening apologised not just to individual investors in the UK but also in Hong Kong. In a simple letter Sam Woods has managed to erode a lot of that.

The Chinese are nothing if not pragmatic and no doubt a lot of these investors will now be selling without too much thought either because they are reliant on dividend income or they think that there must be something wrong with HSBC itself. They will have little interest in UK politics. That is what will be helping to drive the price down at the moment and I think if we can hang on the price will recover over the course of this year and next as the prospect of a dividend becomes more likely once again. Furthermore I think that institutions will buy on value grounds.

Dod

[spiderbill]

That I guess is why HSBC in its announcement on Tuesday evening apologised not just to individual investors in the UK but also in Hong Kong. In a simple letter Sam Woods has managed to erode a lot of that.

Yes, I imagine that the board are fuming about that. The loss of trust built up over many decades can have a massive effect on how a bank is seen for future relationships.

The Chinese are nothing if not pragmatic and no doubt a lot of these investors will now be selling without too much thought either because they are reliant on dividend income or they think that there must be something wrong with HSBC itself. They will have little interest in UK politics. That is what will be helping to drive the price down at the moment and I think if we can hang on the price will recover over the course of this year and next as the prospect of a dividend becomes more likely once again. Furthermore I think that institutions will buy on value grounds.

I hope you're right in the longer term, and tend to agree, but the shorter term could be painful if such selling gains momentum.

If they did decide to relocate what would be the practical effect for shareholders? Would we be bought out or would we find ourselves in a market which had withholding taxes applied or what? I have no experience of this sort of move so wondering what effect that might have, both personally and for the share price and any likely dividends generated in a new market.

[Dod101]

When they set up domicile in the UK, they formed HSBC Holdings plc and reorganised the capital in US Dollars. The effect on the shareholder was minimal. Our shares were simply exchanged for new ones in the holding company. Previous to that the parent was The Hongkong and Shanghai Banking Corporation, incorporated in Hong Kong, where it still operates today.

In fact at the request of the regulators HSBC like other banks were required to set up a 'ring fenced' UK bank which is now headquartered in Birmingham and that was to avoid contamination in the event of another financial crisis such as the 2008 one. It is surely that bank that lends to the UK customer (at least my accounts were transferred to it a couple of years ago) and it was the one that should have been banned from paying dividends up to the parent. As it is, it is profits from Hong Kong, the Far East in general and the Middle East from where most of the holding company profits derive. Rather ironic I think.

Dod

[Wizard]

When they set up domicile in the UK, they formed HSBC Holdings plc and reorganised the capital in US Dollars. The effect on the shareholder was minimal. Our shares were simply exchanged for new ones in the holding company. Previous to that the parent was The Hongkong and Shanghai Banking Corporation, incorporated in Hong Kong, where it still operates today.

In fact at the request of the regulators HSBC like other banks were required to set up a 'ring fenced' UK bank which is now headquartered in Birmingham and that was to avoid contamination in the event of another financial crisis such as the 2008 one. It is surely that bank that lends to the UK customer (at least my accounts were transferred to it a couple of years ago) and it was the one that should have been banned from paying dividends up to the parent. As it is, it is profits from Hong Kong, the Far East in general and the Middle East from where most of the holding company profits derive. Rather ironic I think.

Dod

This rather suggests you think only UK businesses will suffer due to the economic slow down resulting from measures to combat Covid-19.

[Dod101]

No Wizard of course not but I assume that it is only the UK economy that the Bank of England via the PRA is concerned about and that it expects HSBC and the other banks under their jurisdiction to channel their worldwide profits towards.

The more I think about it the more I think that HSBC might in due course return to HK as its domicile and risk interference from China. It would still have a big presence in London of course but I think once the dust settles after the virus is over that there could be some quite straight talking in London.

Dod

[Wizard]

No Wizard of course not but I assume that it is only the UK economy that the Bank of England via the PRA is concerned about and that it expects HSBC and the other banks under their jurisdiction to channel their worldwide profits towards.

The more I think about it the more I think that HSBC might in due course return to HK as its domicile and risk interference from China. It would still have a big presence in London of course but I think once the dust settles after the virus is over that there could be some quite straight talking in London.

Dod

I think the BoE would say, as the lead global regulator for HSBC, it is concerned about the whole business and all of its operations globally. I suspect they would go on to say that they see no reason why a global recession due to Corvid-19 and the associated actions would not cause increased defaults and bad debts across most, if not all, of the markets HSBC operates in.

Other regulators of HSBC subsidiaries and branches may also decide to stop the HSBC operations that they regulate returning capital to the UK based holding company, reducing the holding company's ability to pay dividends.

