* Profit jumps in first quarter
* Banking operations will be hit by lower interest rates
(Adds context, details from statement)
By Huw Jones
LONDON, April 17 (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 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)