Some Comments Received from our Campaign on Banking Recapitalisation and Dividend Rstrictions

We have received the following comments from UKSA members and the general public on the problems faced by investors who held bank shares during the credit crunch crisis and the subsequent interventions by the UK Government.  These comments have been edited for brevity. If you wish to have your own comments added please send them to uksa@uksa.org.uk

"My wife and I have joined [UKSA] largely as a response to the outrageous treatment dished out to shareholders especially of Lloyds TSB. As a pensioner, I am looking at a 15% cut in income for the next five years, for what appears to be no good reason. I cannot imagine any shareholder in LTSB voting for the merger. We intend to attend the EGM and vote against. We also intend to lobby institutional shareholders where we have any interest", Tony Peterson.

"I invested in bank shares to supplement my pension believing that such old and well established organisations were, to coin a phrase, “as safe as houses”. I also believed, naively, that these organisations being fundamental to a highly developed economy, were licensed and therefore obliged to act responsibly and that a degree of supervision was in place to ensure that they fulfilled these obligations. I am therefore very annoyed that I am having to pay the price for what I see as failure of government. I was even conned into taking up the RBOS rights issue.", Ian Adam-Smith.

"Yes.  I am a LloydsTSB shareholder and  I support your campaign. This is a stitch up and LloydsTSB would be better off without HBOS.", Nick Robinson.

"As an investor in Bradford & Bingley and Lloyds TSB, both bought on account of their dividends, I face a considerable loss of income, as apart from a partial state pension (I did not work enough years to qualify for a full one on account of time off to look after my children), I rely almost entirely on investment income to live on.", J. Lynch-Watson.

"As shareholders in LloydsTSB, RBS, HBOS, and HSBC  we thoroughly support the recent UKSA Press release and your campaign. Maybe the banks will not be able to pay dividends over the next five years because they may make no profits.  But it is totally ridiculous and stifling to forbid them to pay dividends, even if they are in a position to do so. Keep up the good work of UKSA.", Alexander Dalgety.

"I have holdings in LloydsTSB and RBS. I am interested in your campaign and support the view that shareholders are being treated unfairly. This should of course come as no surprise to us after Railtrack, etc. The government is using its proposed 12% Debenture holdings as a tax-raising ploy as they will not be raising the funds at this rate.Nothing changes!", Colin Neame.

"The United Kingdom Shareholders Association ( UKSA) is rightly critical of the Government's handling of the problems of the troubled UK Banks from Northern Rock onwards. Conditions prerequisite for the 'assistance' proposed for the major banks are entirely detrimental to the shareholders. The coupon attached to the preference shares together with their redemption will consume any profits for many years to come. Thereafter the interests of existing shareholders in future dividends will be diluted by the Ordinary shares to be issued by the Government. In my own case I see my relatively modest income diminished by close to £1000 per annum from this source alone. At the same time and because of this, the shares I own in three banks are now worth £12,500 less than they were twelve months ago. There is little likelihood of any increase in value until there is some immediate prospect of a resumption of dividends. I have recently retired from self-employment with the concomitant loss of income from this source.  As I approach 'old' age it would be nice to feel some comfort from a lifetime of saving. As it is the banking crisis has been the precursor of a general recession which means that little of my other investment income is secure. A collection of Civil Servants at the FSA seems to have been asleep at their posts. The average layman has thus been exposed to the depradations of a bunch of bonus hunters dealing in instruments they did not understand. All this was on the reliance on the assessments of rating agencies who either did not understand the risks or were equally hungry for bonuses. We must wonder if the FSA was equally ignorant and simply chose to turn a blind eye. Against this background. I hear no word of contrition from Government regarding the failure of their various agencies which contributed so much to the present situation. Their sole approach seems to be predicated on the need to make a profit out of the misery of others.", Helen MacPherson.

"The recapitalisation package is penal to the point of theft from ordinary shareholders. Without the ban [on dividends] being lifted, my family for one will be living on capital for the next 5 years.", Mike Batterson.

