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’?!