Market: Barclays hurt as top banks feel pressure to axe dividends
BARCLAYS shares tumbled another 7% today as the bank came under fresh pressure to ditch a 6p-a-share, £1 billion dividend payment due on Friday.
While other large firms have scrapped shareholder payouts to preserve cash, big banks have said they are financially strong enough to justify a divi.
Bank of England governor Andrew Bailey has already made it plain he expects banks to make protecting customers a priority. Other voices have since said they think dividends are presently irresponsible.
City observers note that investors including pension funds have been expecting the divi and invested partly on expectation of an income flow.
Barclays shares fell 7p to 90p. They were nearer 190p at the start of the year.
The bank is among several meeting the Financial Conduct Authority today for talks, with the dividend issues likely to be raised. Barclays had no comment.
Uncertainty over bank dividends saw the FTSE 100 lose 79.75 points to 5430.58.
Oilers joined the banks among the biggest fallers after oil prices crashed, with Brent Crude around $23 per barrel for the first time since 2002 amid fears coronavirus could grind the global economy to a halt. BP fell 5.8p at 299p and Shell dropped 13.8p at 1216p.
On the FTSE 250 things went from bad to worse for Travelex owner Finablr after Ernst & Young resigned as auditor. Finablr’s shares have been suspended for two weeks after it found £81 million in undisclosed cheques from before its initial public offering in 2018.
EY was looking into the missing cheques and had demanded that Finablr make changes to the board of the company if it was to continue in its roleas auditor. But Finablr failed to do so. Finablr said: “The board was unable to accommodate EY’s requirements in full in the time allowed to them.”
The shares remained suspended.
There were also concerns over the future of Mothercare after the baby clothes seller gave up on plans up to raise fresh equity. Mothercare will instead raise debt “rather than pursuing an equity solution at this time.”
Mothercare had problems before coronavirus and shares in the fragile business were down 5% or 0.2p at 4.5p.
Traders were also nervy after Alpha FX warned that its biggest unnamed client owed the company £30.2 million and is struggling to pay.
The client, a global exporter of food, held a number of contracts with Alpha, selling US dollars to buy Norwegian Krone.
But this month the Norwegian Krone has fallen 15.9% against the US dollar.
Alpha said: “The client subsequently became unable to pay the full margin owed on its forward contracts when due. Alpha is in the process of negotiating a settlement agreement with the client to provide it with a payment plan.”
Alpha has cancelled its full year dividend payout and shares dropped 46% or 440p at 500p.