"I feel that we are the victims of Ministers’ visceral dislike of Shareholders, which can only be understood as some relic in their minds of pre First World War society. I am sure that most shareholders, like myself, come from very ordinary backgrounds, and have worked hard for the money that they have invested.", Miles Stapleton.

"I am scandalised by the whole attitude of the banks and the Government to the private investor. Like many others I have lost a major part of my ISA  pension savings/capital as a result of this crisis. The usurious terms being demanded by Brown and his men are loan shark in nature and it means that I can kiss even the little I had left goodbye.  I knew the risks and was prepared to wait for the recovery, as in previous crises, but I did not expect to be shafted by my own country's leaders.", Patrick Moore

"I write as a pensioner and a shareholder in LloydsTSB and I wish to raise my massive concerns re the above. I purchased shares in Lloyds as they have over the years been a very high yielding stock with a conservative balance sheet and I REQUIRE  the dividend in order to live a half decent life (just) in my, and my wife’s retirement. Had I wished to invest in a bank with an aggressive outlook, I would NOT have invested in Lloyds. This ridiculous proposal now emasculates the dividend for the foreseeable future, will create a bank which in the fullness of time will dominate the UK banking scene which in turn will, in due course, require a future government to step in (again) to resolve the competition issues which will arise.", Neil Watts.

"I write to you as a shareholder of the Royal Bank of Scotland but also as a tax payer and a saver. My shareholding (15000 shares) has cost me £65,000 in cash over the last 3 years. I have deprived my family of many things during the past 10 years in order to amass this saving. This sum represents more than 50% of our overall investments. I also took part in the recent rights issue, thoroughly depleting our cash. I am 56, semi retired because I can no longer find work in my IT vocation, but to make ends meet when I can get the work, I am occasionally supply teaching at college or school. I still have a mortgage of about the amount invested in RBS. We do not have any other credit and live a fairly penny-wise existence. I point these mundane details out in order that you realise that I am not a greedy banker, just a regular citizen like all of your other tax payers and savers. Caught out by the Dot com boom and bust at the beginning of the century I still believed that equities were the best opportunity to grow our money and effectively receive an income via the dividend. I concluded that Banks were the safest long term bet and RBS has always paid a good dividend. Not only has my capital in RBS been devastated, I can no longer depend on the £3K+ annual dividend to pay for basic living standards. My impression is that shareholders are being treated as culpable in relation to the risk taken on by this bank. Why have the Government treated this army of shareholders like 2nd class citizens without hardly a mention. It's all been about Savers and Tax payers. In fact the Government have positively encouraged private shareholdings so shouldn't we also expect some sympathy?", P.G.Mitchell.

"The government has used this issue to aquire an unfair stake in LLoyds TSB, a company that it said was prudent and even the City refferred to them as "Dull as dishwater" because they had prudent management and were not involved in speculative bad practice. As a result, I now find my capital investment worth very much less and my income next year will be 40% less due to the loss of my dividend. This is in the years of my retirement when I was to make the most of my investment and when there may not be many more years left!
The government encouraged me to invest in my company through sharesaver schemes and I was happy to do so because I wanted it to succeed. ! If I knew now what was going to happen I would have put my money in AVC's. I am disgusted at what this government has done and it always appears to be pensioners that end up the losers!", James McMahon.

"As bank shareholders and members of UKSA, we entirely agree with the points made in your press release and the questions you have put to the Chancellor of the Exchequer. The draconian restrictions on dividends will certainly discourage private investors from making further investments in the companies concerned and would be likely to be counterproductive.  Therefore we suspect an undeclared political agenda.", D. & J. McGilvray.

"As the holder of 11,000 shares in LloydsTSB and 13,581 shares in RBOS (and a recent contributor to this company's Rights issue) I offer my whole hearted support for your campaign to obtain some redress from the invidious terms extracted by H.M. Gov. on these two of my retirement portfolio.", Peter Masters.