Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Shinhan approves of quarterly dividends for shareholders
Shinhan Financial Group Chairman Cho Yong-byoung delivers an opening address during the group's 20th regular shareholders' meeting at its headquarters in Seoul, Thursday. Courtesy of Shinhan Financial Group
By Lee Min-hyung
By Lee Min-hyung
Shinhan Financial Group established legal grounds to offer quarterly dividends by changing part of its articles of association during a regular shareholders' meeting, Thursday.
This allowed Shinhan shareholders to receive dividends on a quarterly basis from the current year-end dividend policy. Shinhan is the nation's first financial holding firm to have adopted the drive, as part of its enhanced shareholder return policy.
The passage of the much-anticipated agenda will enable Shinhan to offer quarterly dividends as early as the second half of this year. It remains to be seen when exactly the group will be able to do so, as regulators here urge financial firms to refrain from providing excessive dividends until the end of the first quarter amid coronavirus-related economic uncertainties.
There stands a chance for watchdogs to extend the period to year-end if the virus spread is not subsided and keeps posing economic damage nationwide. Under the recommendation, financial firms were advised to set their 2020 dividend payout ratio at less than 20 percent.
“The quarterly dividend offering is a shareholder return policy devised after Shinhan and its board of directors conducted continuous internal discussion,” Shinhan Financial Group Chairman Cho Yong-byoung told shareholders during the meeting broadcasted live online.
Shinhan also fixed its 2020 year-end dividends at 1,500 won ($1.32) per common share, down by 350 won from the previous year. The dividend for convertible preferred stock was set at 1,716 won.
The drop in the dividend offering came in response to the regulator's recommendation. Shinhan's 2020 dividend payout ratio reached 22.7 percent, slightly above the advised 20 percent limit, as the company passed a stress test which checked whether the firm can maintain its financial soundness under the assumption that the economy falls into a longer-than-expected recession.
The top-tier financial holding firm also passed an agenda of extension of terms for six outside directors during the meeting. Under the decision, their terms will be extended for another year.
Shinhan Bank CEO Jin Ok-dong has also been appointed as a non-executive director of the group.
The decision was widely expected despite earlier opposition from Institutional Shareholder Services (ISS).
ISS recently raised concerns over Jin becoming the group's non-executive director, citing that he faces a legal risk over Shinhan Bank's involvement in a nationwide fund fiasco surrounding Lime Asset Management.
The world's largest proxy advisor also expressed its opposition for Cho's extension of terms during Shinhan's shareholders' meeting last year.
But Shinhan passed all the proposed agendas during the meeting which lasted for less than an hour.
Cho pledged to keep its agile management to deal with the post-coronavirus uncertainty this year.
“Shinhan will swiftly push for changes for future finance from the perspective of digitalization and the environmental, social and corporate governance,” Cho said. “We will transform the lingering crisis into a new innovative opportunity by dealing with the virus-sparked uncertainty in an agile manner.”