What is the Process for Reprivatization of Banks?
Question/Comment: If the banks are nationalized and become healthy again, what is the process for reprivatization? Do stockholders on record as of the date of nationalization have any priorities when the banks are reprivatized? How did Sweden manage this process?
Paul Solman: Under any proposal I’ve seen, the shareholders are wiped out. Period. What kind of priority would one imagine? A discount on the new stock issue? First right of refusal to buy shares?
In the accounts I’ve read of the Swedish takeovers, the shareholders of the nationalized banks were left with nothing. The banks that recovered, under government ownership, were later sold to new private investors. Someone please write to the Business Desk to tell me if I’m wrong.