RBS Divis

louisj

Can someone tell me the likelhood of RBS ever paying out divis again and what are the determining factors? Also, is it right that a shareprice has to be more than 40p before a company can pay divis? RBS shares are currently well below that. Thanks

Masomnia

I guess they will at some stage but it'll be years off I reckon. There were legal restrictions relating to the bailout, but I don't think they apply any more, or at least won't in the near future.

No idea where you've got that 40p thing from.

IronWolf

If it remains solvent, I would say there is a very high chance they will pay out dividends again (or similar schemes like share buybacks), but I wouldn't want to speculate when that will be, it could be years away.

Also I wouldn't want to guess how much they would pay out in dividends, I'd expect them to start at around 10-20% of their earnings (whatever they will be) and ratchet it to around 50% over the following years.

I've never heard of the 40p rule, I don't think its true.

gadgetmind

A company can legally pay dividends if they have retained earnings to cover the divi and if the EU don't have a dividend blocker in place. The blocker is now coming to an end, so RBS might be able to pay dividends on their ordinaries BUT they might have some senior with divi blocked clauses.

I hold some NWBD that's been paid throughout on a technicality, but I also hold some blocked LLPC preference shares that prevent dividend payments on LLOY for 12 months after any dividend has been missed on them.

I'm keep a close eye on Lloyds restarting dividends but not RBS as I'm getting my dividends anyway!

talexuser

I would have thought RBS should be paying back the taxpayer first?(for the next hundred years?)

gadgetmind

talexuser wrote: »

I would have thought RBS should be paying back the taxpayer first?(for the next hundred years?)

The tax payer owns a load of shares, and the best way to repay the tax payer is by paying a dividend on these shares as that will both return capital and boost the value of the shares.

(The taxpayer used to own RBS preference shares but ISTR these were swapped for ordinaries as RBS couldn't afford the coupons!)

talexuser

How much money did we put in... I've seen figures of 45 billion bandied about? How many years of normal business, divis and share sales in good times, would it take to pay that back? The mind boggles.

Glen_Clark

gadgetmind wrote: »

The tax payer owns a load of shares, and the best way to repay the tax payer is by paying a dividend on these shares as that will both return capital and boost the value of the shares.

(The taxpayer used to own RBS preference shares but ISTR these were swapped for ordinaries as RBS couldn't afford the coupons!)

Of course some people would love the banks to pay out dividends from their borrowed money, then when they need to borrow even more money just go back to the taxpayer again.
In my opinion the banks should not be paying out dividends until they have paid the taxpayer back with interest, and got enough in reserves so that the taxpayer is no longer on the hook to guarantee their debts..
Shareholders, of which I am one, chose to risk their money, the taxpayer did not. So the taxpayer should be paid back first.
Shareholders in the two bust Scottish Banks Bank of Scotland and Royal Bank Of Scotland have done far better than shareholders in the two bust Englsh Banks, Northern Rock and Bradford & Bingley.

gadgetmind

For RBS I think it was £20 billion. I don't expect the banks to ever become the cash cows they once were as they are going to be forced to take less risk and be better capitalised, so I have no idea when the state might be able to reduce their holding as than at a massive loss.

On the plus side, I'm on a double digit yields on my NWBD until they make a suitable tender.

gadgetmind

Glen_Clark wrote: »

Of course some people would love the banks to pay out dividends from their borrowed money

They can only pay dividends to shareholders from retained earnings and not from borrowings.

Shareholders, of which I am one, chose to risk their money, the taxpayer did not.

The taxpayers *are* shareholders.

Glen_Clark

talexuser wrote: »

How much money did we put in... I've seen figures of 45 billion bandied about? How many years of normal business, divis and share sales in good times, would it take to pay that back? The mind boggles.

We don't really know, because the taxpayer is on the hook to guarantee astronomical amounts of sub prime bank debt, some of which is not due to be repaid for another 30 years. So we probably won't know for 30+ years how much that guarantee will cost. Arguably, no dividends should be paid until then.

In the meantime, how much profit the banks will make depends on how much scope the politicians give them to continue ripping off their customers.