Not so fat cats! Big British banks rein in dividend payouts to senior executives

It’s a jungle out there. A sophisticated, highly well capitalized jungle, but a jungle none the less. Nestling at the very upper echelons of the City of London’s metaphorical jungle are the fat cats who inhabit the boardrooms of some of the largest FX dealers and handlers of interbank electronic trading order flow in the […]

It’s a jungle out there. A sophisticated, highly well capitalized jungle, but a jungle none the less.

Nestling at the very upper echelons of the City of London’s metaphorical jungle are the fat cats who inhabit the boardrooms of some of the largest FX dealers and handlers of interbank electronic trading order flow in the world, all of whom are notorious for reaping the reward of the large banks’ efforts in the form of huge dividends.

This is due to stop, with the Bank of England having concluded a series of ‘stress tests’ which are likely to cause Lloyds Banking Group PLC (LON:LLOY), Standard Chartered, Barclays PLC (LON:BARC) and HSBC Holdings plc (LON:HSBA)among others, to be obliged to scale back dividend payouts.

During the course of yesterday evening, those with a vested interest in the fortunes of Lloyds Bank attempted to put a dampener on industry speculation that the bank would have to make reductions to its expected dividend.

The consequences of a reduction in dividend payments would potentially affect the British government’s plans to offer £2 billion worth of the bank’s shares to the public in the spring.

Emulating the ideology of legendary British prime minister Margaret Thatcher, who during the 1980s made successful attempts to privatise large, publicly owned entities which were in effect ‘dinosaurs’ and in doing so empowering the public by envisaging a nation of investors and shareholders, the idea behind the government’s proposed sale of Lloyds bank shares is to provide small investors with a discount and bonus shares in order to make invsesting in Lloyds stock an attractive proposition, whilst transferring the burden of ownership from the government into the potential fortune of the working man.

Lloyds Bank resumed its dividend this year after scrapping shareholder payments following the financial crisis, when it was bailed out by taxpayers.

The bank paid its shareolders a nominal 0.75p per share in February for 2014 and another 0.75p for the first half of this year. Chief executive Antonio Horta-Osorio has said he would like to return half of profits to investors by way of a dividend in the future.

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