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RBS, etc. UK Banks Govt Investment

  • 13-10-2008 9:55am
    #1
    All in all
    Registered Users, Registered Users 2 Posts: 434 ✭✭


    Does the UK Governments bailout plan mean that these banks are nationalised and their shares will have a nil value?


Comments

  • #2
    Idu
    Registered Users, Registered Users 2 Posts: 1,152 ✭✭✭Idu


    My understanding of it(from Brown and Darling's press conference earlier today) is that the money they put in will be terms of an investment to offer liquidity to the banks. It will basically be the equivilant of someone like Warren Buffet coming in with investment. The government will be looking to sell their shares in the future for a profit and have no further involvement in the bank.

    While they are in however they will have a degree of control over the banks activities. This includes regulating the bonuses paid to top exec's and will also mean that no dividend will be paid until the government has sold their shares


  • #3
    Baird
    Closed Accounts Posts: 260 ✭✭Baird


    What is happening with RBS is not the same as Northern Rock.
    RBS are issueing £15bn in ordinary shares at 65p and a further £5bn in pref shares
    which will be taken up by the gov.
    Ordinary shareholders are invited to take up the £15bn but any of it that is not taken up
    will be taken by the gov.
    What it is in effect is a massive share dilution which is normally very negative for a shareholder.
    However RBS was trading at 55p at one stage which is down 90% in a year so a lot
    of this specualted share dilution seems to be priced in.
    If no ordinary shareholders take up the rights offer, the gov will underwrite the entire
    issue and will own 58% of the bank, so it will be partly nationalised.
    Janet is also right there will be no div paid any time soon.
    Basically shareholders in RBS are screwed


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