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tuggybear

Hbos Faces Rights Issue Disaster

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THE high-street bank HBOS will tomorrow admit to one of the most disastrous rights issues in corporate history when it concedes that as few as 10% of its investors took up its £4 billion share offer.

Its two underwriters, Morgan Stanley and Dresdner, will have to place £3.6 billion of shares over the course of Monday or Tuesday.

If they are unable to place the shares at the rights-issue price of 275p or above, they will be forced to take them on to their own balance sheets.

The two investment banks are thought to have sub-under-written about 40% of the issue but it still means they could be left with £1 billion worth of shares each.

Barclays said on Friday that only 19% of its investors took part in its £4.5 billion placing.

Last week as investors were making up their minds whether to subscribe for equity in HBOS, shares in the UK banking sector plunged on fresh concerns over the viability of some of America’s big banks.

Continued : http://business.timesonline.co.uk/tol/busi...icle4363979.ece

Looks like they will have to find a different way to raise cash, when the rightdowns from UK sub-prime begin to bite.

Edited by tuggybear

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What the hell were those banks playing at? Underwriting such a massive share offering in the current market was madness. Heads will roll for this.

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What the hell were those banks playing at? Underwriting such a massive share offering in the current market was madness. Heads will roll for this.

Last chance to avoid going bankrupt.

Looks like it has failed.

Not expecting their share price to go past 275p for a very long time now...

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RBS were v. cleverly off the blocks first with their rights issue, presumably HBOS had already been to the BoE and ECB and quietly had their tanks filled up and then burnt through that cash injection. You have to wonder if we're now reaching the 'zone of the end game' in relation to bail outs. Even in the US you get the impression that Freddie and Fannie got more support through spin and sound bites as opposed to genuine cash.... <_< For HBOS to get so little support is very surprising, perhaps some of the Banksters have finally broken ranks, cashed in their chips and left the table?

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What the hell were those banks playing at? Underwriting such a massive share offering in the current market was madness. Heads will roll for this.

All banking is crooked. They had their reasons but don't try to find them in the book of honest business practices <_<

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What the hell were those banks playing at? Underwriting such a massive share offering in the current market was madness. Heads will roll for this.

I suspect banks of all forms will step in to save fellow banks. Maintaining the status quo and "stability" is essential for the entire banking sector. Without public confidence they are nothing.

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THE high-street bank HBOS will tomorrow admit to one of the most disastrous rights issues in corporate history when it concedes that as few as 10% of its investors took up its £4 billion share offer.

Its two underwriters, Morgan Stanley and Dresdner, will have to place £3.6 billion of shares over the course of Monday or Tuesday.

If they are unable to place the shares at the rights-issue price of 275p or above, they will be forced to take them on to their own balance sheets.

The two investment banks are thought to have sub-under-written about 40% of the issue but it still means they could be left with £1 billion worth of shares each.

Barclays said on Friday that only 19% of its investors took part in its £4.5 billion placing.

Last week as investors were making up their minds whether to subscribe for equity in HBOS, shares in the UK banking sector plunged on fresh concerns over the viability of some of America’s big banks.

Continued : http://business.timesonline.co.uk/tol/busi...icle4363979.ece

Looks like they will have to find a different way to raise cash, when the rightdowns from UK sub-prime begin to bite.

Strange how bank shares staged a recovery last week. One might almost have thought that someone was desperately pumping the market in order to get these rights issues away. Of course, such manipulation would never be allowed by our ever vigilant financial authorities.

It looks as though the suckers are not biting this time.

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Looks like they will have to find a different way to raise cash, when the rightdowns from UK sub-prime begin to bite.

Is there a different way to raise cash? What will they do? Also, could someone please expain how B&B are still operating?

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What the hell were those banks playing at? Underwriting such a massive share offering in the current market was madness. Heads will roll for this.

Yes but if they didn't underwrite the share offering it would have failed. This is the ever so slightly clandestine world of fraud banking that we are talking about here.

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I think we can safely say, that no bank will underwrite any future bank's rights issues.

Only the 'Tax payer' can underwrite and fund banks now.

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RBS were v. cleverly off the blocks first with their rights issue, presumably HBOS had already been to the BoE and ECB and quietly had their tanks filled up and then burnt through that cash injection. You have to wonder if we're now reaching the 'zone of the end game' in relation to bail outs. Even in the US you get the impression that Freddie and Fannie got more support through spin and sound bites as opposed to genuine cash.... <_< For HBOS to get so little support is very surprising, perhaps some of the Banksters have finally broken ranks, cashed in their chips and left the table?

