Pressure builds on insurer FBD over dividend payout amid Covid-19 crisis
FBD has postponed its annual shareholders meeting which was due to take place on May 8 because of the Covid-19 crisis, which effectively means that a decision of the payment of a final dividend will be postponed.
Many companies and financial firms have also decided to postpone the holding of their agms until after the health restrictions are lifted.
Regulated financial firms have, however, come under considerable pressure to defer making dividend payouts because the huge costs facing countries across the world are substantial from the fallout of the pandemic.
FBD said that “all business normally conducted at the agm, including the approval of a final dividend, will be deferred to the later date which will be advised to shareholders in due course”.
It comes after the European insurance regulator, Eiopa, said earlier this week that insurers and reinsurers should suspend on a temporary basis dividend payouts and share buy backs because the costs of the pandemic remain unclear..
Analysts said that the regulator’s advice will put pressure on insurers, including FBD.
“Added to the regulatory directive, will also be the wider political consideration – even if Covid-19 proves temporary – of what happens to dividend distributions if the whole issue of business interruption coverage remains a live issue outstanding for a number of quarters,” broker Goodbody said.
Davy said: “The statement from the European Insurance and Occupational Pensions Authority, while not calling for an outright suspension to dividends, would indicate that dividend pay-outs by FBD and all European insurers are now in serious doubt.” The broker said FBD was “well positioned” to tackle the effects of the Covid-19 crisis.
Shares in FBD fell 2.5% in the latest session to bring its losses in the past month since the onset of the Covid-19 crisis to 31%.
Meanwhile, Barclays in Britain has switched its agm due to take place on May 7 from Glasgow to London and said shareholders would not be able to attend in person, Reuters reported.
The bank followed other big British financial firms such as Standard Life Aberdeen in banning in-person attendance, complying with rules to prevent the spread of the coronavirus.
“Barclays very much regrets the need to impose this restriction on attendance as it regards the agm as an important date in the Company’s corporate calendar,” it said, adding that shareholders will be able to vote electronically.
Investors are due to vote on proposals to bind Barclays to tougher commitments on ending fossil fuel financing.
They will also vote on the bank’s own version of the measures, which it announced in response to the motion by shareholders, which commit it to an ‘ambition’ to have net zero carbon emissions by 2050.