The Chancellor would be the one saying he wants the banks, including HSBC, to support the UK economy.

But remember who appoints the BoE's Governor.

On Hong Kong, I wonder if HSBC would be that keen to return to a territory that not so long ago saw ex-pats fleeing from in droves as every week saw riots of increased ferocity. I think Singapore is potentially an option, but as I think you observed earlier that could be perceived as a politically damaging insult to China.

[Dod101]

On Hong Kong, I wonder if HSBC would be that keen to return to a territory that not so long ago saw ex-pats fleeing from in droves as every week saw riots of increased ferocity. I think Singapore is potentially an option, but as I think you observed earlier that could be perceived as a politically damaging insult to China.

Do you really think that expats were fleeing Hong Kong in droves? Do you have any evidence for that? I have quite a few friends living in Hong Kong both expat and local Chinese bit I never heard that.

Dod

[Wizard]

On Hong Kong, I wonder if HSBC would be that keen to return to a territory that not so long ago saw ex-pats fleeing from in droves as every week saw riots of increased ferocity. I think Singapore is potentially an option, but as I think you observed earlier that could be perceived as a politically damaging insult to China.

Do you really think that expats were fleeing Hong Kong in droves? Do you have any evidence for that? I have quite a few friends living in Hong Kong both expat and local Chinese bit I never heard that.

Dod

I have a couple of friends who both have family in Hong Kong, well had. They and many of the expats they knew left. I guess the people you know are hardier souls. Maybe your friends have been there longer, which I guess is likely on balance to make you less inclined to leave.

[Dod101]

One guy has lived there for more than it must be 50 years, makes me feel old! (which I am) but is in a serviced apartment in central district. The other has been there for a shorter period but lives at Discovery Bay on Lantau Island. The other side from the Airport. They had no problems.

The Chinese guys that I know obviously have not got much choice although at least one of them and his wife were issued with British passports just pre 1997 before the handover, but I suspect have never used them.

I would live there again but not now I am too old. There was never any real threat to life and limb with the disturbances but considerable inconvenience at times. A neighbour Cantonese/Scottish was there last Christmas with her husband and said the rioters were mostly quite helpful especially as she spoke Cantonese.

Whether HSBC would want to return I really do not know. Probably on balance not.

Dod

[monabri]

"Retail investors in Hong Kong have threatened legal action against HSBC and will attempt to force the bank to hold an extraordinary general meeting.....

......again highlighted the lender’s complicated situation in Hong Kong, where it derives most of its profits before tax. Individual HSBC shareholders in the Asian financial hub — ranging from wealthy business people to low-income earners — have banded together in an attempt to reach the threshold of 5 per cent of outstanding shares required to secure an EGM."

https://uk.finance.yahoo.com/news/hsbc- ... 05018.html

( the link above is to a similar article. I had trouble linking to the Yahoo website ( misdirects) but this article reports similar)

[Wizard]

"Retail investors in Hong Kong have threatened legal action against HSBC and will attempt to force the bank to hold an extraordinary general meeting.....

......again highlighted the lender’s complicated situation in Hong Kong, where it derives most of its profits before tax. Individual HSBC shareholders in the Asian financial hub — ranging from wealthy business people to low-income earners — have banded together in an attempt to reach the threshold of 5 per cent of outstanding shares required to secure an EGM."

https://uk.finance.yahoo.com/news/hsbc- ... 05018.html

( the link above is to a similar article. I had trouble linking to the Yahoo website ( misdirects) but this article reports similar)

They can clearly call an EGM if they get enough shareholders behind the plan. At which point management will say: "If we had not cancelled the dividend the BoE would have stopped it anyway. What do you suggest we do?". What basis for legal action would then be available to disgruntled shareholders, the article gives no insight into that?

As I have now bought in at a low, post cancellation price I see the shareholder activity as positive as it reinforces the likelihood of the dividend being reinstated at the earliest possible time at the previously planned level. I am tempted to add to my holding.

[Dod101]

More power to those Hong Kong shareholders. Not that it will do any good of course but it at least puts some pressure on both the Bank and the bully boys at the PRA. Noel might like to send a letter of apology to me and the other UK retail shareholders as well.

All in all though it might persuade all concerned to reinstate the dividend asap.

Dod

[idpickering]

As we've been talking about this AGM , I thought I'd put this item here rather than on the company news board.

HSBC - Important Information relating to Annual General Meeting

The Notice of the Annual General Meeting ("AGM") of HSBC Holdings plc (the "Company") scheduled to be held at 11.00am on Friday, 24 April 2020 at the Queen Elizabeth Hall, Southbank Centre, Belvedere Road, London, SE1 8XX, was circulated to shareholders on 11 March 2020.

