Rbs Share Deal

[Reck B]

http://alexmasterley.blogspot.com/2009/01/...worse-than.html

Monday, 19 January 2009

Probably the worst deal ever - worse than the Conservatives' Black Wednesday

At close of business last Friday, the UK government held £5 billion in preference shares and a 50% of the ordinary shares of RBS. I calculate the market cap of all of the company’s ordinary shares at £8.33 billion, so the total government holding of prefs and ordinaries would have been worth about £9.16 billion.

At the weekend the government cut what it thought was a good deal to exchange the prefs for ordinaries at a price 8.25% below the Friday closing price, giving the government a 70% interest in the ordinaries. Unfortunately the share price fell 67% on the day leaving the market cap of RBS at £4.58 billion, and the UK government’s 70% share at £3.2 billion. So instead of getting a benefit of a £400m discount on the conversion price, the government took a £5.96 billion loss on the day.

If the rating of UK government debt is downgraded as has just happened to Spain, then the banks will still be short of capital and the whole exercise will have been in vain.

FOOOOOOOOOOOOKIN' ELL

[time 2 raise interest rates]

It's them there "green shoots" again, why the banks ever stopped borrowing money they never had and

lending out to people that could never repay it is beyond me.

[KingBingo]

It's them there "green shoots" again, why the banks ever stopped borrowing money they never had and

lending out to people that could never repay it is beyond me.

Ah but the banks must be forced to return to 2007 levels. They must be forced to lend money to people that have no hope of repaying it.

[IMHAL]

Looks like Brown is going to re-learn and old lesson that his pal Callaghan learned - you cannot spend your way out of a recession or buck the market. You end up going broke if you try.

In any case Brown has crossed the line long time ago so now he has no option but to break the country - no doubt he'll go down saying it was the right thing to do.........

[time 2 raise interest rates]

Ah but the banks must be forced to return to 2007 levels. They must be forced to lend money to people that have no hope of repaying it.

The Government are now getting the tax payer to lend money to the banks knowing that the banks have no chance of

repaying it. A vicious downward spiral, one may say. Gordon's a genius.

[DisQ]

FOOOOOOOOOOOOKIN' ELL

+1

if these figures are correct

[Dangerous Woman]

To give one example of RBS's suicidal carelessness among many, it is owed some £2.5billion by the Russian oligarch Leonid Blavatnik which will never be seen again.

Why can't we confiscate his London house; just say he's a terrorist.

[R K]

That's what happens when you're playing with other people's money.

[jonpo]

politicians are never succesful traders....

politicians make careers out of telling the world its wrong and they are right

traders make careers out of telling the world what it should already know

never argue with the markets... even when markets are wrong.... never argue with the markets ... or you will end up poor very quickly.

[Reck B]

politicians are never succesful traders....

politicians make careers out of telling the world its wrong and they are right

traders make careers out of telling the world what it should already know

never argue with the markets... even when markets are wrong.... never argue with the markets ... or we will end up poor very quickly.

fixed

[bobthe~]

It's them there "green shoots" again, why the banks ever stopped borrowing money they never had and

lending out to people that could never repay it is beyond me.

The Conservatives wouldn't have done this, they are the Do Nothing party.

Still in this case doing nothing would have saved 6billion.

[Dangerous Woman]

Can I have Leonid Blavatnik's house please? I must own a bit of it.

[interestrateripoff]

Our dear leader is a financial genius why are you worried, he brought us 10 years of uninterrupted growth you don't do achieve that unless you know something about economics.

[dances with sheeple]

Our dear leader is a financial genius why are you worried, he brought us 10 years of uninterrupted growth you don't do achieve that unless you know something about economics.

yes he knows a thing or two about a thing or two let me tell you...........schools hospitals hospitals schools bla bla bla , I hope the f*ckwits who insisted on voting them in again are happy.

[Ah-so]

The Conservatives wouldn't have done this, they are the Do Nothing party.

Still in this case doing nothing would have saved 6billion.

Well it wasn't them who got us into this mess - it was Brown.

[zilly]

To give one example of RBS's suicidal carelessness among many, it is owed some £2.5billion by the Russian oligarch Leonid Blavatnik which will never be seen again.

Why can't we confiscate his London house; just say he's a terrorist.

But in an earlier thread you were pondering that if RBS went under why your mortgage shouldn't be cancelled so you could get a free house.

By your argument above then, the taxpayer should repossess your house immediately if RBS is nationalised because of the money you owe the bank.

You can't have it both ways, m'dear.

[jonpo]

I think RBS should swap the money in my current account they owe me for a load of common equity.. it migh help...

[Guillotine]

The 2.5% VAT discount was never going to work either, that cost the treasury £12 billion.

This government have had several black wednesdays.

[BXLONDONMAN]

FOOOOOOOOOOOOKIN' ELL

is this for real

[interestrateripoff]

Well it wasn't them who got us into this mess - it was Brown.

Not quite true which party started off the house price madness in the first place???

[stormymonday_2011]

politicians are never succesful traders....

politicians make careers out of telling the world its wrong and they are right

traders make careers out of telling the world what it should already know

never argue with the markets... even when markets are wrong.... never argue with the markets ... or you will end up poor very quickly.

If market forces were to have full play most of the banks should be simply liquidated. Of course, that would also mean depositors would lose their money. I happen to think that would have been the simplest, quickest and most brutal way to resolve this crisis in the UK. However, I am not sure whether everyone deriding Brown on here would have liked that medicine when it was doled out to them. Certainly, many of those burnt by the Icelandic bank collapse changed their tune quite dramatically when their feet were held to fire. I agree that Brown 's government is clueless and can't seem to follow a consistent policy but then the advice they are getting from the so called experts in the City at every stage of this crisis has also turned out to be rubbish. This Labour party's main fault is that it has never had the guts to stand up to the financial sector and to pursue policies that were in the country's long term interests. Both it and the Tories are slaves to an ideology that has had its day. I have no doubt that Brown and Labour will be turfed out of office at the next election. I also think that the next Tory government will turn out to be equally hopeless. After all the government Bank Insurance scheme which many so find laughable was their idea. Sadly, Cameron will probably be the last Prime Minister of Great Britain because by 2015 I expect the UK to dissolve into its component parts.

[Guest sillybear2]

The 2.5% VAT discount was never going to work either, that cost the treasury £12 billion.

The VAT trick worked well, it was just an expensive way to fiddle the inflation figures.

[DisQ]

Not quite true which party started off the house price madness in the first place???

exactly, every party will do what they are told, they just have to follow.

[subspace]

If market forces were to have full play most of the banks should be simply liquidated. Of course, that would also mean depositors would lose their money.

Not necessarily - depositors could still be compensated, either directly out of the public coffers or by seizing the mortgate and loan assets of the failed banks and selling them off to the surviving banks.

Edited January 20, 2009 by subspace

[huw]

Not necessarily - depositors could still be compensated, either directly out of the public coffers or by seizing the mortgate and loan assets of the failed banks and selling them off to the surviving banks.

Apparently there are around £600 billion on deposit in UK accounts (2006 figures).

However, bank deposits are generally left where they are unless a bank run occurs, so as far as I can see there would be no actual need to come up with the money to cover these deposits, provided a credible banking institution was put in place to 'hold' them.

Compare with the bond of a bankrupt, state-guaranteed bank reaching its maturity date ... the government, having guaranteed the debt, must come up with (or find a creditor willing to roll over) the entire sum immediately.