Shareholders in the four main UK banks face the prospect of receiving no cash dividends until at least 2010, analysts have said, as a result of £400bn bank rescue package announced by the government this week. Banks that choose to accept a capital injection in return for preference shares will effectively dilute the holdings of existing investors, and be limited in the earnings that they can pay out.

“We feel that dividend payouts for the main four UK domestic banks – Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS – will be severely impacted with the possibility of no cash payout until 2010 or later,” warned Alex Potter of Collins Stewart. However, he forecast that neither HSBC nor Standard Chartered would need additional capital and would therefore be able to continue paying dividends as before – making them “unique among the UK banks”.