Somewhere among all the news last night was an item about bank shareholders who, despite their banks being propped up by billions of pounds from The Government, are complaining about the decision to pay no dividends on their shares until every penny of the taxpayers’ money has been repaid to The Treasury.
For years the same banks have been making staggering profits and their shareholders have received appropriate dividends. Now those banks, by applying for and accepting support from The Government, are effectively acknowledging that unless their balance sheets and liquidity are helped by billions of pounds of taxpayers’ money they cannot continue in business. They are broke. Bust. Kaput.
Will someone please tell these shareholders the following:
1/ Holding shares is a gamble. Their value can go down as well as up. A profit is not guaranteed.
2/ When a business (whether a bank or otherwise) goes broke, bust, kaput, the shares are worthless and there are no more dividends.
3/ Thanks to The Government’s bank rescue arrangements they (the shareholders) are not actually holding worthless shares as they would be otherwise.
4/ Thanks to the rescue arrangements the shareholders may well be receiving dividends again in a relatively few years time – which they would not otherwise.
5/ That expecting dividends while our money is propping up their businesses is not just appalling cheek, it is sheer greed, that is, precisely the same vice that got the financial world into such a mess in the first place.