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The rights of bank deposit holders?


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  • When a business has disproportionate debt (vs. equity), they are labelled as ‘highly leveraged’ and viewed with a sense of caution. What about commercial banks? If you consider deposit holder funds as debt (which represents 80%-90% of a bank’s ‘capital employed’), then aren’t banks among the most leveraged businesses? 
  • We talk of shareholder activism, how about deposit holder rights? Can this only be left to the regulator and boards that effectively represents ‘minority capital’? Shouldn’t deposit holders have a ‘voice’ in the way a bank is governed? Not when it goes bankrupt (pun intended!), but when it’s alive and kicking?
  • So, should they have voting rights? Or wait till they form a ‘union’?!

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