RBS Shares

I,_Brian

Disagreement is fine.

Something else to note, though - the Treasury is now able to provide a lot more financial support directly to banks - if I recall correctly, this was a problem because of EU rules on funding previously, which kept the government restricted on how much help it could give.

I'm certainly not suggesting people invest spontaneously in banks - and I've said elsewhere that we're almost certainly in a bear rally at present - so while bank shares are leaping up today, and probably for a while yet, I'm expecting them to lower through the summer.

LRW1975

Hi, i'm a share buying newbie and put £50 on RBS last week at 10.30p

Been a total nightmare ever since checking the price every 5 minutes

Scary to think when i was working for RBS in the late 90's what the share price used to be.

mrposhman

Masomnia wrote: »

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.

You say a few bad results - well we are only waiting for Lloyds headline numbers and we haven't yet had a run on the bank.

The main difference between now and Northern Rock is that the government have shown that they will protect savers so people will now think twice about removing all their savings. There hasn't been any queueing around the corners of shops as we saw with NR and we are only waiting on one more set of results and most of the signs from within LBG seem to suggest they won't be too bad.

Why do you say they will need more capital? You are pre-empting things that won't happen. This is what the market does and primarily why banks have been oversold. You only need to look at Barclays to see that - who by the way, have said they do not foresee having to raise any more capital.

Also, I find it hard to believe that the govt will be selling all their shares on the open market. Its more likely that a good portion will be sold back to the relevant banks. Its the easiest way for both the bank and the government so it would be unlikely that this doesn't occur.

True, the banks aren't paying dividends, though LBG have already indicated that they will have paid the preference shares off well before the end of 2009 and Barclays chose not to pay a dividend as its far more preferable to shareholders to lose a couple of dividend payments than see further dilution to their shareholding. To me its a very good decision by Barclays. That only leaves RBS.

I would rather look at facts rather than wild speculation of potential things that may or may not occur.

Current facts

- The results aren't as bad as everyone thought
- Barclays for one have said they need no further capital
- Some of the shares seem massivel oversold. I will work out the basic financials around the current market caps / pe ratios in a bit but can't be bothered to do that now. These will grow massively in the future providing large capital gains.
- The government have practically confirmed that all savings are safe (through the FSCS and potential nationalisation) so a run (which would be the most obvious reason for nationalisation) unlikely.
- Interest rates have fallen meaning those with tracker mortgages pay LESS for their mortgages. This will most likely result in lower default ratios than in previous recessions.

There are clearly other variables, for example, the housing market. How much further it has to fall probably is still well and truly up in the air but a lot of people seem to think that falls in property values affect the banks balance sheets, well the truth to that is it only happens when people default. As stated above, I wouldn't expect this to be as high as in previous recessions which can only be good for the banks. If people can pay their mortgages they do not default.

Moving on from there, the real problem underlying the economy is business loans. If the banks are recapitalising enough that they can continue to fund businesses this may just result in unemployment being not as bad as some fear and this is the biggest ratio that people should be watching. More unemployment results in more writeoffs, however if these are phased then they shouldn't pose massive problems for the banks being as (and I keep having to state this) are NON-CASH ITEMS which won't result in nationalisation.

To me the fear of nationalisation (and the resultant reduction in the share price) is way bigger than the likelyhood. Now I have steered clear of RBS as I feel that both LBG and Barclays are in a far healthier situation. Its wrong to taint them all together and I've actually been surprised by all the smaller investors on this board. Pretty much all the posters talking about investing less than £1000 have been commenting on RBS, just because their share price is the lowest doesn't mean they have the best possible chance of recovery. Out of the 3, last week I'd have stated Barclays, then LBG and then RBS for the simple reason of levels of dilution since the crisis started.

stylus360

Was in/out on BARC when they where 150-170's, still in at moment, also got RBS ad LLOY.

All for long term in my view as for reasons above and you must be prepared for a loss, although the spread i have should minimize one if it does happen.

Will reply to this thread next year........:D

chambta

Out of interest the RBS Group staff sharesave that's yet to actually start has shares set at 36p or thereabouts.

sabretoothtigger

Whens that option actually expire, its not immediately relevant to the current price

I,_Brian

RBS now at 16.5p - Barclays and Lloyds have recovered all falls over the past week - doubling their price from a few days ago.