At the behest of the Swiss regulator, large banks have changed their dividend distributions to ensure that capital holds robust during the pandemic crisis.

Julius Baer yesterday joined its Zurich-listed rivals UBS and Credit Suisse in splitting its dividend distribution as lenders try to manage capital during the global COVID-19 pandemic.

The bank will propose to its shareholders to split the previously announced total distribution of SFr1.50 ($1.56) per share for the financial year 2019. If shareholders agree at their 18 May annual meeting, a first distribution of SFr0.75 will be made on 25 May, Julius Baer said in a statement. 

The action has been prompted by the Swiss Financial Market Supervisory Authority, FINMA, to ensure that banks keep financially solid amid the virus-caused market turmoil. Banks in the UK, for example, have dialled back on dividend payments to protect their capital buffers.

Julius Baer has also pushed back its ordinary annual general meeting from 16 April to 18 May. Because the total proposed dividend distribution of SF1.50 (in two instalments) had already been accrued in Julius Baer’s capital in 2019, the split will not affect its reported capital ratios.

“Julius Baer is adhering to this request from FINMA despite our continued strong capital, funding and liquidity position, which would have comfortably allowed us to pay the initially proposed dividend, and despite our strong performance in the first quarter of 2020,” Romeo Lacher, chairman at Julius Baer, said. “However, our decision is aligned with those of our peers and marks our commitment for a joint and united effort by all parties involved in the face of the challenges of the COVID-19 crisis. This is also reflected in the donation of SFr5 million we pledged to emergency relief efforts earlier this month.”

Julius Baer’s interim management statement for the first four months of 2020 will be published as planned on 19 May, it said.

UBS
Last week UBS, the country’s largest bank, proposed that the previously announced dividend of $0.73 for the financial year 2019 will be paid in two instalments, a dividend distribution of $0.365 per share and the establishment of a special dividend reserve of $0.365 per share. (For more than a year UBS has reported results in dollars rather than Swiss francs.) 

UBS expects to report a first quarter 2020 net profit of around $1.5 billion and expects its CET1 capital and CET1 leverage ratios to be in line with its targets, and well above regulatory requirements.

Credit Suisse
Credit Suisse said that instead of a total dividend of SFr0.2776 gross per share, as originally announced on 25 March, a total of SFr678 million, its board proposed a cash distribution of SFr0.1388 gross per share, with half being paid from retained earnings and half out of the capital contribution reserves. In the autumn of this year, Credit Suisse intends to propose a second cash distribution of SFr0.1388 gross per share.