Shareholders in Britain’s biggest banks could be forced to give up billions of pounds in dividends following last week’s lifeline from the government.

However, the £50 billion recapitalisation could also boost share prices battered by the strife in global financial markets. Some banking stocks have fallen by as much as 90% in the past year.

“The market has been screaming for the government to act and provide full-scale capital support for the banks. We got it,” said Guy de Blonay of the New Star Global Financials fund.

“It’s early days — the market is not entirely sure it’s going to be enough — but I think we’re closer to an inflexion point than we would otherwise be.”

Analysts said shareholders in some banking stocks could have to forgo income until 2010 or later on the back of the government’s rescue deal, which will turn Britain into a nation of bankers.

“We have now entered a new era for global banking,” said Paul Niven at fund manager F&C.

“In return for taxpayers’ money, the state will gain a level of control over their governance, pay and lending practices. Regulation will increase markedly and controls on all elements of banking practices will rise.”

The influence over income payments is likely to come as a blow to shareholders. In the past, banks have been among the highest yielding — and generally safest — shares on the market.

In recent years, UK banks’ dividends have accounted for around 50% of the income payout of the FTSE 100 index.

Last year Royal Bank of Scotland (RBS) yielded 8.9% while Alliance & Leicester paid 8.5%. Shareholders in Lloyds TSB recieved dividends of 35.9p a share last year — a yield of 7.6%.

How much capital each bank will ask the government for and the precise terms of the recapitalisation remain unclear.

Credit Suisse analysts estimate that RBS could seek a capital boost of £10 billion. That would represent around 67% of its market value.

Its share price has plunged 84.8% from its 52-week high — to 77.7p from 470.6p — taking its market capitalisation to £15 billion.

Barclays and HBOS could take about £5 billion each and Lloyds TSB £4 billion, Credit Suisse said.

Among them, these four banks paid a total £9.5 billion in dividends last year.

However, Alex Potter at Collins Stewart said: “Dividend payouts for the main four UK domestic banks will be severely impacted with the possibility of no cash payout until 2010 or later.”

Mark Durling at Brewin Dolphin said in a research note that HSBC and Standard Chartered were likely to continue paying dividends, but that payment of Barclays’ and RBS’s final dividend was now “looking doubtful”.

Lloyds TSB and HBOS, which agreed an emergency takeover after HBOS shares plummeted, have already swapped final dividends for scrip issues — meaning shareholders will receive more shares instead of cash.

The prospect of British banks trying to raise more capital through rights issues could further dampen their share prices. De Blonay said that RBS was the most likely to have “some sort of liquidity issuance”.

Nevertheless, experts said the value of banking shares could now enter a sustained rally, buoyed by the government’s rescue package and an improving outlook for earnings.

On a price/earnings ratio of around four, the prospect of recession is already factored into prices, those bullish on the sector say.

Nick Raynor at The Share Centre, a broker, warned investors against getting too gung-ho.

He said: “Investors should feel a little more confident, but those who invested in banks last year and still hold these shares are likely to have lost a large chunk of their original investments already.”

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