But the system relies so much on cooperation. That's obviously been missing in recent months as the inter-bank rate has been higher than you'd expect from the BoE base rate. Maybe this breaking of ranks is, as you put it, the end game.

I know a lot of people on HPC will be rubbing their hands in glee at this, but I think it's scary. :o

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Strange how bank shares staged a recovery last week. One might almost have thought that someone was desperately pumping the market in order to get these rights issues away. Of course, such manipulation would never be allowed by our ever vigilant financial authorities.
This is the ever so slightly clandestine world of fraud banking that we are talking about here.

I refer the honourable gentlemen to my last post.

edit for spelling - too tired, off to bed :blink:

Edited by Nickolarge

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But the system relies so much on cooperation. That's obviously been missing in recent months as the inter-bank rate has been higher than you'd expect from the BoE base rate. Maybe this breaking of ranks is, as you put it, the end game.

I know a lot of people on HPC will be rubbing their hands in glee at this, but I think it's scary. :o

At some stage those who make the decisions will pull up the drawbridge and allow the rest of us plebs to fight amongst ourselves. I always felt it was near 'closing time' when the Carlyle group pulled out of certain markets over 6 months ago losing billions in the process. Akin to a drug dealer losing one shipment as a gift to the police but 2 others get through....some will lose millions, but if your wealth is cut from 200mil to 100mil you're not gonna suffer as much as the man in the street trying to hustle a living...

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I suspect banks of all forms will step in to save fellow banks. Maintaining the status quo and "stability" is essential for the entire banking sector. Without public confidence they are nothing.

Nail on head, however, its not nec. about public confidence at the 'shop front', these guys lost the confidence to lend to each other last August ( yes it was that long ago) this lack of take up signals a new low of confidence and could herald a lot of changes. The network could be disintergrating as one or two refuse to stand firm.

Edited by Converted Lurker

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A more in depth report from the Times : http://business.timesonline.co.uk/tol/busi...icle4364079.ece

This bit is quite telling about Barclays

Quote :

Analysts at Citi estimate that Barclays will have to raise a further £9 billion on top of the £4.5 billion clinched last week. Chen reckons that even at their lowly price of 320p, Barclays shares are likely fall to 230p. AT the macro-economic level, there are good reasons to feel anxious. Chris Watling of Longview Economics claims that over the past decade, for every £1 increase in British GDP, aggregate debts have risen by more than £4. “That increase in indebtedness has been driven by the banks,” he said. “And it’s unsustainable.” :blink:

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A more in depth report from the Times : http://business.timesonline.co.uk/tol/busi...icle4364079.ece

This bit is quite telling about Barclays

Quote :

Analysts at Citi estimate that Barclays will have to raise a further £9 billion on top of the £4.5 billion clinched last week. Chen reckons that even at their lowly price of 320p, Barclays shares are likely fall to 230p. AT the macro-economic level, there are good reasons to feel anxious. Chris Watling of Longview Economics claims that over the past decade, for every £1 increase in British GDP, aggregate debts have risen by more than £4. “That increase in indebtedness has been driven by the banks,” he said. “And it’s unsustainable.” :blink:

230p wipes off nearly 30% from Fridays close, wonder why he's so bearish? <_<

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Strange how bank shares staged a recovery last week. One might almost have thought that someone was desperately pumping the market in order to get these rights issues away. Of course, such manipulation would never be allowed by our ever vigilant financial authorities.

What a conundrum. On one hand, I want to accuse you of being a conspiracy theorist... but on the other, I admit, I asked myself the exact same question.

Who is buying all the banks? Why the sudden shift in sentiment?

It makes no sense... unless there is some hugely relevant piece of news of which we are unaware, the sudden up-tick in the price of bank shares makes no sense whatsoever. I don't expect the FSA do investigate (I'd not even be surprised if they were complicit) but I do wonder about the extent to which a determined journalist might establish whom has recently bid the shares up. Have there been buy-backs declared? If this was investment by, say, a hedge fund or pension fund - is there any way to establish which?

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What a conundrum. On one hand, I want to accuse you of being a conspiracy theorist... but on the other, I admit, I asked myself the exact same question.

Who is buying all the banks? Why the sudden shift in sentiment?

