RBS shares (5%) being sold- too cheap?
Discussion
Ali G said:
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? 
Basic economics!
The corollary being - do not reward success with huge benefits - that way profit is minimised.
This certainly worked for 'right said fred'.
They just turn up and get a bonus, then whine when bankers get a larger bonus because they have surpassed the goals assigned to them for the year.
Ali G said:
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? Basic economics!
The corollary being - do not reward success with huge benefits - that way profit is minimised.
This certainly worked for 'right said fred'.
Du1point8 said:
Doesnt matter to him... piggies are piggies, they are scum as they work for a bank.
Mr Du1point8 was right thenIts money back to the tax payer also in the interim many 1000's of jobs were saved an thoes people paid Income tax an NI etc and contributed to the economey. So just looking at the 1st tranche sale price is not really a true representation of the deal..hard for most to grasp of course.
Also if the government had done a public offeriing this would have taken huge amount of time and money to organise a small stake to large investors is money back as at now. An as some have said it reduces debt or at least need to borrow more.
Also if the government had done a public offeriing this would have taken huge amount of time and money to organise a small stake to large investors is money back as at now. An as some have said it reduces debt or at least need to borrow more.
andymadmak said:
Mr Du1point8 was right then
I find you both very entertaining!
As for the topic in hand, I see no problem in disposing of the first tranche at a 'loss' - and perhaps once fully doshed up - the piggies at the top will generate sufficient profit for the following tranches to generate greater return.
Oink, oink.
ofcorsa
I think my wife's take would be that I shouldn't buy the Aston to start with. In fact I know so. Sadly.
Gargamel
It's not so much a matter of how I put it as how it is. I understand they might make a profit over a few more years but it's already been in public ownership for 7 years.
If we make a small profit over 12 years for the huge cost and risk of bailing out a badly run company, I for one will very much still be able to criticise it. At 7 years and a loss it's easy.
legzr1
I'm sure some people did very well out of it. Good luck to them. My gripe is with those wasting public money. Those shrewd and cynical enough to get themselves a slice are a fact of life, and one of the best arguments against a planned economy and corporate welfare, even when it's dressed up as capitalism.
What it has to be assessed against is the cost of honouring the savings guarantee and letting the bank go bust. Those above or outside of the savings guarantee would have lost money.
I'm not quite sure how many people this would have affected. People with over £85k in a single account. I would imagine thousands rather than millions.
The cost of the national debt is borne by everyone and the taxes it necessitates are a drag on everyone and on the economy as a whole.
There's also the moral hazard of bailing out bad banks and bad savers so encouraging them to repeat these mistakes.
Another alternative would have been to recapitalise RBS enough to keep it solvent then sell it off as quickly as possible. Probably broken into smaller banks. Not sure how this would compare cost wise but borrowing £80bn and losing 30 of it is not cheap.
A further option again if we think it's turned around is to keep it in public ownership and enjoy the upside. I don't favour this as I'm against public ownership of companies in general but it doesn't become any better when you only nationalise the downside.
As there isn't an alternative universe in which another course of action was followed it's impossible to say what would have been better, but it seems entirely right to criticise the huge costs of this exercise.
I think my wife's take would be that I shouldn't buy the Aston to start with. In fact I know so. Sadly.
Gargamel
It's not so much a matter of how I put it as how it is. I understand they might make a profit over a few more years but it's already been in public ownership for 7 years.
If we make a small profit over 12 years for the huge cost and risk of bailing out a badly run company, I for one will very much still be able to criticise it. At 7 years and a loss it's easy.
legzr1
I'm sure some people did very well out of it. Good luck to them. My gripe is with those wasting public money. Those shrewd and cynical enough to get themselves a slice are a fact of life, and one of the best arguments against a planned economy and corporate welfare, even when it's dressed up as capitalism.
What it has to be assessed against is the cost of honouring the savings guarantee and letting the bank go bust. Those above or outside of the savings guarantee would have lost money.
I'm not quite sure how many people this would have affected. People with over £85k in a single account. I would imagine thousands rather than millions.
The cost of the national debt is borne by everyone and the taxes it necessitates are a drag on everyone and on the economy as a whole.
There's also the moral hazard of bailing out bad banks and bad savers so encouraging them to repeat these mistakes.
Another alternative would have been to recapitalise RBS enough to keep it solvent then sell it off as quickly as possible. Probably broken into smaller banks. Not sure how this would compare cost wise but borrowing £80bn and losing 30 of it is not cheap.
A further option again if we think it's turned around is to keep it in public ownership and enjoy the upside. I don't favour this as I'm against public ownership of companies in general but it doesn't become any better when you only nationalise the downside.
As there isn't an alternative universe in which another course of action was followed it's impossible to say what would have been better, but it seems entirely right to criticise the huge costs of this exercise.
Gecko1978 said:
Its money back to the tax payer also in the interim many 1000's of jobs were saved an thoes people paid Income tax an NI etc and contributed to the economey. So just looking at the 1st tranche sale price is not really a true representation of the deal..hard for most to grasp of course.
What I find hard to grasp is how quickly and with what a straight face people become socialists when it suits their outlook or their interests. That's the sort of argument that was made for keeping the coal mines open.
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.
