Managers of UK equity income funds – which have come to rely on the dividends from Royal Bank of Scotland, Lloyds TSB and Barclays – are seeking alternative holdings following the government’s bank bail-out.

In future, these banks – which are all expected to participate in the government’s £400bn rescue plan and accept capital – are likely to either scrap or reduce their dividends to less than 4 per cent or pay “scrip” dividends in shares.