RBS Divis

Glen_Clark

gadgetmind wrote: »

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



The taxpayers *are* shareholders.

Taxpayers are a lot more than shareholders because they are on the hook for hundreds of billions in sub prime debt. Shareholders are only on the hook for the price of their shares.
There would be no earnings if the Taxpayer had not (been forced to) guaranteed this debt, because the bank would have gone bust.
In any case you don't know what, if any, are the earnings because you don't know how much the banks will lose on their sub prime loans.
Banks are notorious for over valuing their assets, by under estimating risk, to inflate their earnings and short term share price, to benefit the directors bonus. For instance some still had Icelandic Bank Debt on the books at face value when it was trading at half a pence in the pound! The huge 'profits' ofthe past were based on this sort of creative accounting, and on the mis selling rip offs they are now finding it much harder to get away with.

Banks don't trust each other's accounts, thats why they won't lend to each other. So why should we trust them?

louisj

Really interesting answers thank you. I inherited quite a lot of these shares in 1995 so have lost quite a lot of money, albeit money I was given. They are worth so little there seems little point in selling them so I suppose I just sit on them and wait a very long time!

gadgetmind

A "bit of red" in your portfolio is always good: it teaches you about diversification and constantly reminds you of your flaws and weaknesses.

Glen_Clark

louisj wrote: »

Really interesting answers thank you. I inherited quite a lot of these shares in 1995 so have lost quite a lot of money, albeit money I was given. They are worth so little there seems little point in selling them so I suppose I just sit on them and wait a very long time!

I do sympathise with RBS shareholders, but I don't think its politically or morally acceptable to pay dividends until the banks financial position is strong enough to release taxpayers from the guarantees that have been forced on them.
I fear that will be a very long time in coming, if at all

link: http://blogs.telegraph.co.uk/finance/jeremywarner/100014469/hesters-bonus-is-a-sideshow-the-real-issue-is-whats-become-of-our-45bn/

gadgetmind

Glen_Clark wrote: »

I don't think its politically or morally acceptable to pay dividends until the banks financial position is strong enough to release taxpayers from the guarantees that have been forced on them.

Paying dividends will send a powerful message that they are starting to get back to normal (or even better than they were before, Steve Austin style!) and that they are now a business in which people can invest. The value of the shares will be boosted and the taxpayer will have a (reasonably) graceful exit.

I expect the first essential stage of this (resumption of dividends) to occur on prefs in the next few months and ordinaries in the next 12-18 months.

Thrugelmir

gadgetmind wrote: »

I expect the first essential stage of this (resumption of dividends) to occur on prefs in the next few months and ordinaries in the next 12-18 months.

RBS has to build its capital reserves to meet the requirements of Basle 3. So better to retain profit than pay dividends in the interim.

Hester still has work to do to sell off some of RBS's investments and other holdings.

ManAtHome

Jeremy Warner thinks we coughed up £45bn - more here http://blogs.telegraph.co.uk/finance/jeremywarner/100014469/hesters-bonus-is-a-sideshow-the-real-issue-is-whats-become-of-our-45bn/

Mini quotey thing:

The other point worth bearing in mind about RBS is this. The £45bn of capital provided by the taxpayer merely stabilised the position. It didn't pay for the full horror of the legacy losses, which are still coming through. More and more of them keep cropping up all the time, the latest being the likely total writeoff on Greek sovereign debt (so far, RBS has provided for a 50pc haircut).

And then there's the £2bn-ish interest per year we could have got if we'd bunged the £45bn in a Building Society...

atush

for them to pay dividend again, you need them to be back in profit. And for the profit to be expected to be stable in future. and for their shareprice to be stable/going up (in case they have borrowings linked to share price etc not topention performance profit again).

None of this will happen if the board allow the decisions of the bank(from firing to hiring to divesting of assets to directors pay etc) to be micromanaged by the Opposition, the press and the public.

This weeks rants (and I totally get the public reaction) have probably set the bank (and profits to be repaid to the taxpayer) back. As the micromanaging and full out public assault on a private individual and his earnings was as far as I can see immoral if not illegal.

For Labour to call a vote on it, when they arranged it was despicable. Are there any lows to which they will not stoop? Quite frankly it beggars belief.

gadgetmind

Thrugelmir wrote: »

RBS has to build its capital reserves to meet the requirements of Basle 3.

Lloyds is doing very well in this regard but I don't watch RBS as keenly as they have no choice other than to pay my coupons. It will be interesting to see what happens to prefs as they are slowly grandfathered out of T1 qualification.

gadgetmind

I'm strongly of the opinion that RBS and Lloyds will restart coupons on the discretionaries as soon as possible and make a (modest) divi payment on the ordinaries as soon as blocker clauses expire.

Not only do I think that, but I've stuffed my chops with their prefs in anticipation, and hold only a few £k of Lloyds ordinaries than I bought on a whim at 30p ish on the grounds that they couldn't go any lower ...