Government sale of RBS Shares - good buy??

gazwaldo8

I am looking at the news that George Osbourne has announced "The government plans to sell its 80% stake in the Royal Bank of Scotland"
The government paid 500p a share for the bank, compared with the current price of about 361p
What's everyones thoughts? - Good buy or steer clear???

Thanks

[Deleted User]

gazwaldo8 wrote: »

I am looking at the news that George Osbourne has announced "The government plans to sell its 80% stake in the Royal Bank of Scotland"
The government paid 500p a share for the bank, compared with the current price of about 361p
What's everyones thoughts? - Good buy or steer clear???

Thanks

Sounds like it was a bad buy.

Why's he selling?
Is he just cutting our losses now, or is it still a falling knife?

arbster

I'm not a financial advisor, so can't predict the future, sadly.

The pessimist in me says that they wouldn't be selling if they thought the price was going to go up, which would lead me to stay away.

The optimist in me sees that the Government is planning a phased sell-down, and expects the initial tranches to lead to a rise in the share price, reducing the overall "loss", and wonders whether that'll really happen or whether they're just putting up a smokescreen to minimise the negative press.

The index-investor in me disinterestedly observes the above and goes back to his cheap cup of instant coffee and discounted sandwiches, safe in the knowledge he'll probably be better off than either of the guys up there...

redmalc

Have they announced any price for the shares yet ?

BJV

I think it is a way of them raising cash. Just a shame that "we the collective have to lose out" an estimated £1.39 per share.

steelbru

redmalc wrote: »

Have they announced any price for the shares yet ?

The current plan is not to sell to the public, but to institutions, so they won't announce a price, they'll just negotiate with the buyers, then announce that they've sold x% and raised y £million

gazwaldo8

The current plan is not to sell to the public, but to institutions, so they won't announce a price, they'll just negotiate with the buyers, then announce that they've sold x% and raised y £million

Sounds as if its wide open for favoured bids (ie corruption!!)

Glen_Clark

Starline wrote: »

Why's he selling?

With Osborne its always political. He wants to sell everything he can to get more money to waste on his obsessive housing market interventions.
Lots of state owned banks function well, and nobody has set out any logical argument why the RBS shares need to be sold now - incurring huge fees for brokers etc.
So instead of making the announcement in the appropriate place - Parliament, Osborne chose to announce it at a City Dinner where lining the pockets of brokers is lot more popular

Lungboy

steelbru wrote: »

The current plan is not to sell to the public, but to institutions, so they won't announce a price, they'll just negotiate with the buyers, then announce that they've sold x% and raised y £million

Which is precisely what they have just done on the quiet with the final Royal Mail shares. Shady doesn't come close.

LHW99

I had heard that the EU has put a limit on how long the Government support for RBS can continue, and that they must be getting rid of (some, all?) of theit holding by the end of 2016.
This was Radio 4, so can't say if that's accurate.

uknick

LHW99 wrote: »

I had heard that the EU has put a limit on how long the Government support for RBS can continue, and that they must be getting rid of (some, all?) of theit holding by the end of 2016.
This was Radio 4, so can't say if that's accurate.

How is the UK supporting RBS now? At the time we bought the shares maybe, and even then it could be argued it was a bad business transaction not a bail out, but I'm not aware of any subsidies at this time.

I think the only reason he is looking to sell is to raise cash to reduce the deficit as mentioned above. Following on from this thought, it worries me if he doesn't think tax receipts will do the job. Is he expecting another significant drop in the economy?