We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

What if HBOS Goes Ahead with a Right Issue?

Options
1235712

Comments

  • Tozer
    Tozer Posts: 3,518 Forumite
    ad44downey wrote: »
    You're a bank director's dream. You believe what they tell you even though they've been exposed as liars in recent weeks. And then they ask you for thousands of pounds to put right their mistakes, you don't even question it but practically throw the money at them! Unbelievable.

    No, perhaps I know a little more about corporate governance and reporting obligations in respect of plcs than you.

    As I said, I will be buying. Interestingly brokers are maintaining their hold-buy recommendation on HBOS so I very much doubt I'll be alone.

    You are completely free to disagree but I would really appreciate it if youj could try and keep away from personal attacks. Thanks.
  • ianmr65
    ianmr65 Posts: 596 Forumite
    Tozer wrote: »
    No, perhaps I know a little more about corporate governance and reporting obligations in respect of plcs than you.

    .

    Tozer there is no obligation for a bank to report that is holding assets that are worth x on paper, but are really not, because no one would buy them at that rate.

    The derivatives products at the centre of the credit crunch, have been parcelled, and tranched, and sub tranched. Primary tranch holders are off loading and not shareing to stem their losses. What many banks are reluctant to do is re-value, or attempt to sell, or declare their expected losses on these instruments. At least not all at once.

    This is why they are doing a rights issue, and are hording cash like ebineezer scrooge.

    This is wht there are many calls from polititans for banks to be open. And why they are not being.

    Just something to bear in mind for you and all the others who are considering taking up the rights issue.
  • Tozer
    Tozer Posts: 3,518 Forumite
    ianmr65 wrote: »
    Tozer there is no obligation for a bank to report that is holding assets that are worth x on paper, but are really not, because no one would buy them at that rate.

    The derivatives products at the centre of the credit crunch, have been parcelled, and tranched, and sub tranched. Primary tranch holders are off loading and not shareing to stem their losses. What many banks are reluctant to do is re-value, or attempt to sell, or declare their expected losses on these instruments. At least not all at once.

    This is why they are doing a rights issue, and are hording cash like ebineezer scrooge.

    This is wht there are many calls from polititans for banks to be open. And why they are not being.

    Just something to bear in mind for you and all the others who are considering taking up the rights issue.

    Balance sheets?
  • debbie42
    debbie42 Posts: 2,586 Forumite
    Tozer wrote: »
    Balance sheets?

    If it was that straightforward then we wouldn't be getting all these write offs, changing every other week?
    Debbie
  • Tozer
    Tozer Posts: 3,518 Forumite
    Presumably HBOS reports quarterly. They will be under a duty to notify the markets of any deterioration in their asset base.
  • ianmr65
    ianmr65 Posts: 596 Forumite
    Tozer wrote: »
    Presumably HBOS reports quarterly. They will be under a duty to notify the markets of any deterioration in their asset base.

    Only if they calculate it. And only if it's not held off-balance sheet.

    Tennessee Sub-prime parcel + michigan sub prime parcel + lots of others... Wrapped in a set of cdos. sold on in tranches and sub tranches- bundled with lots of other CDO's. Chopped up into a set of siv's, and options. Rated AAA by ratings agencies - Sold on. £10bn of this rubbish ends up with large Uk mortgage bank

    Returns flow, but are diminishing. Cos a couple of the original cdos' are liquidated, by primary tranche holder (large Us investment bank) Notional asset value remains at £10bn

    The ability for Bank to value or write down is severly hampered by the sell ons. The desire for uk bank to value or write down is hammpered by a desire not to lose £10bn off it's asset base.

    Ability of FSA and most of the banks teams of investingating or even understanding the structure of the investment vehicles and obligations as they are far too complicated, is very low. The desire for the banks team to unravel is low, as it does not want to lose £10bn off it's asset base.

    Result - Rights issue!!

    Ability of bank to use this stuff as colateral for liquidity is low, as no one wants to risk it completly unravelling whislt of their books.

    Result - BoE liquidity crisis package.

    The bottom line is that UK banks are suffering liquidity problems, cos of these 'asset's, and large scale solvency issues.

    It is strongly rumoured that said large uk mortgae bank allegedly came within one day of running out of cash, and was only saved by a secret emergency cash bail out by the BoE.

    The BoE liquidity package has solved the short term cash problems. It has not and cannot address what these assets are actually worth.

    + There is a conspiracy of silence in place preventing the real scale of these problems being aired in public - between the regulators, the financial community, the authorities, the bank and the press, as no one wants another Northern Rock. And confidence in the banking sector is crucil to prevent whole scale economic carnage.

    I think the likelyhood of a UK bank defaulting remains high. I also think the current bull run, is a bull trap, and, the fall in share price, and values will start again pretty soon, once the hedge funds, and the banks start shorting each other once again.

    I think its safe to hold a deposit in a uk banks, cos of the FSA guarentee, and to hold a mortgage or loan with them.
    I think investing in them is very risky,

    still it's your money.
  • ashm1
    ashm1 Posts: 234 Forumite
    IMO the rights issue is too small!!!!!Going forward are they capping the dividend or paying the dividend out in shares / cash split ?
  • pjala
    pjala Posts: 420 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    ianmr65 wrote: »

    It is strongly rumoured that said large uk mortgae bank allegedly came within one day of running out of cash, and was only saved by a secret emergency cash bail out by the BoE.

