B&B Shareholders

ad44downey

Nick_C wrote: »

But of course they did not go bust, they were taken into public ownership. If they had gone bust, shareholders might have got a better deal!

The share price don't lie. From over £5 to 18 pence and sinking fast. It was going bust.

EalingSaver

Nick_C wrote: »

But of course they did not go bust, they were taken into public ownership. If they had gone bust, shareholders might have got a better deal!

As Penryhn points out, if they had gone bust the shareholders would have got nothing, or pretty close to, as they have the last call on the assets.

Point of fact: B&B wasn't taken into public ownership. B&B was declared failed. Its deposit base/branches etc. were then taken up by Santander, and the mortgage book taken under the governments wing. That's different from nationalising a going concern as a single entity.

Point of fact: B&B's share price had fallen to the point that its market capitlisation was chicken feed relative to the size of its deposit and loan books. And yet no other institution wanted to make an offer for it. QED the 'market' had effectively valued it as either zero or negative worth. It no longer mattered whether it's share price gave it a market capitlisation of £200m, £300m or £0m. If it had been deemed to have value, you can be damn sure one of the big boys would have swooped and bought it up.

Of course I have sympathy with those that lost out, particularly lower level employees who had employee share purchase schemes. They have a nauseating double whammy - good chance of losing their jobs, if they haven't already, and a slice of their savings wiped out. But shares are inherently risky, and diversifcation of a share portfolio is critical. Just because its your employer - and perhaps even more so if its your employer who is also paying your salary - doesnt' mean you should be hanging on after exercising the purchase. I feel for those employees who have lost jobs and savings.

But in general it would be a complete travesty if the taxpayer ends up compensating shareholders of either B&B or NR. If those companies had any real intrinsic value at the point at which the government intervened, where were the institutional buyers eager to snap up a bargain? Ultimatley its the shareholders responsibility/duty to ensure the proper management of the companies through their power to appoint the board. Maybe a bit esotoric for the average small scale shareholder, but that is the reality.

What about the shareholders of the banks that were strong armed by the Govt. into underwriting/backing the B&B rights issue? They have taken a double hit, loss of value due to the wipe out, and the resulting cost through the FSCS enactment.