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I have waited and watched and seen through the last few weeks the volatility within the financial services sector and I think I have to show my hand on this topic. For the investor in RBS Group, the dividend is what attracts investors to shares. Under the Government scheme, no investors(that includes HMT) gets a dividend and makes the shares not really worth buying when other companies will provide a dividend.
Furthermore, the continued watering of the shares means that at the moment the share price is at a precarious level, just above and at time below the likely option price of 65p. I am not sure that HMT have thought about this merely deciding that the RBS Group will pay 12% on the £5billion pounds+ deal.
Come on HMT, at least think about the potential dividend which will benefit tax payers, mean that the RBS Group shares will be more attractive and therefore putting value on the HMT stakeholding and therefore the taxpayer. The deal as it stands is NOT good for RBS Investors and is not a good deal for HMT.
The decision, imho, was taken in haste and was short termism rather than looking at the long term effects.
I stand down from my soap box.
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Finally RBS may actually agree with me
RBS delays prospectus on £20bn capital raising
Royal Bank of Scotland has delayed publishing the prospectus on its £20bn capital raising in a move which will allow it to take advantage of new softer accounting rules on toxic assets.
By Katherine Griffiths and Philip Aldrick
Last Updated: 7:36PM GMT 30 Oct 2008
Royal Bank Of Scotland Group
RBS is planning to use new accounting rules adopted on October 13 to reduce its write-downs. The rules prevent the self-perpetuating cycle of downgrades caused by "mark-to-market" accounting, a system that requires banks to value their assets at the market price at any point in time.
Valuations have collapsed because forced sellers were having to accept fire-sale prices, pushing prices to levels that no longer reflected the real quality of the loans.
Deutsche Bank yesterday saved €825m (£625m) by becoming the first European bank to take advantage of the changes which have been made to the International Accounting Standard 39 (IAS39).
Analysts have predicted RBS will announce about £4bn of write-offs when it publishes a trading statement along with its prospectus.
RBS will be able to reduce this figure thanks to the changes to IAS39, which allow banks to shift some hard-to-value assets out of their "available for sale" portfolio, effectively recognising the assets will be held until maturity.
RBS shocked the market when it said it would have to raise £20bn of new capital, including £5bn in preference shares from the Government. Analysts believe RBS will have a tough job trying to persuade investors to subscribe for the ordinary equity, which will be taken by the Government if there is no interest from institutional shareholders.
RBS has been scrambling to complete its prospectus by the end of October, but will miss its deadline by a few days.
To help sell the investment case to shareholders, RBS hoped it would be able to persuade the Government to roll back its ban on dividends until the preference shares are repaid. But so far the Government has not budged substantially on the issue.
Source: RBS delays prospectus on 20bn capital raising - Telegraph
Furthermore, the continued watering of the shares means that at the moment the share price is at a precarious level, just above and at time below the likely option price of 65p. I am not sure that HMT have thought about this merely deciding that the RBS Group will pay 12% on the £5billion pounds+ deal.
Come on HMT, at least think about the potential dividend which will benefit tax payers, mean that the RBS Group shares will be more attractive and therefore putting value on the HMT stakeholding and therefore the taxpayer. The deal as it stands is NOT good for RBS Investors and is not a good deal for HMT.
The decision, imho, was taken in haste and was short termism rather than looking at the long term effects.
I stand down from my soap box.
------------------------------- merged -------------------------------
Finally RBS may actually agree with me
RBS delays prospectus on £20bn capital raising
Royal Bank of Scotland has delayed publishing the prospectus on its £20bn capital raising in a move which will allow it to take advantage of new softer accounting rules on toxic assets.
By Katherine Griffiths and Philip Aldrick
Last Updated: 7:36PM GMT 30 Oct 2008
Royal Bank Of Scotland Group
RBS is planning to use new accounting rules adopted on October 13 to reduce its write-downs. The rules prevent the self-perpetuating cycle of downgrades caused by "mark-to-market" accounting, a system that requires banks to value their assets at the market price at any point in time.
Valuations have collapsed because forced sellers were having to accept fire-sale prices, pushing prices to levels that no longer reflected the real quality of the loans.
Deutsche Bank yesterday saved €825m (£625m) by becoming the first European bank to take advantage of the changes which have been made to the International Accounting Standard 39 (IAS39).
Analysts have predicted RBS will announce about £4bn of write-offs when it publishes a trading statement along with its prospectus.
RBS will be able to reduce this figure thanks to the changes to IAS39, which allow banks to shift some hard-to-value assets out of their "available for sale" portfolio, effectively recognising the assets will be held until maturity.
RBS shocked the market when it said it would have to raise £20bn of new capital, including £5bn in preference shares from the Government. Analysts believe RBS will have a tough job trying to persuade investors to subscribe for the ordinary equity, which will be taken by the Government if there is no interest from institutional shareholders.
RBS has been scrambling to complete its prospectus by the end of October, but will miss its deadline by a few days.
To help sell the investment case to shareholders, RBS hoped it would be able to persuade the Government to roll back its ban on dividends until the preference shares are repaid. But so far the Government has not budged substantially on the issue.
Source: RBS delays prospectus on 20bn capital raising - Telegraph
