Amundi has offered to suspend the payment of its dividend for 2019, becoming the first major investment firm to make such a move, although analysts predict more will follow.
Europe’s largest asset manager, 70 percent owned by French bank Crédit Agricole, said it was responding to calls from the European Central Bank in March. The proposal will be put to a shareholder vote at the company’s annual meeting, which is scheduled to take place virtually on May 12.
Amundi’s share price has fallen by more than 32% since reaching its all-time high of € 78 on February 19. The group was born from the merger of the asset management activities of Crédit Agricole and Société Générale ten years ago and listed in 2015.
The announcement came a day after Britain’s five largest banks agreed to withhold their 2019 dividends following pressure from the Bank of England’s Prudential Regulation Authority.
Shareholders and regulators have called on companies to suspend dividend payments until the worst effects of the coronavirus pandemic subside. Analysts have speculated that several top fund managers, including Standard Life Aberdeen and Jupiter, could cut their dividends by at least half.
Amundi stressed that it still has a strong capital position, with a senior capital ratio of 15.9% at the end of 2019. The suspension of the dividend coincided with a similar decision by Crédit Agricole.
Amundi raised its dividend to € 3.10 in February after two consecutive quarters of collection. The fund manager has said he will place the capital in his reserve account and consider distributing it to shareholders in the second half of 2020.
Marina Cremonese, a senior analyst at rating agency Moody’s, said asset managers linked to banks were more likely to withhold their dividends, as were fund managers who were over-leveraged. But she added that few groups fall into these categories as fund managers have deleveraged since the 2008 financial crisis.
“We could see that for some asset managers it is a way of saving money,” she said. “Some will feel the pressure and have to cut costs. “
Jefferies analysts said it was “very likely” that German company DWS would follow Amundi’s lead. But the investment group, majority owned by Deutsche Bank, told FTfm it has yet to decide whether it will cancel, cut or suspend its 2019 dividend, which stands at € 1.67 per share.
Last week, two Italian wealth managers with banking licenses, Banca Generali and Banca Mediolanum, announced that they would withhold their dividend payments for 2019, while Azimut, a wealth manager who has no banking license, confirmed that it would pay its dividend this year.
Several analysts have suggested that SLA, Britain’s largest listed fund manager in terms of assets, could cut its dividend by as much as 60%. In its annual results last month, the group said it would continue to pay its 21.6p dividend over the next two years.
But David McCann, analyst at Numis, said that even though the company had a strong balance sheet, its dividend was likely to fall 60% to 9p per share beyond 2022. “Assuming markets don’t recover from levels current, we consider the dividend to be at risk beyond this period, as core business profits are at current levels and are not close to sustaining the payout indefinitely, ”he said.
Douglas Flint, chairman of SLA, told FTfm that the Scottish group has pledged to pay its dividend in full this year. “Dividends are extremely important for the UK stock market,” he said. “Many retirees and savers rely on dividend payments from their equity portfolios to generate income.”
Mr McCann also predicted that other UK managers could cut their dividends in the coming years, including Jupiter by 50 percent, Man Group by 56 percent, Premier Miton by 33 percent and River and Mercantile by 56 percent. .
Gordon Aitken, analyst at RBC Capital Markets, said that even if SLA had enough capital to pay the 2019 dividend, he predicted that the board would cut future payments by up to 50% in response to the slowdown in the market. pandemic-induced market.
Additional reports by Peter Smith