Banks will pay dividends after all Patrick Hosking, Philip Webster and Miles Costello The Treasury is preparing to relax an implicit five-year ban on newly nationalised banks paying dividends, in an effort to keep the bailout on track. Banks asking the Government for £37 billion in rescue finance scented what they saw as a Treasury climbdown. At the weekend each bank involved in the bailout — Royal Bank of Scotland, Lloyds TSB and HBOS — agreed in signed statements approved by the Treasury to a ban on dividends to shareholders while the taxpayer held a significant stake. Officials disclosed yesterday, however, that the ban was only irrevocably in force for a year. It could then be lifted if the banks paid back large sums to the Treasury, and if such a move was “in the interests of the taxpayer”. Senior bankers insisted that the restriction was a climbdown from the Treasury’s unambiguous position in the frantic weekend rescue talks. Senior officials angrily denied suggestions, however, that the Government was reopening the agreement signed three days ago. Asked on BBC Two’s Newsnight whether the terms of the bailout were being rejigged, Alastair Darling, the Chancellor, said: “No, they are not. We reached an agreement with these banks on Sunday. The banks had the figures then. It was a voluntary agreement.” From The Times October 16, 2008
|