ARE you one of the forgotten bank victims of 2008? Admit it, you are silently nursing stock market wounds that you never foresaw?
If so, you are one of a multitude of voiceless small investors, marooned out there.
Perhaps you sold your small business recently, netting you a tidy sum? Perhaps you received redundancy money or an early retirement payment? Maybe you are a thrifty young saver who put money aside for a rainy day? Or you are a cute hoor who exited from the property frenzy at the peak? Most likely of all, you are an ordinary pensioner who salted away a few bob for retirement?
And where is your money?
Such savings have traditionally been sunk into the safest of all investments: Irish bank shares. Ahem.
Turn away for a moment from the antics of our bankers, who deserve all the grief now awaiting them. Forget too the unfortunate taxpayer who is footing the bill for the bankers’ sins. Instead, let us today take time out for the innocent victims who buried their life savings in bank shares.
Contrary to myth, these guys are not millionaires. They are mostly small savers who took the prudent route. Some 70,000 of us our suckers, impaled on the Bank of Ireland share spike, 85,000 in AIB, 20,000 in Anglo Irish Banks and 130,000 in Irish Life & Permanent. That makes over 300,000 registered holders of Irish bank shares. Allowing for a bit of overlap, there must be 200,000 small punters wallowing in the manure business. All were convinced that this swamp was the most prudent place to sink their life savings. Today, they are 90 per cent underwater.
If these were normal times, small shareholders in Bank of Ireland would be anticipating an annual dividend next week. Many of them old people, loyal to the idea that the banks were blue-chip stocks, took comfort from the certainty of their two dividends a year. They depended on them, however small.
Not only have their dividends died, but the value of their nest egg is decimated, meaning that their saving is worth less than a tenth (often a twentieth) of what it was.
Ditto AIB, Anglo and Irish Life & Permanent.
The poor souls would have been better advised to plunge blindfold into oil exploration plays, mining in Nigeria or even to have bought a few crippled donkeys.
Admittedly there were few hiding places in 2008. Even more canny investors, who spread their risk outside Ireland, lost their shirts. The US Dow dropped 34 per cent, Russia (for long the darling of emerging market zealots) a mighty 72.4 per cent, Japan 42 per cent , and Europe 45 per cent. Those smarter guys, who diversified into UK shares, saw the Footsie 100 lose only 34 per cent, but were then clobbered on the rebound by a sterling collapse of 24 per cent against the euro.
Ireland limped in near the bottom of the world equities league, with a 66 per cent fall.
But Irish financials took the global biscuit.
The ISEQ index of financial shares has dropped from a high in May 2007 of 17,063 to a level of 935 at the end of 2008, a 95 per cent loss. At first glance, a nought seems to have gone missing, but it has not.
Somewhere in the middle of the maelstrom sit a puzzled crowd of battered onlookers. The markets have taken lumps out of these victims. Their standard of living has been punctured, their expectations shattered and their fear is palpable. Many of them no longer have any earning power. Most made a supposedly secure investment for life and are now shattered.
Are you one of these people?
Are you going to take it lying down? Will you remain a spectator while our dazzled Government plays footsie with the discredited top brass of the Irish banks? You, not the Government nor the cowboys who are still in command, own these banks.
Ireland is fertile ground for shareholder activism. Suddenly a perfect opening has arisen to stop the Government and its banking friends from enjoying a free ride in a joint mission to destroy shareholder value.
Start with Anglo. The Government’s plan for Anglo will need to be endorsed by an EGM on January 16, late next week.
Anglo has hired Dublin’s historic Mansion House for this epoch-breaking event. It could be the Anglo directors’ last stand. Let us hope it is. But let us also hope that small shareholders flock to the Mansion House to serve notice on the financial establishment that the days of treating them as lobby fodder are over. Shareholders should turn up armed with their votes and their questions. They should be prepared to fire both weapons ruthlessly. Transparency is imperative, so neither the government nor the new Anglo chairman Donal O’Connor can be allowed to rush the new plan through.
Similarly, Bank of Ireland and AIB boards will be forced to face their angry owners. The big two will hold shareholder meetings before the end of March to ram through the new deal, a pact which involves an injection of government cash in exchange for concessions.
The 70,000 BoI shareholders and 85,000 from AIB should flex their muscles. First, by demanding that the directors exit en masse; and second, by giving notice that shareholder activism is in Ireland to stay. They will never again be taken for granted.
Ordinary shareholders should insist that it is unacceptable for BoI governor Richard Burrows (earning €512,000 a year despite the lamentable share price) and chief executive Brian Goggin (earning €3m), or bosses at AIB, Irish Life and Anglo to cliing to office in the face of the 90 per cent losses suffered by their investors.
The entire boards should depart. Their job was to shield shareholder value. Instead, they have presided over its annihilation.
No excuses hold water. Comparisons with overseas banks are devastating. While Irish financial stocks lost over 90 per cent last year, the UK’s Footsie Banking Index dropped only 58 per cent. Our failure is stellar.
So far all the manoeuvering, the guarantee scheme, the rescue plan, the murky negotiations and the final decisions have been cooked up behind closed doors. None of the owners — the small shareholders — have been consulted.
No questions have been posed or answered. Input has come mainly from the same cretins who have been responsible for the debacle.
Next, put the dates of the four banks’ meetings in your diary. Remember there are 300,000 of us in total. This is not an elitist club. If you include pensioners, whose money is so badly managed by Ireland’s number one parasites, the figures mushroom.
Ireland’s bankers almost singlehandedly ruined the nation in 2008. It is time you had your say in 2009. Break your silence, find your voice.
Are you game?