RBS shares (5%) being sold- too cheap?

[Gargamel]

AJS- said:

I thought we were going to make a massive profit from all this?

We still might

In any case,

If we paid £80bn, and we sell at £50bn - if the £50bn goes into repaying the national DEBT, then we get an interest saving that will go on giving back to us.

[AJS-]

Gargamel said:

We still might

In any case,

If we paid £80bn, and we sell at £50bn - if the £50bn goes into repaying the national DEBT, then we get an interest saving that will go on giving back to us.

Oh here's a piece of man maths I'll be applying in future.

So if I borrow £80K to buy an Aston and sell it for £50k, then use the £50k to pay off debts, I'll save a fortune!

[greygoose]

AJS- said:

Gargamel said:

We still might

In any case,

If we paid £80bn, and we sell at £50bn - if the £50bn goes into repaying the national DEBT, then we get an interest saving that will go on giving back to us.

Oh here's a piece of man maths I'll be applying in future.

So if I borrow £80K to buy an Aston and sell it for £50k, then use the £50k to pay off debts, I'll save a fortune!

[ofcorsa]

If the alternative is keeping the Aston for another ten years and at best still only £50k for it whilst still servicing the debt, Isn’t plan A better?

[Gargamel]

AJS- said:

Oh here's a piece of man maths I'll be applying in future.

So if I borrow £80K to buy an Aston and sell it for £50k, then use the £50k to pay off debts, I'll save a fortune!

well when you put it like that...

Not sure what the right answer is, can't hold them forever, and I am not sure in the current climate that RBS is going to break £5 a share.

This was a test sale and a signal to the market. We made money on the Lloyds sale, have made a bit more of dividends, but the financing cost is significant, and personally I would rather we moved the public investment down - I guess if we make a few quid on the last 20% in five year time, no-one will be able to criticise the whole process.

Part 1 of the story.

[Pan Pan Pan]

Gargamel said:

AJS- said:

I thought we were going to make a massive profit from all this?

We still might

In any case,

If we paid £80bn, and we sell at £50bn - if the £50bn goes into repaying the national DEBT, then we get an interest saving that will go on giving back to us.

I thought the plan was to keep the bank in existence, and not make such a colossal loss, as would have been the case if it had folded. A sows ear very often does not make a silk purse.

[Du1point8]

Gargamel said:

AJS- said:

Oh here's a piece of man maths I'll be applying in future.

So if I borrow £80K to buy an Aston and sell it for £50k, then use the £50k to pay off debts, I'll save a fortune!

well when you put it like that...

Not sure what the right answer is, can't hold them forever, and I am not sure in the current climate that RBS is going to break £5 a share.

This was a test sale and a signal to the market. We made money on the Lloyds sale, have made a bit more of dividends, but the financing cost is significant, and personally I would rather we moved the public investment down - I guess if we make a few quid on the last 20% in five year time, no-one will be able to criticise the whole process.

Part 1 of the story.

But if we are selling them, we are re-privatising the bank... I thought the lefties wanted us to buy more shares and then watch the bank burn like many other nationalised companies due to no investment by any government ever.

[55palfers]

Gargamel said:

AJS- said:

I thought we were going to make a massive profit from all this?

We still might

In any case,

If we paid £80bn, and we sell at £50bn - if the £50bn goes into repaying the national DEBT, then we get an interest saving that will go on giving back to us.

....but didn't we have to borrow the £80BN?

[legzr1]

AJS- said:

I thought we were going to make a massive profit from all this?

Some will.

Can you guess who?

[Moonhawk]

Smollet said:

The sale could be viewed as a loss leader. Only time will tell.

Yep - my immediate thought was the same - especially since it's only 5% of them.

I think the people reading doom and gloom into this are being rather premature.

[Mojocvh]

Zod said:

This is the first tranche and was designed to test the market appetite. There will be a large retail offering at some stage. There is no point waiting until the share price exceeds the buy-in price as that could take years. Indeed with such a large government holding, there is a good chance it would not do so on any acceptable timeframe.

sounds like your rubbing your hands together...

[Ali G]

Zod said:

This is the first tranche and was designed to test the market appetite. There will be a large retail offering at some stage. There is no point waiting until the share price exceeds the buy-in price as that could take years. Indeed with such a large government holding, there is a good chance it would not do so on any acceptable timeframe.

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

[andymadmak]

Ali G said:

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

Can you inform us how many of the "piggies at the top" today are the same "piggies at the top" that got RBS into trouble in the first place?

[Ali G]

andymadmak said:

Ali G said:

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

Can you inform us how many of the "piggies at the top" today are the same "piggies at the top" that got RBS into trouble in the first place?

Your point being?

[Du1point8]

andymadmak said:

Ali G said:

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

Can you inform us how many of the "piggies at the top" today are the same "piggies at the top" that got RBS into trouble in the first place?

Doesnt matter to him... piggies are piggies, they are scum as they work for a bank.

[Professor Barney]

Genuine question here, but why isn't this process classed as insider dealing? It looks to the outsider like the chancellor is offering a select bunch of individuals or companies an opportunity to purchase taxpayer owned shares at a discounted rate without offering them to the open market?

Would it be legal to do the same if e.g. He was the chairman of any FTSE100 company?

[Moonhawk]

ofcorsa said:

If the alternative is keeping the Aston for another ten years and at best still only £50k for it whilst still servicing the debt, Isn’t plan A better?

Yep - it's the same principle behind paying off a mortgage early. You save money relative to taking the loan full term.

Lets look at the Aston example in a bit more detail:

If you borrow £80k over 5 years at 10%, your total repayment if you take the finance to full term will be ~£102k with a monthly payment of around £1700 per month.

If you get half way though the term and decide to sell the car for £50k to pay off the finance, the outstanding balance at that point would be ~£45k.

Given that you have already shelled out £51k in monthly payments - you will have by that point incurred a total outlay of £96k. By paying off the loan early - you will therefore avoid paying around £6k of interest that you would have to pay had you taken the loan to it's full term.

[andymadmak]

Ali G said:

andymadmak said:

Ali G said:

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

Can you inform us how many of the "piggies at the top" today are the same "piggies at the top" that got RBS into trouble in the first place?

Your point being?

My point being, what have the actions of the former employees got to do with the remuneration of those hired to sort out the mess? Moreover why should the new people be subjected to childish name calling simply because of the positions they hold?

[covmutley]

The shares were bought as a bail out, not an investment. UK plc was always going to take a hit.

i think the argument is that diluting the public ownership would allow the bank to make progress, in the hope that the share price will rise as the other 95% is sold off. Time will tell...

It makes sense to pay off the debt, but then again I presume loans are very low interest and not on a credit card.

[Ali G]

andymadmak said:

Ali G said:

andymadmak said:

Ali G said:

Alternatively, RBS will only generate 'profit' when piggies at the top are provided with bonus swill.

Can you inform us how many of the "piggies at the top" today are the same "piggies at the top" that got RBS into trouble in the first place?

Your point being?

My point being, what have the actions of the former employees got to do with the remuneration of those hired to sort out the mess? Moreover why should the new people be subjected to childish name calling simply because of the positions they hold?

As any fool know - reward success with huge benefits - that way profit is ensured.

Basic economics!

The corollary being - do not reward success with huge benefits - that way profit is minimised.

This certainly worked for 'right said fred'.