Why Are Banks Falling
Banks under pressure to axe dividends
Share this:
Bank stocks are dominating the lower reaches of the FTSE on Tuesday. The likes of RBS, Lloyds, HSBC and Barclays have shed round 2% each despite the FTSE pushing higher.
The move lower comes as the UK’s largest banks face pressure to axe or at the very least delay their dividend pay outs. The move would ensure that the banks have sufficient resources to keep businesses afloat through the coronavirus crisis.
These banks are due to pay out around £15.3 billion in dividends, around half of it is due to be paid out in the coming weeks. This may not be prudent, given that these banks are also bracing themselves for a wave of bad loans from both businesses and individuals.
Bad loans
The government’s lock down of Britain has caused demand for goods and services to evaporate. Businesses are laying off staff to control costs. As a result, these individuals will struggle to pay back any loans they have.
Despite cutting costs and help from the government many businesses could struggle to survive. If they are not doing business the likelihood of the business failing, increases. No -one really knows how long the lock down will go on for. However, the three months floated by some senior medical advisers could prove to be too much of a strain for the UK high street.
The government’s lock down of Britain has caused demand for goods and services to evaporate. Businesses are laying off staff to control costs. As a result, these individuals will struggle to pay back any loans they have.
Despite cutting costs and help from the government many businesses could struggle to survive. If they are not doing business the likelihood of the business failing, increases. No -one really knows how long the lock down will go on for. However, the three months floated by some senior medical advisers could prove to be too much of a strain for the UK high street.
Bankruptcies
The UK high street was already under strain prior to the coronavirs outbreak. One week into lock down and Carluccio’s and Brighthouse have collapsed. These are just the start of what promises to be a long list of companies failing. Bankruptcies could be a significant challenge for banks over the coming months.
The prospect of a dividend being cancelled has caused investors to jump ship into higher yielding investments, explaining today’s decline. Should the Bank of England implement the move for a freeze on bank dividend pay outs, Lloyds could be a particularly poor performer. Lloyds share price is already down 50% over the past 12 months.
Lloyds levels to watch
Lloyds trades below its 50, 100 and 200 sma on the 4 hour chart, a bearish chart. At the end of last week, the move higher was capped by the 50 sma at 38p. The path of least resistance is to the downside.
Resistance can be seen at 34.2 (today’s high) prior to 35.9 (50 sma).
Support is seen at 32p today’s low prior to 29.8p (low 23rd March)
Bank stocks are dominating the lower reaches of the FTSE on Tuesday. The likes of RBS, Lloyds, HSBC and Barclays have shed round 2% each despite the FTSE pushing higher.
The move lower comes as the UK’s largest banks face pressure to axe or at the very least delay their dividend pay outs. The move would ensure that the banks have sufficient resources to keep businesses afloat through the coronavirus crisis.
These banks are due to pay out around £15.3 billion in dividends, around half of it is due to be paid out in the coming weeks. This may not be prudent, given that these banks are also bracing themselves for a wave of bad loans from both businesses and individuals.
Bad loans
The government’s lock down of Britain has caused demand for goods and services to evaporate. Businesses are laying off staff to control costs. As a result, these individuals will struggle to pay back any loans they have.
Despite cutting costs and help from the government many businesses could struggle to survive. If they are not doing business the likelihood of the business failing, increases. No -one really knows how long the lock down will go on for. However, the three months floated by some senior medical advisers could prove to be too much of a strain for the UK high street.
The government’s lock down of Britain has caused demand for goods and services to evaporate. Businesses are laying off staff to control costs. As a result, these individuals will struggle to pay back any loans they have.
Despite cutting costs and help from the government many businesses could struggle to survive. If they are not doing business the likelihood of the business failing, increases. No -one really knows how long the lock down will go on for. However, the three months floated by some senior medical advisers could prove to be too much of a strain for the UK high street.
Bankruptcies
The UK high street was already under strain prior to the coronavirs outbreak. One week into lock down and Carluccio’s and Brighthouse have collapsed. These are just the start of what promises to be a long list of companies failing. Bankruptcies could be a significant challenge for banks over the coming months.
The prospect of a dividend being cancelled has caused investors to jump ship into higher yielding investments, explaining today’s decline. Should the Bank of England implement the move for a freeze on bank dividend pay outs, Lloyds could be a particularly poor performer. Lloyds share price is already down 50% over the past 12 months.
Lloyds levels to watch
Lloyds trades below its 50, 100 and 200 sma on the 4 hour chart, a bearish chart. At the end of last week, the move higher was capped by the 50 sma at 38p. The path of least resistance is to the downside.
Resistance can be seen at 34.2 (today’s high) prior to 35.9 (50 sma).
Support is seen at 32p today’s low prior to 29.8p (low 23rd March)
Related tags:
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Klarna IPO 2025: Key Facts, Valuation & BNPL Outlook
Klarna’s long-awaited IPO lands with a ~$14B valuation target—well below its 2021 peak but far above its 2022 trough. With 111M users, ~790k merchants, and five straight profitable quarters, Klarna hopes to prove it’s more than just a BNPL pioneer. Our cheat sheet breaks down the company’s history, valuation, competitors, revenues, and what to watch as KLAR lists on the NYSE in the busiest IPO week since 2021.
JPMorgan Q4 Earnings: Growth, Risks, and Outlook
JPMorgan Chase releases Q4 earnings on Jan 15, with EPS expected at $4.03 and revenue at $41.58B. Analysts will watch net interest income, cost control, and credit provisions as rising rates boost profits but risks like delinquencies and geopolitical tensions persist. The bank has outpaced the S&P 500 in 2025 YTD, reflecting resilience. Will it maintain its streak of beating estimates? Learn about its growth drivers, risks, and market impact ahead of this pivotal report.
Earnings preview: Bank of America, Goldman Sachs & Citigroup
US financial services and banks continue to release earnings. All of them reported higher earnings numbers when compared to last year. We continue with 4 more.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.