RBS Divis

longleggedhair

Oh and Glen I think that both your beliefs AND your arguments are flawed!

Ark_Welder

gadgetmind wrote: »

Those criteria are being tightened and a lot of existing capital will cease to count as T1 during a progressive grandfathering process. If banks are to replace this capital, they will need to tender for it, and the prospectus of most does not allow tenders while dividends aren't being paid.

B3 qualifying T1 will also be loss adsorbing via a coco type mechanism.

Those criteria are as tight as it gets: they're from the last-revised version of of the B3 regulations. CoCos will not quailfy as T1, which will have to be ordinary share capital and retained earnings/income/reserves. Any capital that is not in the form of ordinary shares will count only if their difference from ordinaries is in the restriction of voting rights.

It is up to national authorities (or potentially regional, in the case of the EU) to determine whether CoCo's can contribute to their particular regulatory requirements that are above the B3 requirements.


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The quote from the HMT document in the other post shows what will happen if RBS start paying dividends on their ordinaries before certain criteria are met.

Glen_Clark

longleggedhair wrote: »

Oh and Glen I think that both your beliefs AND your arguments are flawed!

You say paying out money to you in dividends would make the bank stronger, and its my arguments thats flawed :rotfl:

As Duncan Bannatyne would say, its ridiculous, its ludicrous, and I am out

Thrugelmir

gadgetmind wrote: »

Lloyds is doing very well in this regard

HBOS could turn out to be a bigger basket case than RBS. Losses and provisions are expected to top £60 billion post part nationalisation (allowing for 2011's results). HBOS holds stakes in and owns many businessess. To the extent that Lloyds is now the 4th largest housebuilder in the UK currently.

longleggedhair

Glen_Clark wrote: »

You say paying out money to you in dividends would make the bank stronger, and its my arguments thats flawed :rotfl:

As Duncan Bannatyne would say, its ridiculous, its ludicrous, and I am out

Please do point out or quote exactly where I made that statement please....you can't because I didnt so who is the one talking drivel yet again.

gadgetmind

Glen_Clark wrote: »

You say paying out money to you in dividends would make the bank stronger, and its my arguments thats flawed

Yes, a bank paying dividends would greatly help their capitalisation and value to shareholders for reasons that have been explained to you.

If you didn't understand these explanations (which would be fine as it's specialised stuff) then please don't be afraid to ask.

If you don't like something, then fine, but please ensure you understand the hell out of it before you express this dislike.

Thrugelmir

gadgetmind wrote: »

Yes, a bank paying dividends would greatly help their capitalisation and value to shareholders for reasons that have been explained to you.

If the profits are retained to reinvest, i.e. improve lending. Then that adds value to the business.

gadgetmind

Thrugelmir wrote: »

If the profits are retained to reinvest, i.e. improve lending. Then that adds value to the business.

Yes, retained profits are great, but banks need capital, and this requires that they issue various kinds of bonds, and they'll find this "somewhat hard" if they aren't servicing their existing debt.

Once their bonds (and prefs, ECNs, and myriad other instruments) are being serviced, then they can either continue to retain profits or boost the value of their shares (often owned by governments nowadays) via well covered dividend payments.

sabretoothtigger

If returns on equity are high like Apple then keeping profit back can make sense otherwise they will help improve company outlook by paying something. I expect 1p a share for a decade, nothing special

HBOS I think will beat RBS so long as the housing market is stable or flat then the margin profit on such a large mortgage book will be in the billions per year.
RBS on the other hand is a forced seller at present, laying off all the crap purchases Goodwin made for top dollar, it sells at no profit? However it does operate well in some places and could do ok eventually, they still have the insurance for example.

Main thing in both cases is that UK does not tank and/or market forces flush away all profits. Hence we have 0.5% rates and 4% inflation for almost 3 years now and I expect them to half the currency worth to stop nominal losses.
All banks are subsided by cheap funding, they will survive