U.S. Markets

Euroclear puts listing option, dividend on ice due to market volatility

LONDON (Reuters) - Brussels based European stock and bond settlement house Euroclear is halting efforts to float or find other ways for small shareholders to sell stakes and is suspending the payment of dividends, it said on Friday.

Euroclear, which settles securities for exchanges like Euronext and London Stock Exchange, said in its first quarter trading update that approval for the dividends it had already set out have been postponed until the fourth quarter following recent guidance for financial institutions from the European Central Bank.

The company, which is owned by banks and other customers, has been looking at ways to make it easier for many shareholders who own small stakes to sell out, either by a stock market listing for the company or a private placement scheme.

The nine largest shareholders, including Euronext, LSE and ICE ICE.N hold around 55% of the company, but there are more than 100 stakeholders who own fractions of 1%, making it hard for them to attract buyers if they want to offload.

“Given the current uncertain environment, the board has decided to stop all work on a tentative liquidity initiative, and wait until economic activity and market stability has been restored in a sustained way to consider the matter again,” Euroclear said in its statement.

Euroclear said its first quarter revenues rose 9% year-on-year to 383 million euros, with net profit up 29% to 127 million euros.

But it said lower interest rates will substantially impact its banking operations over the coming quarters, with a yearly decline of approximately 50% anticipated in 2020, compared to 2019 results.

Central banks have slashed interest rates in response to the economic crisis brought on by national lockdowns to control the coronavirus pandemic.

Reporting by Huw Jones. Editing by Jane Merriman and Elaine Hardcastle