RE: Takeover activity27 Jun 2026 12:03
Here’s why imo
1. The dividend hasn’t been “saved” as cash
The company hasn’t put £102m a year into a piggy bank.
Instead, the cash has effectively been used to:
* strengthen capital,
* absorb the motor finance provision,
* support lending growth,
* fund restructuring,
* reassure regulators, rating agencies and depositors.
So while the cash hasn’t left the business, it isn’t “spare”.
2. The £350m from disposals isn’t all free cash
Business disposals don’t automatically translate into distributable cash.
Some proceeds have been used for:
* debt management,
* restructuring costs,
* capital optimisation,
* supporting CET1.
Some also represents value that was already reflected on the balance sheet.
3. The real question isn’t “Can they pay a dividend?”
The answer is probably yes.
The question is:
Why have they chosen not to?
And I think there are four likely reasons.
a) Regulatory optics
The PRA will expect a conservative approach while the largest conduct issue in the bank’s history remains unresolved.
Even if legally permitted, paying dividends before the litigation is clearer could be viewed negatively.
b) Strategic flexibility
Every retained £100m gives management options.
If the litigation resolves favourably they can:
* restart dividends,
* announce a buyback,
* pursue acquisitions,
* invest for growth.
Once paid out, that flexibility disappears.
c) Negotiating position
Imagine the FCA, Tribunal or courts looking at a bank paying a large dividend while arguing about the size of provisions.
Management may simply think:
“Let’s avoid that headline.”
d) Timing
If they restarted a dividend today, they’d probably have to make it quite modest—perhaps 15–20p.
If they wait until after legal clarity, they could potentially announce:
* a higher ordinary dividend,
* perhaps a special,
* perhaps a buyback,
creating a much bigger market impact
I’m sympathetic to your frustration, not because I think CBG should necessarily have resumed dividends; but because management have said very little beyond:
“We’ll keep it under review.”
I’d much rather hear something like:
“Our intention remains to resume capital distributions once there is sufficient legal certainty and subject to maintaining our target capital ratios.”
That wouldn’t commit them to a date but would at least give shareholders a framework.
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