Oil Spill: BP To Decide On Dividend Cut,Today


British Petroleum‘s directors are to meet today to decide whether to suspend its dividend.

The British Broadcasting Corporation reported on Friday that the meeting comes in response to pressure from the United States government, which wants BP to use the money to pay for the Gulf of Mexico clean-up instead.

Meanwhile, BP‘s shares closed 7.2 per cent higher in London, fully recovering the losses suffered the previous day.

”In practice Monday‘s discussion at newly instituted weekly meetings of the board will be about when to suspend the payments, how long to suspend the payments, and what to do with the billions of dollars that would be saved and not paid to shareholders,” BBC Business Editor, Mr. Robert Peston said.

It looks increasingly likely that dividend payments will be ceased for a period -because of the intense pressure to do so from senior US politicians and the White House

Pension‘s expert and former government adviser, Mr. Ros Altmann told the BBC that if the company did cut its dividend it would be “a blow” but should not be taken “out of proportion”.

”For people already drawing a pension it does not really have much impact. For people saving for a pension, what we are talking about here is one quarter‘s dividend perhaps not being paid, certainly initially,” she said.

”It will only have an impact on people who are coming up to retirement immediately and will then have to convert their pension fund into a pension straight away, then the value of that pension fund will be less.

”Altmann said, “I don‘t think we should take it out of proportion

”The National Association of Pension Funds estimates that UK pension funds‘ exposure to BP is about 1.5 per cent of their total assets, which are worth more than £800bn.

The Chief Executive of the NAPF, Ms. Joanne Segars agreed that the impact on pensions would be “relatively diluted” as pension funds invest in many different companies‘ stocks and shares.

”The ability of pension funds to pay out pensions to today‘s pensioners and tomorrow‘s pensioners shouldn‘t be affected by this crisis,” she said.But she added: “If we saw a continuation of withholding of dividends or the company coming under further pressure and further speculation about its future then that‘s a real issue.

”BP shares closed at 390 pence on Friday. On Thursday, its shares fell 6.6 per cent as it continued to struggle with the fall-out from the Gulf of Mexico disaster.

However, the oil giant‘s share price had almost halved since the Deepwater Horizon oil spill began on 20 April.