If RBS go National next week, do shareholders lose their money?

master_ian

A question about the 2nd Biggest bank in the UK.

What happens to people who invested money last week into RBS (and past shareholders) IF RBS becomes Nationalized?

Masomnia

The trading of the shares will be suspended and they will become worthless.

NR and B & B shareholders may yet get compensation if they are very, very lucky but it looks unlikely.

cos69

If your lucky, you might get Fridays closing price but if the liabilities exceed the market value of the company on Friday, as a shareholder you will get nothing.

master_ian

And if the Govt buys 50% of RBS, what then?

cos69

master_ian wrote: »

And if the Govt buys 50% of RBS, what then?

For the government to own 50% of the bank, means they have to issue new shares. Total number of shares in circulation would thus have to double (for the government to ahve 50%) so the share price must halve to keep the same market value of RBS!

sabretoothtigger

The government scheme is similar to a rights issue afaik but with a nice fat guarantee for the bank and governments return.
They wont nationalise them afaik, the value of any shares might fall in short term but thats obviously better then zero and we've allready seen them half.
If the government buys in and the share price doubles in confidence then hopefully there is nothing lost in theory!


Also in case it aint obvious RBS is absolutely gigantic, they own Natwest entirely. Natwest churn out 2 bn profit per year and so on. It really would not be feasible in the way northern rock or bb was

dunstonh

cos69 wrote: »

For the government to own 50% of the bank, means they have to issue new shares. Total number of shares in circulation would thus have to double (for the government to ahve 50%) so the share price must halve to keep the same market value of RBS!

That is the correct theory. However, given the irrational behaviour of the markets, the value of the shares could go up (or remain unchanged) as its expected that that they will be going with the Govt capital and the price is already factored in.

master_ian

Cheers folks...:beer:

StevieJ

cos69 wrote: »

For the government to own 50% of the bank, means they have to issue new shares. Total number of shares in circulation would thus have to double (for the government to ahve 50%) so the share price must halve to keep the same market value of RBS!

If the Govt injects capital and takes shares as recompense the share price should not change from this move. The share price may in fact go up because of the perceived stabilty.

GDB2222

StevieJ wrote: »

If the Govt injects capital and takes shares as recompense the share price should not change from this move. The share price may in fact go up because of the perceived stabilty.

Yes, I'd bet on up. The market hates instability and risk, and it will reward greater stability and certainty. The B&B and NR nationalisations are now seen as a bad example, because they left shareholders with nothing, thus not encouraging any further investment into banks.

chopperharris

sabretoothtigger wrote: »

The government scheme is similar to a rights issue afaik but with a nice fat guarantee for the bank and governments return.
They wont nationalise them afaik, the value of any shares might fall in short term but thats obviously better then zero and we've allready seen them half.
If the government buys in and the share price doubles in confidence then hopefully there is nothing lost in theory!


Also in case it aint obvious RBS is absolutely gigantic, they own Natwest entirely. Natwest churn out 2 bn profit per year and so on. It really would not be feasible in the way northern rock or bb was

This is exactly what I think , but it would take the dumbing down and explantion on peak time tv addressing for everyone to understand its not otherwise and to be relieved.Assumption of anything else by the public and traders needs to be removed asap.

By nationisation theres billions more than the bailout loans given lost within the economy if shares end up worthless.Its that fear of true nationalisation by shareholders that is driving down the price as the rat leaves their percieved ship.Funds though will imo start buying them up once theres clarification which will bring them back up again.

The top 5 banks will be saved by "loans by the govt" which is in no way nationalisation but to balance their books , somewhere else ie outside the top 5 have to be sacrificed...ie smaller banks will have to go to the wall if they are over exposed.

There is another option though on the "suspension" of shares if there is a real nationisation rather than the complete loss of them to the shareholder.For them to be "frozen" but reintroduced into the market upon a tier system of govermental payback...ie 50 percent paid back of loan means reintroduction of the holders shares back into the market...thus speeding up their recovery.