Privatise Profits - Socialise Losses

BANK OF England governor Mervyn King used his now-famous meeting with the chief executives of the "big five" UK banks last Thursday to admonish them for increasing shareholder dividends.

On February 27, HBOS hiked its dividend by 18% to 48.9p meaning the bank offers a yield of 6.9%. It also lowered the targets under which directors would receive payouts on its executive incentive schemes. Previously directors only received bonuses under the scheme should the bank's shares outperform a basket of UK banks by 3%. Under the new rules, HBOS only needs to be 1.5% above rivals to trigger pay-outs.

Colin McLean, chief executive of SVM Asset Management said: "It just seems wrong that bankers are looking for support and essentially public money at a time when both dividends and executive pay are not only high but have also just been raised."

As we previously reported annual reports from RBS and HBOS show that Sir Fred Goodwin's remuneration totalled £4.19 million in 2007. Hornby's package climbed 22.5% to £1.93 million.