The board of directors (the "Board") has been closely monitoring the evolving Coronavirus (COVID-19) situation. Following the UK Government's introduction of social distancing measures and prohibition on non-essential travel and public gatherings, it will not be possible for shareholders to attend this year's AGM in person.

https://www.investegate.co.uk/hsbc-hold ... 30018801I/

Also posted there for non HYPer information.

[floyd3592]

More power to those Hong Kong shareholders. Not that it will do any good of course but it at least puts some pressure on both the Bank and the bully boys at the PRA. Noel might like to send a letter of apology to me and the other UK retail shareholders as well.

All in all though it might persuade all concerned to reinstate the dividend asap.

Dod

I agree. Don't know where i read it (I think it was in the Telegraph), but one financial journalist was saying banks had agreed to the dividend cut 'through gritted teeth'

[Dod101]

More power to those Hong Kong shareholders. Not that it will do any good of course but it at least puts some pressure on both the Bank and the bully boys at the PRA. Noel might like to send a letter of apology to me and the other UK retail shareholders as well.

All in all though it might persuade all concerned to reinstate the dividend asap.

Dod

I agree. Don't know where i read it (I think it was in the Telegraph), but one financial journalist was saying banks had agreed to the dividend cut 'through gritted teeth'

Yes I read that somewhere as well and I bet HSBC certainly did so, because of all the banks they could well afford the dividend.

Dod

[monabri]

I received a reply from the PRA (copy below). So I've written back along the lines of my annoyance at the threatening tone of Mr Wood's letter ( highlighting the specific text). I've pressed ahead with the complaint ( not that it will do any good) but it at least registers the complaint...no point in letting them off the hook.



Your Complaint Against the Prudential Regulation Authority

Thank you for your emails of 31 March 2020 which we are considering as a potential complaint against the PRA as defined by the rules of the Complaints Scheme.  A copy of the Scheme can be found at: http://www.bankofengland.co.uk/about/Pa ... fault.aspx. Section 3.2 of the Scheme sets out:

“Complaints can be made by anyone who is directly affected by the way in which the regulators have carried out their functions, or anyone acting directly on such a person’s behalf, provided that the complaint meets the requirements of the Scheme. To be eligible to make a complaint under the Scheme, a person must be seeking a remedy (which for this purpose may include an apology) in respect of some inconvenience, distress or loss which the person has suffered as a result of being directly affected by the regulators’ actions or inaction.”

Please can you confirm to us, by responding to this email, that you are directly affected (i.e as a shareholder, and with which bank/insurer) and the remedy which you are seeking.  Then in accordance with the Scheme, we will write to you again on or before 30 April 2020 setting out a summary of our understanding of your complaint and whether we propose to investigate the matters you have raised. 

In the interim however, we would like to ensure you have seen the PRA statement issued on 31 March, published on the Bank of England website: https://www.bankofengland.co.uk/prudent ... sh-bonuses) setting out the rationale for the decisions taken by the large UK banks.

The full statement said:
“The PRA welcomes the decisions by the boards of the large UK banks to suspend dividends and buybacks on ordinary shares until the end of 2020, and to cancel payments of any outstanding 2019 dividends in response to a request from us.

The PRA also expects banks not to pay any cash bonuses to senior staff, including all material risk takers, and is confident that bank boards are already considering and will take any appropriate further actions with regard to the accrual, payment and vesting of variable remuneration over coming months.

In the assessment of the Financial Policy Committee and the Prudential Regulation Committee, the banks enter this period with strong capital positions, more than sufficient to accommodate the combined simultaneous impact of severe UK and global recessions and a financial markets shock – as demonstrated through their performance in our recent stress tests. Although the decisions taken today will result in shareholders not receiving dividends, they are a sensible precautionary step given the unique role that banks need to play in supporting the wider economy through a period of economic disruption, alongside the extraordinary measures being taken by the authorities. We do not expect the capital preserved to be needed by the banks in order to maintain adequate capital positions, but the extra headroom should help the banks support the economy through 2020.”

As you are aware, the PRA also wrote a letter to UK insurers, published on the Bank of England website: https://www.bankofengland.co.uk/-/media ... 16646A1B70).

If you require any additional information in the meantime, please contact us at this email address.

Yours sincerely


PRA Complaints

[Dod101]

Well done monabri. The wording of Section 3.2 is very interesting and I too will now make a complaint. The loss is straight forward but I do not see the Bank of England making any monetary recompense unfortunately.

Dod