RBS Nationalisation?

BMWrider

I bought some RBS shares earlier this week, now having read some web based stuff and getting a bit confused can anyone tell me what happens to the shares if the govt nationalise RBS?

Masomnia

You would in all likelyhood lose the lot, as basically the government take all the shares.

When Northern Rock and Bradford and Bingley were nationalized the shareholders got nothing, but are still waiting to see if they will be compensated in some way. The reason the shares are so cheap at the moment is that there is still a fear in the market that the shares will become worthless through nationalization.

nick_fury

i just bought 1000 this week also. Got me thinking now :-(

BMWrider

Masomnia wrote: »

You would in all likelyhood lose the lot, as basically the government take all the shares.

When Northern Rock and Bradford and Bingley were nationalized the shareholders got nothing, but are still waiting to see if they will be compensated in some way. The reason the shares are so cheap at the moment is that there is still a fear in the market that the shares will become worthless through nationalization.

And whats the chance of nationalisation happening, surely all the bad news is out including the chief exec, things can only get better???

Masomnia

I wish I could say!

The point is, it's speculation rather than investment. The chance that you could lose all the money means the potential reward could be massive. So as long as you only put in what you can afford to lose you'll be ok.

gozomark

BMWrider wrote: »

And whats the chance of nationalisation happening, surely all the bad news is out including the chief exec, things can only get better???

10-20% chance I'd say - ie not likely, but not insignificant

opinions4u

I think it will prove to be an inspired flutter on your part.

But it is one hell of a risk and not one I was prepared to take. While I don't think the government will fully nationalise, they might. The other threat is that they put more capital in which will dilute the value of your holdings.

For example, if their 70% share increased to 85%, the remaining share has reduced from 30% to 15%. Your value halves.

If you've already doubled your money (which many who bought in last week have) why not cash in now?

Andrew64

opinions4u wrote: »

The other threat is that they put more capital in which will dilute the value of your holdings.

I think this is a bigger threat than explicit nationalisation. This is what I would call "nationalisation by stealth"!

tradetime

BMWrider wrote: »

I bought some RBS shares earlier this week, now having read some web based stuff and getting a bit confused can anyone tell me what happens to the shares if the govt nationalise RBS?

No disrespect BMWrider but if you are going to risk money, you really should understand what it is you are getting into before you commit the cash.Nobody really knows whether RBS, or any of the other remaining weak banks will end up nationalized, though there is a risk. Personally I'd think it would be a very last resort for the government to take onto the national balance sheet, the kind of debts and bad assets RBS seems to hold. Ahead of that is obviously as they have been doing, pumping money in, which if it has to continue will dilute shareholder value significantly from here, there is also the risk, (rarely considered it seems) of some sort of firesale and orderly unwinding, ie a controlled bankruptsy.