HSBC is said to be mulling a move back to Hong Kong because the Bank of England asked it to not pay a dividend. Certainly, bank boards won’t be happy – their members count on those divis for paying for their second and third homes. Nor too will many savers, many of which are in Hong Kong. But any notion that the authorities will be interested in doing anything to ‘support savers’ is fanciful. That idea died with the last financial crisis with central banks unleashing QE and permanently ultra-low rates.
This crisis has turned accommodative monetary policy up to 11 – regulators, governments and central banks are not interested in savers. The hunt for yield goes on – income investors shunned the British bank stocks yesterday, which seems odd given that it was well reported the day before that the BoE was forcing them to ditch dividends and buybacks. HSBC’s threat is likely a reminder to the UK authorities that this time around the banks are here to fix the problem and should not be a target for politicians like they were last time.
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