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INVESTORVOICE Press Release Investors in UK banks get the worst deal The forced suspension of dividend payments is bad for shareholders and taxpayers. 17 October, 2008. Now that other countries are announcing their rescue schemes for their troubled banks, it has become apparent that shareholders in the UK banks are being treated less more favourably than their US and many EU counterparts. The United Kingdom government has demanded that any bank seeking government assistance should not be permitted to pay a dividend until they have redeemed all of the preference shares taken by the government. With the possibility that some banks may not be able to repurchase the preference shares back from the Treasury for a number of years, this could mean no dividends will be received by pension funds and individual investors for many years to come. In contrast, in the United States, the regulators have stated that those institutions receiving federal assistance cannot increase their dividend nor undertake share buy backs without receiving prior approval from the regulators. Whilst in Switzerland, the Government has agreed to purchase CHF 6 billion ordinary shares of UBS without imposing any restrictions on the bank’s future dividend payments. In addition, the Swiss National Bank is allowing the bank to transfer up to US$ 60 billion of distressed assets into a separate fund in which both the central bank and UBS will share in any upside. UBS shareholders will suffer a near 10% dilution but will have escaped from any further write downs on the toxic assets. The bank expects to pay a dividend again in 2010 for the year 2009. The UK dividend restriction is self defeating in that it will discourage investors from participating in the proposed ordinary share capital raising planned by the banks and underwritten by the Treasury. The shares will then be owned by the Treasury at a cost to the taxpayer of £ 30 billion. InvestorVoice requests the United Kingdom government to renegotiate the agreement with the banks involved for the mutual benefit of both their shareholders and all taxpayers.
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