Help with shares

Laurencek

I have some shares in rbs

I have just got this email below, can some one explain this to me in simple terms is this going to cause me to loose alot of money?


The Royal Bank of Scotland Group PLC (RBS) is proposing a Sub-division and Consolidation of its Ordinary shares on the following basis:

Each Existing RBS Ordinary GBP0.25 share will be sub-divided into one Pre-Consolidation Ordinary GBP0.10 share and one Deferred GBP0.15 share.

Then,

Every ten Pre-Consolidation Ordinary GBP0.10 shares will be consolidated into one New Ordinary GBP1.00 share.
!

gadgetmind

It's window dressing with little real meaning.

Having driven the company into the ground, with the result that it's now a penny share, the directors feel that it's better if they attempt to hide this fact by consolidating each ten old shares into one new share that should be worth 10x as much.

I guess the cunning plan is that they then pay themselves big bonuses as a key part of their strategy to drive the company further into the ground.

See here -
http://www.citywire.co.uk/money/rbs-to-beautify-itself-with-10-for-one-stock-split/a584706?ref=citywire-money-latest-news-list

Vortigern

Google is your friend...
Link to Reuters
Link to Grauniad

Essentially, instead of 10 shares at 23.5p you'll have 1 share at £2.35
They say volatility will be reduced because a one penny movement in the price will not have such a large percentage effect on the consolidated price.

Laurencek

So am I going to be loosing much on this as I have over 5k shares

The bit that confused me about the deferred share bit

Do I sell my shares even though there at a loss now or in the end will they still be worth simular amounts value wise

Reaper

Laurencek wrote: »

So am I going to be loosing much on this as I have over 5k shares

Share consolidations and splits don't make any difference to the value of your shares. You will end up owning less shares but worth more so it balances out.

The bit that confused me about the deferred share bit

You can ignore it. The deferred shares are temporary and will be deleted once the consolidation has completed.

Do I sell my shares even though there at a loss now or in the end will they still be worth simular amounts value wise

They will be worth the same, +/- any normal daily movements on the stock market of course.

sabretoothtigger

Vortigern wrote: »

Essentially, instead of 10 shares at 23.5p you'll have 1 share at £2.35
They say volatility will be reduced because a one penny movement in the price will not have such a large percentage effect on the consolidated price.

Thats bs because if the share is 30 pounds or 3p it will still be priced to 0.01 pennies every time it moves up or down.

Pretty much anywhere will quote RBS at 23.51

All it effects is single shares will become like buying lots of 10 shares. Thats really no difference

gadgetmind

Laurencek wrote: »

So am I going to be loosing much on this as I have over 5k shares

This consolidation won't affect you much, though there is a large admin cost to the company, which as a shareholder might not please you.

You'll also have to keep notes of this when working out capital gains.

Fuzzythinking

Let say I have 4117 RBS share and how can I work out my consolidation share and how much will I have?

Fuzzythinking

Fuzzythinking

Fuzzythinking wrote: »

Let say I have 4117 RBS share and how can I work out my consolidation share and how much will I have?

Fuzzythinking

If the share price is 23.58 pence and will be consolidated into £2.358 but the share would be 412.

Is it correct?

Fuzzythinking

agrinnall

Exactly, although my brief read of the document suggests that you'll actually only get 411 shares, and I assume the balance for the 7 original shares will be repaid as cash.

agrinnall

Reaper wrote: »

You can ignore it. The deferred shares are temporary and will be deleted once the consolidation has completed.

Can you (or anyone) explain what the purpose of the deferred shares is then? Is it simply an accounting device because the current shares are a nominal 25p and the new ones will be 10p before consolidation, so the deferred shares are 15p to balance the books?