RBS rights issue march 2009

bubblesmoney

we received the form for the RBS rights issue yesterday. i thought rights issue pricing was always cheaper than the market price. dont know what they are smoking but guess what they are offering shares at 31.75pence while the present rbs share price on the open market is 24pence now. so they expect a premium of nearly 25% of present market price, they wont have many takers as people can buy for less directly on the market instead.

but the issue is underwritten by the HM treasury so any unsold shares will be bought by the treasury for the 25% inflated price. why the !!!! is the govt paying a 25% premium for buying more troubled assets. it is a 3:7 open offer rights issue but people can buy more if they wish on the form. offer closes at 11am on april 7. nearly 17 billion new shares are being issued under the new rights issue, so the present share price is bound to get hammered even more.

Degenerate

They don't expect any investors other than the Government to buy, it's just an obligation they have to offer you the chance.

Generali

bubblesmoney wrote: »

we received the form for the RBS rights issue yesterday. i thought rights issue pricing was always cheaper than the market price. dont know what they are smoking but guess what they are offering shares at 31.75pence while the present rbs share price on the open market is 24pence now. so they expect a premium of nearly 25% of present market price, they wont have many takers as people can buy for less directly on the market instead.

but the issue is underwritten by the HM treasury so any unsold shares will be bought by the treasury for the 25% inflated price. why the !!!! is the govt paying a 25% premium for buying more troubled assets. it is a 3:7 open offer rights issue but people can buy more if they wish on the form. offer closes at 11am on april 7.

I think you answer you own question here old bean.

The rights issue is underwritten by you (for free presumably which is anti-competitive but that's an argument for another time). As you've agreed to underwrite it at a price above the market price there's no reason for RBS to take a lower price for it's newly minted shares.

BTW, I've got a 20 y/o Ford Laser up for sale. Only £385,000 ono. Hardly ever crashed. Serviced more often than you'd imagine. Could I interest you in it or at least persuade that nice Mr Darling to force you to buy it from me with your future income?

bubblesmoney

Generali wrote: »

I think you answer you own question here old bean.

The rights issue is underwritten by you (for free presumably which is anti-competitive but that's an argument for another time). As you've agreed to underwrite it at a price above the market price there's no reason for RBS to take a lower price for it's newly minted shares.

BTW, I've got a 20 y/o Ford Laser up for sale. Only £385,000 ono. Hardly ever crashed. Serviced more often than you'd imagine. Could I interest you in it or at least persuade that nice Mr Darling to force you to buy it from me with your future income?

i wish i could think of buying that classic car you mention.
edited by me to remove personal details. apologies for any inconvenience caused.

Generali

bubblesmoney wrote: »

i wish i could think of buying that classic car you mention. after all i (ps my DW not me) was a bigger mug and our £14,000+ RBS share 'employee investment' is worth a measly 450£ now and thats excluding the 9.5k i managed to pull out earlier! :wall: . i can take that loss but wonder how many other ordinary employees can take such losses without affecting their daily living.

my DW has just been in RBS a few years so guess other employees who have been in RBS longer and in the employee share scheme which directly debits from salary and one contracts into it in advance for years at a predetermined price are truely stuffed courtesy of goodwin. my OH knows colleagues who worked for 40y in lower level bank positions (cashiers etc) and had their lifetimes savings or a big chunk of it there as the RBS investment advisors informally would say it was good choice, many had well more than 200,000£ of RBS employee shares (my DW knows atleast 2-3 people who retired and were back at work part time), quite a few who retired are having to do part time jobs now after retirement because their savings vanished in a short time, i feel sorry for people such as these retiring now with their lives savings down the drain. most wouldnt have had anything to do with the toxic assets as ordinary employees, while the 800 investment bankers who made the losses made off with probably millions in bonuses for their incompetence / criminal behavior just like goodwin. those f*ckwits should have a beehive stuffed up their backsides everyday for the rest of their lives. guess not a chance in hell of that happening.

It amazes me that the bank bailout is so popular right across the world.

Those people screwed up monumentally so the popular policy response is to pay off the bosses handsomely and borrow money from our kids to bail out the failed institutions and shareholders?

Madness.

JonnyBravo

bubblesmoney wrote: »

those f*ckwits should have a beehive stuffed up their backsides everyday for the rest of their lives. guess not a chance in hell of that happening.

Leave off mate.

Bees are having a hard enough time of it as it is..... what with this virus that either does or doesn't exist killing 'em all.

Mind I s'pose you could mean the empty beehives? In which case I'll be first in the line to kick it up 'em

mbga9pgf

JonnyBravo wrote: »

Leave off mate.

Bees are having a hard enough time of it as it is..... what with this virus that either does or doesn't exist killing 'em all.

Mind I s'pose you could mean the empty beehives? In which case I'll be first in the line to kick it up 'em

How about fir cones instead?

kennyboy66_2

Generali wrote: »

It amazes me that the bank bailout is so popular right across the world.

Those people screwed up monumentally so the popular policy response is to pay off the bosses handsomely and borrow money from our kids to bail out the failed institutions and shareholders?

Madness.

I don't think "popular" is the right word, and the alternative scenario would have been that BOS & RBS would have certainly failed - and quite possibly either LTSB and Barclays would have done as fell through sheer bond holders & creditor panic.
Why would middle east investors bought shares in Barclays if there was not some de-facto guarantee that the UK government stood behind the banks?

Almost all businesses would have potentially seen credit lines withdrawn.

I can understand that this "creative destruction" has an intellectual purity about it but then some people believe the same thing about socialism.

brightonman123

would the govt buy price been set before shares tumbled further? i would hope they have an option to buy at the going market price..

Generali

brightonman123 wrote: »

would the govt buy price been set before shares tumbled further? i would hope they have an option to buy at the going market price..

The point of underwriting a rights issue usually is that you say that for a certain fee you'll buy any shares that remain unsold at the price the new issue was being sold at.

It reduces the risk that the issuing company faces and for that risk reduction they pay a fee to an investment bank that is acting as underwriter.

If the issuer of the new stock will just sell at the market price then it's pointless paying an underwriter. The issuer might as well just create and sell new shares and save the money.

Of course this isn't really a rights issue, it's a way of HM Govt putting more money into RBS. It's just a nice, Let's Pretend way of making everyone think this is just normal rather than another ledger entry into the accounts of HM Screwup PLC.

malima

I received a letter today offering me the chance to buy "open shares".
Please can someone tell me what it is, and do i need to reply, whether i buy or not?
TIA
Malima