Nationalisation (what is means for shareholders)

Legacy_user

So breaking news is that Anglo Irish Bank is being completely nationalised (link: http://news.bbc.co.uk/1/hi/business/7832203.stm)

So what are the implications for share-holders (of which I am one, might I add!). I understand they are injecting €1.5billion for the control. Am I right in understanding we as shareholders will get offered (told) a rate to sell our stock in the company as per market cap? i.e: €2.3 or something per share?

Aegis

Effectively you'll get whatever the government that nationalised it decides to give you as compensation for your shares. The process for issuing Northern Rock shareholders with compensation is still ongoing about a year after the nationalisation took place, so that gives you some idea of what you have ahead of you unfortunately.

If the government (or its appointed valuers) decide that the bank wasn't able to continue without being nationalised, your position may not be great.

Lokolo

Yeh my friend had shares in NR and is still waiting....

System

ahhh I see....I understand there are 760mill shares in total so is it as easy (usually) as €1.5bill/760mill shares = value of shares

Silver lining seems to be this bank wasn't going to collapse had the govt not intervened (unlike NR)...anyways, let's see....

Aegis

Lokolo wrote: »

Yeh my friend had shares in NR and is still waiting....

Personally I wouldn't encourage him to hold out much hope for a great return on those shares. NRK was pretty much belly up when nationalised, so the guys valuing it are going to have to take that into consideration. I'd be amazed if the offer got much above 20p per share.

Then again this is just my opinion as someone who watched as shares plummeted and people threw more and more money into the company in the hope that it would rise again, i.e. trying to catch the proverbial falling knife.

Lokolo

Aegis wrote: »

Personally I wouldn't encourage him to hold out much hope for a great return on those shares. NRK was pretty much belly up when nationalised, so the guys valuing it are going to have to take that into consideration. I'd be amazed if the offer got much above 20p per share.

Then again this is just my opinion as someone who watched as shares plummeted and people threw more and more money into the company in the hope that it would rise again, i.e. trying to catch the proverbial falling knife.

Wasn't his money so he doesn't care... his dad gave it to him to 'have go on the stockmarket'. He also got suggested to buy shares in Carter and Carter. They got delisted so he lost out on that too! lol.

He has Vodafone shares now for a couple of years, over the past year I told him to keep them and he hasn't gained a penny - opps

Aegis

Paz wrote: »

ahhh I see....I understand there are 760mill shares in total so is it as easy (usually) as €1.5bill/760mill shares = value of shares

Not at all. The government will work on the assumption that it took ownership before that injection of cash. You'll be awarded compensation partly based on the value of the bank before that cash injection happened. You definitely don't just get a share of the injection each.

Silver lining seems to be this bank wasn't going to collapse had the govt not intervened (unlike NR)...anyways, let's see....

Certainly gives you a better chance of getting a decent amount for your shares compared with what you bought them for.

Aegis

Lokolo wrote: »

Wasn't his money so he doesn't care... his dad gave it to him to 'have go on the stockmarket'. He also got suggested to buy shares in Carter and Carter. They got delisted so he lost out on that too! lol.

He has Vodafone shares now for a couple of years, over the past year I told him to keep them and he hasn't gained a penny - opps

Now there's someone with some bad luck at stock picking

Lokolo

Aegis wrote: »

Now there's someone with some bad luck at stock picking

Ha yes. He was going to sell his NR shares at one point but I told him not to, just wait a little more time to make sure you get an ok return, just before they plumetted... and stopped trading.

I am now worried about my investment decisions! (least mine are more spread risk!!)

System

Just found this
"Legislation surrounding the takeover will provide “fair compensation” for shareholders depending on how an “assessor” values the company, Lenihan said. “If the assessor decides the bank is worthless, then compensation will be nil,” he said. "

http://www.bloomberg.com/apps/news?pid=20601102&sid=aVmXpjfp1ExY&refer=uk

Mikeyorks

Not sure where you're picking the €1.5Bn from? That was the proposed injection mooted some days ago but before the Irish Govt changed it's mind and decided that re-capitalisation was not the way ahead and to take it over instead.

No doubt there will still be an injection of finance .... but it's certainly not a value that's on the table at the moment.

From your Bloomberg link :

and scrap a proposed 1.5 billion-euro ($1.97 billion) cash injection after the lender’s funding position weakened.