    What?
    Are you creating a rumour that HBOS were about to go bankrupt, but were secretly bailed out by the Bank of England? If not, then please let us know where this "rumour" came from, otherwise it is purely and simply self interested gossip.
    If you remember a month or so ago there was a run on HBOS, and the share price shot down to around £4 or so, for an hour or so, then shot up again gaining 20% or more from its lows when the HBOS said it was shorters running down their stock.
    Subsequently the BoE declared that it would find the unscrupulous traders who were seeking to profit from pumping and dumping (although more accurately this would be dumping and then pumping, as it would be shorters who were seeking to profit), that is spreading scurrilous rumors to profit by driving down the share price.

    Unless you can justify your statement, you are restarting those rumours again, and hence prone to action by the authorities - so do tell where those rumours are coming from.
  • ianmr65
    ianmr65 Posts: 596 Forumite
    pjala wrote: »
    What?
    Are you creating a rumour that HBOS

    I didn't name any specific bank, you did. And i am not creating a rumour. The rumour has been there all along.

    pjala wrote: »
    What?
    about to go bankrupt, but were secretly bailed out by the Bank of England?

    Running out of cash is a long way from going bankrupt. The bank in question is rumoured to have suffered severe liquidity problems, and been offered an emergency funding line from the BoE
    pjala wrote: »

    If not, then please let us know where this "rumour" came from, otherwise it is purely and simply self interested gossip.

    Well that's the whole point of rumours... no one exactly knows where they come from. If someone had stood up and said that said bank were suffereing liquidity problems, it would hardly be a rumour.

    pjala wrote: »
    What?

    If you remember a month or so ago there was a run on HBOS, and the share price shot down to around £4 or so, for an hour or so, then shot up again gaining 20% or more from its lows when the HBOS said it was shorters running down their stock.

    Subsequently the BoE declared that it would find the unscrupulous traders who were seeking to profit from pumping and dumping (although more accurately this would be dumping and then pumping, as it would be shorters who were seeking to profit), that is spreading scurrilous rumors to profit by driving down the share price.

    The traders who were shorting the stock were, shorting it becuase HBOS were reported to be facing severe liquidity problems. Shorting in and off itself is fine. Starting rumours to accelerate a stocks fall, thus helping to ensure more profitable shorting, and then profiting from it yourself is the big no-no.
    pjala wrote: »
    What?
    Subsequently the BoE declared that it would find the unscrupulous traders who were seeking to profit from pumping and dumping (although more accurately this would be dumping and then pumping, as it would be shorters who were seeking to profit), that is spreading scurrilous rumors to profit by driving down the share price.

    Well the fsa, and the BoE reacted rather sharply, and some might say with a great deal of unprecedeneted weight, to strenously deny that HBOS had liquidity problems, and were in need of emergency funding.

    This might lead one to the belief that there was some truth, to the rumours, or else wht would have the denial been so fast and so strenuous.

    I have no idea what you mean by dumping and pumping. The FSA did say it would launch an investigation into certain traders short trades... i have yet to see any news of the outcomes, but i suspect the conversations went something like this:

    FSA: I see you've been shorting HBOS?
    Trader : Yes
    FSA Why were you shorting HBOS?
    Trader : Becuse i heard they had liquidity problems.
    FSA. One of your clients was shorting HBOS?
    Trader: Yes
    FSA why
    Trader : Because i told him that i'd heard that HBOS had liquidity problems
    FSA : But HBOS doen't have liquidity problems.
    Trader : Really. OK I guess i must have been misinformed.
    FSA: Did you start any rumours that HBOS had liquidity problems?
    Trader: No

    Click Brrr

    pjala wrote: »

    Unless you can justify your statement, you are restarting those rumours again, and hence prone to action by the authorities - so do tell where those rumours are coming from

    Well, as i said the rumours have been there all along. And being as i stand to gain nothing finacially from a problem at a large uk mortgage bank, in fact stand to be troubled personally by it, as i have a couple of accounts, with said bank then i cannot be held accountable by the regulatory authorities.

    The only issue then is if what i say is not true, and so a possible libel.

    The first defence against a writ of libel is truth. If siad bank were mad enough to sue me for libel, they would have to prove beyond a resonable doubt that they did not in fact recive emergency funding from the BoE.
    As the BoE, and the said bank are hardly likely to want this aired one way of the other in public. I think i'm pretty safe.

    The reason that i reminded people was simple. It strengthened the main point that investing in UK banks at the momement is risky.
  • pjala
    pjala Posts: 420 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    But when someone says "rumour has it" it generally means either they know because someone in the know has told them - hence they then acted upon it under the premise that they would be making money on the deal, but they don't want to be fingered.

    If someone told you valuable inside information that you could use for your financial benefit, it might reasonably be assumed that you would remember who told you.

    Insider trading used to be rife, which spoiled the markets as they would not longer represent the true and honest state of the company, but would be driven by insiders manipulating share prices.

    Surely another item in the conversation with the FSA would also happen:
    "FSA: Who told you the rumour that HBOS were having these problems?
    Answer: I can't remember....."
    Hmmmmm...


    If you say "rumour has it" it is a rumour no more, it is like saying rumour has it that Bill is cheating on his wife - you would not be able to look Bill's wife in the face again. But it could be a vicious piece of gossip. BoE is saying it is a vicious piece of gossip, and actionable as it is libellous as you say.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.8K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.8K Work, Benefits & Business
  • 598.7K Mortgages, Homes & Bills
  • 176.8K Life & Family
  • 257.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.