Lloyds TSB has spelled out today that there is no five year ban on dividends as first thought for the banks taking taxpayer cash. Lloyds plans to refinance the preference shares that it is issuing to the government next year and then intends to start paying dividends again.
Good news for Lloyds shareholders - and those in HBOS who will be consumed into the wider group assuming the planned deal goes ahead - who relied on their shareholding for dividend income.
Bad news for Barclays. John Varley, the Barclays chief executive, could have argued until today that Barclays was more attractive to would-be investors than other banks because it would be able to pay dividends more quickly than those taking the government money. This was one of the reasons for Barclays inviting Middle Eastern states to take a combined 31% stake in the bank rather than taking taxpayer cash.
Now, however, this is not the case. Barclays seems likely to resume its dividend payments around the same time as Lloyds.
The question for Barclays keeps coming back to executive bonuses. John Varley, the Barclays chief executive, has indicated he would not take his. The intentions of his boardroom colleagues are not yet clear.
