RBS Shares

sabretoothtigger

Last I heard was the government setting up a large bank holding fund (years from now) that would contain all shares in the banks. Then shares in that fund could be sold off to any investor interested or even an ipo, etc

If the banks were still on the ftse100, then tracker funds could buy in, would be obliged to do so even. I font think hmg wants to sell at a loss though

Just as a side issue, any idea what rate the government got their most recent shares at (preference share conversion). Was this at the original value (65p) or at current market value?

I dont think its happened yet but I assume it'd be 65p or whatever the price was a week ago as the news itself effects the price

Masomnia

Your original question has been answered, so to chip in something else:

A lot of the other FTSE100 companies, which won't be collapsing any time soon, are seriously devalued, with solid fundamentals. You'll get dividends (esp. good if denominated in dollars), long term growth, and no unnecessary worries about nationalization. Trackers could be good given that the markets are so low, funds like M & G recovery... No financial advice of course, just my opinions.

Failing that... buy your wife a nice necklace, take her to La Gavroche or something. Don't have a wife? Wine and dine some lovely lady then! I really don't think it's worth risking all that money.

Andybrwn7

I have a few questions for Martin or whoever does banking. My money is in the RBS group! How many shares does the general public own ?. What rights do we have against the owners of the bank for their bonuses? Can we ask that x% of your bonus should be paid to your customers?. Now that we have bailed the banks ou then surely we are entitled to something, or is it the case that you pay 40% tax after doing overtime but you get nothing back from bailing companies out?

Andy

mrposhman

Andybrwn7 wrote: »

I have a few questions for Martin or whoever does banking. My money is in the RBS group! How many shares does the general public own ?. What rights do we have against the owners of the bank for their bonuses? Can we ask that x% of your bonus should be paid to your customers?. Now that we have bailed the banks ou then surely we are entitled to something, or is it the case that you pay 40% tax after doing overtime but you get nothing back from bailing companies out?

Andy

You and I get shares in the banks, who once the preference shares are paid off (getting you and I an income on that investment) will start to receive dividends (I'm a little unclear on the RBS situation as the govt have just converted their preference shares to ordinary, whether this lifts the dividends "ban" I'm not sure though they are more likely to withhold them in 2009 anyway). Then its capital gains that hopefully will be raised for the shareholder.

The shares in the banks are non-voting, and besides corporates use remuneration committees to ratify pay packages and bonuses.

ardandy

So what would happen to peoples shares if the Governement nationalises the bank? Would the Gov just buy yours off you giving you some return?

How does this all work?

I,_Brian

The government can't 100% nationalise RBS, because it would wreak economic armageddon on the UK. Not a single person who advocates 100% nationalisation can argue why, other than the fact RBS shares are at a low.

But even still, all investors need to have a strategy, and also be prepared to lose their investment - it is the nature of investing that you could lose money, so you need to plan for that.

I hold RBS shares but am not worried in the slightest - however, I would personally look at Lloyds and Barclays as stronger investment opportunities because both are likely to recover faster, so you're more likely to make your money better with those, as well as be less stressed by their future possibilities.

2c.

mrposhman

I,_Brian wrote: »

The government can't 100% nationalise RBS, because it would wreak economic armageddon on the UK. Not a single person who advocates 100% nationalisation can argue why, other than the fact RBS shares are at a low.

Exactly, on the "Is it time to invest in the banks thread", I asked the exact question of those stating nationlisation will occur and have not had a coherent argument for it yet.

The only comment I've really had back is that house prices will drop which I clearly explained is a non-cash item and therefore not a viable reason for nationalisation.

No-one has yet told me where all this cash will go, that will make the banks not viable as a going concern.

Masomnia

Some bad financial results from the banks and what's to stop a run on the banks as people withdraw savings?

If the economy becomes worse, more people get laid off, fewer mortgage payments, more write-offs, banks struggle... It happened to Northern Rock and it happened to B & B. Why not RBS, Lloyds or Barclays?

It's not as if nationalization is the only problem. They'll possibly have to raise more capital from share holders, diluting your holding, and it'll be years before they recover in all probability. All the while you're not getting any dividends (traditionally one of the main reasons for holding them), and in the end with greater regulation, there's no guarentee they'll go as high as they were.

Don't forget also that the government has millions (billions?) of shares in some of these banks. When they recover, the government will off load them all into the market, keeping the price of the shares down. This may be the time to buy, in my view.

There are very few sensible reasons to invest in my view.

I,_Brian

Masomnia wrote: »

It happened to Northern Rock and it happened to B & B. Why not RBS, Lloyds or Barclays?

Because they are more diversified banks, where NR and B&B had specifically chased the Buy To Let market, and additionally failed to retain capital to cover losses - it came to the point that B&B could not operate past 2008 because it no longer had any cash.

Barclays, meanwhile, announced today it had £36 billion in cash before assets:
http://www.bloomberg.com/apps/news?pid=20601102&sid=aDTYqXUMCzxc&refer=uk

Masomnia

I,_Brian wrote: »

Because they are more diversified banks, where NR and B&B had specifically chased the Buy To Let market, and additionally failed to retain capital to cover losses - it came to the point that B&B could not operate past 2008 because it no longer had any cash.

Barclays, meanwhile, announced today it had £36 billion in cash before assets:
http://www.bloomberg.com/apps/news?pid=20601102&sid=aDTYqXUMCzxc&refer=uk

The BTL market didn't make up that much of the mortgage book, wasn't as high as 60% in B & B's case, I admit I know less about NR. Plus its rights issue made it one of the best capitalized banks in Europe, in terms of the tier 1 ratio, yet it still failed.

Securitized mortgages brought them down, and RBS et al are just as exposed to them.

I think we'll end up going round in circles from here. As long as people are aware of the risks then that's fine, there's potentially a lot of money to be made, but if it wasn't so risky then the price wouldn't be so rediculously low. Of course with risk comes reward.

Perhaps we should agree to disagree?