It makes no sense... unless there is some hugely relevant piece of news of which we are unaware, the sudden up-tick in the price of bank shares makes no sense whatsoever. I don't expect the FSA do investigate (I'd not even be surprised if they were complicit) but I do wonder about the extent to which a determined journalist might establish whom has recently bid the shares up. Have there been buy-backs declared? If this was investment by, say, a hedge fund or pension fund - is there any way to establish which?

Steve, come on, they were just massively oversold and now represent good value.... :rolleyes:

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A more in depth report from the Times : http://business.timesonline.co.uk/tol/busi...icle4364079.ece

This bit is quite telling about Barclays

Quote :

Analysts at Citi estimate that Barclays will have to raise a further £9 billion on top of the £4.5 billion clinched last week. Chen reckons that even at their lowly price of 320p, Barclays shares are likely fall to 230p. AT the macro-economic level, there are good reasons to feel anxious. Chris Watling of Longview Economics claims that over the past decade, for every £1 increase in British GDP, aggregate debts have risen by more than £4. “That increase in indebtedness has been driven by the banks,” he said. “And it’s unsustainable.” :blink:

Banking analyst Sandy Chen of Panmure Gordon, who has been consistently bearish on bank shares, maintains that the market is still taking too optimistic a view of likely write-downs and the need for future bad-debt provisions.

“For retail depositors, there should be very few concerns. And for debt-holders, the government has sent pretty clear signals that they won’t lose out. But I think holders of equity in the banks still face a significant risk of seeing further write-downs and bad-debt charges.”

Chen forecasts that Barclays will make earnings of less than half the City’s consensus figure of 57p a share in 2009. For HBOS, he forecasts 24p a share against a consensus figure of 56p. His forecasts are far lower than the consensus because he believes banks have underestimated their exposure to toxic debts, and he is pessimistic about the damage that a recession could cause in the areas of personal and corporate debt.

Chen thinks the capital-raisings of the past few weeks are not the last. Barclays may need more money, he believes.

One of the few honest guys about ... Sandy Chen is an oriental guy with a Scottish accent ... knows his stuff IMHO.

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What a conundrum. On one hand, I want to accuse you of being a conspiracy theorist... but on the other, I admit, I asked myself the exact same question.

Who is buying all the banks? Why the sudden shift in sentiment?

It makes no sense... unless there is some hugely relevant piece of news of which we are unaware, the sudden up-tick in the price of bank shares makes no sense whatsoever. I don't expect the FSA do investigate (I'd not even be surprised if they were complicit) but I do wonder about the extent to which a determined journalist might establish whom has recently bid the shares up. Have there been buy-backs declared? If this was investment by, say, a hedge fund or pension fund - is there any way to establish which?

It doesn't matter. the point is for the last couple of days weve all been buying banks. at 150p for RBS people were starting to buy with real money... time for a short squeeze. that should force the weak players out.

the point is these shares are going up and fast... if the a going up I buy if they fall i wanna sell .... simple as...

I think you think too much Steve they going up buy buy buy....

i think it might be sell sell sell time on monday though but I will wait and see... amd then trade in that direction..

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Steve, come on, they were just massively oversold and now represent good value.... :rolleyes:
the point is these shares are going up and fast... if the a going up I buy if they fall i wanna sell .... simple as...

I think you think too much Steve they going up buy buy buy....

I prefer to think - it sometimes yields interesting observations. Frankly the thesis that there's some criminal conspiracy among banks to artificially buoy their own shares is right-up-there with "I was abducted by aliens" - I admit. Conversely, this wild speculation raises some interesting questions none-the-less.

Who, exactly, is buying these bank shares (by demographic and proportion of shares) as the trend-following, IMHO, doesn't fully explain.... unless equity investors are every bit as savvy and capable as the bankers excellently lampooned by Bird and Fortune on Rory Bremner's show. What news/event reversed sentiment? I don't believe that it was that all-of-a-sudden a lot of buyers independently thought - "Oh, OK, they're way, way, way too cheap now." I am entirely ready to accept that ordinary people have suddenly switched from "sell, sell, sell" to "buy, buy, buy" - but this still seems extreme. Are there any other industry sectors that have shown such rapid share price increases over the space of a couple of days?

With the underwriters taking the stock onto their balance sheet is this not like the consolodation of the industry that happened during the depression?

From where do your draw your background information about the Great Depression?

Edited by A.steve

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Cue to music from the Who: Won't get fooled again. :blink:

Followed by "Another One Bites the Dust" by Queen.

These failing rights issue offers are simply an indication that people are not willing to buy shares that are in a down cycle. I sold all my RBS shares about 2 years ago. Most people know it makes sense.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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