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topliner

Bradford & Bingley Hope?

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they voted FOR demutualisation

then, when the business failed, they lost the value in the shares - they could have sold them at any point up to this, a window of years and years.

I hope they get nothing. business risk. moral hazard.

Edited by Si1

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Whilst I would agree with the comment that if a business fails, the shareholders don't deserve a bailout, I do sympathise with their plight, by how things were done. The government basically stepped in and dealt with it. However the shareholders should have been asked to vote on whatever was being done, and also had the right to let it fail and/or put it into administration. A firesale of assets may still have resulted in more than a zero return. The entire process carried out seems to pay lipservice to comapny law and shareholders rights. I would be very sceptical about holding shares in any business that could be nationalised, and this could put a serious spanner in the works when the government wants to sell bank shares in years to come.

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However the shareholders should have been asked to vote on whatever was being done, and also had the right to let it fail and/or put it into administration.

the systemic risk at the time makes that tricky - again a risk for the shareholders to bear

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the systemic risk at the time makes that tricky - again a risk for the shareholders to bear

That is true, but before the crisis took hold, nobody was to know that B&B would be dealt with in this way.

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That is true, but before the crisis took hold, nobody was to know that B&B would be dealt with in this way.

indeed. but so what?

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indeed. but so what?

Well it makes it impossible to judge the risk of being a shareholder in a business that could be nationlised. It may be best not to hold shares in companies that operate in jurisdictions which do this kind of thing.

Edited by BalancedBear

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Well it makes it impossible to judge the risk of being a shareholder in a business that could be nationlised. It may be best not to hold shares in companies that operate in jurisdictions which do this kind of thing.

that's slightly off the point - the B&B shareholders should have judged that the business was risky, and sold their shares. The fact that it ended up being nationalised is lamentable, but does not detract from the fact that B&B was a crock of an investment.

It is a separate point that the govt needs to reassure people that they aren't going to get in the habit of nationalising things willy nilly. These were extreme times.

Edited by Si1

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A firesale of assets may still have resulted in more than a zero return.

Even if the assets had been sold and had obtained market rather than firesale prices, there still wouldn't have been enough to cover B&Bs liabilities.

There was NO POSIBILITY of the shareholders getting ANYTHING if B&B went into administration.

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