This.Remember though that this site is like an arm of the Daily Mail at times, so unless you write in red top headline speak, many will not take notice. It's a shame, but reality and educated debate seem a difficult one for people to grasp.
I'll try though.....
RBS's current share price of around 330p is lower than the average price the government paid (around 510p a share) for their 81% stake. So they're sitting on a loss at the moment.
There's no sign of that share price rising fast anytime soon (I know as I have some too). They briefly topped 400p a few months ago but didn't last long.
Most experts in the City see that RBS will struggle to become a proper profitable bank until it is free of Government shackles. RBS simply doesn't have the freedom to perform, grow or change in the way that Barclays, HSBC, Santander or even Lloyds does because every single major decision is being watched over by Government, Parliament and the media.
So Osborne has a choice:
1. Sell the whole 81% stake at 330p now (or likely less than 330p, as he'd need to offer a discount so someone could underwrite it).
2. Sell some at 330p now to bring down the Government's ownership and allow the bank to free itself from the shackles, make some bigger profits and see if the share price rises to allow further sales at higher prices.
3. Wait and see if the share price rises, continuing to pay interest on the money being borrowed to maintain the stake and keeping the shackles on the bank, but hoping somehow it can conjure up more profit that way.
If you were chancellor (and left in this mess by the previous Labour government) what would you do?
Ali G said:
Splitting retail into W&G et al
Or splitting investment from retail.
And share price is a rather peculiar beast at the best of times - 'confidence', tea-leaves and current bowel movements all may play their part!
I tend to agree with oyster.
Don't forget splitting the assets/debt held by UK and Irish, then splitting those assets in Ireland out and offsetting and selling the debt to a 3rd party.Or splitting investment from retail.
And share price is a rather peculiar beast at the best of times - 'confidence', tea-leaves and current bowel movements all may play their part!
I tend to agree with oyster.
I know people working on the W&G system and that isn't close to being ready and the politics and arguments of the 3rd party sell of is horrific as RMs don't know their A from E and are remembering sales months after they have happened, yet the debt has already been moved.
Not sure on the investment arm, but it did at one point look to be offloaded (lock stock the effing lot) to a 3rd party as a turn key investment vehicle, but that is quiet now.
When that is up and running I would consider selling shares, but until then, not a chance unless maybe buying.
Professor Barney said:
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?
Would it be legal to do the same if e.g. He was the chairman of any FTSE100 company?
Du1point8 said:
Don't forget splitting the assets/debt held by UK and Irish, then splitting those assets in Ireland out and offsetting and selling the debt to a 3rd party.
I know people working on the W&G system and that isn't close to being ready and the politics and arguments of the 3rd party sell of is horrific as RMs don't know their A from E and are remembering sales months after they have happened, yet the debt has already been moved.
Not sure on the investment arm, but it did at one point look to be offloaded (lock stock the effing lot) to a 3rd party as a turn key investment vehicle, but that is quiet now.
When that is up and running I would consider selling shares, but until then, not a chance unless maybe buying.
'You see what your problem is?'I know people working on the W&G system and that isn't close to being ready and the politics and arguments of the 3rd party sell of is horrific as RMs don't know their A from E and are remembering sales months after they have happened, yet the debt has already been moved.
Not sure on the investment arm, but it did at one point look to be offloaded (lock stock the effing lot) to a 3rd party as a turn key investment vehicle, but that is quiet now.
When that is up and running I would consider selling shares, but until then, not a chance unless maybe buying.
'You go looking for 'problems''
'Just bring me solutions - and only when you have sorted things out.'
Oink, oink.
Pan Pan Pan said:
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.
t from Fred the Shred. It's probably at about the right value now. You can't wish the share price higher.Mojocvh said:
Professor Barney said:
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?
Would it be legal to do the same if e.g. He was the chairman of any FTSE100 company?
Zod said:
xactly. The bank's share price at bail-out time overvalued it, after years of bullst from Fred the Shred. It's probably at about the right value now. You can't wish the share price higher.
And how should one, the state, the economy etc. prevent another fred the shred (doyenne of the City, Government et al - at the time)t from Fred the Shred. It's probably at about the right value now. You can't wish the share price higher.These are lessons which need to be learned, although there appear to be few texts available to learn from.
If Labour think it's such a good idea to hold onto to the shares in case they go up, why don't they propose buying even more shares in other banks? The government could make a killing!
Because it's not the government's job to speculate on the stock market with taxpayers' money. Osborne is quite right to start unwinding the position. He hasn't sold the shares too cheaply; it was Labour that paid too much for them in the first place.
Because it's not the government's job to speculate on the stock market with taxpayers' money. Osborne is quite right to start unwinding the position. He hasn't sold the shares too cheaply; it was Labour that paid too much for them in the first place.
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.
The usual suspects were enjoying a good old uninformed rant and you go and ruin it by come here talking sense - boo!!Du1point8 said:
FredClogs said:
Like the Royal Mail sell off recently, the trains, the telephones, the electricity and all the Tory sell offs since 1979 - it's toffs selling our stuff cheap to their pals so they can make money.
Or selling them off so some other organisation can rescue the infrastructure that has had decades of neglect and needs tens of billions putting into it rather than them.1) Anyone can subscribe to the shares, including you, and buy them at the same price as anyone else.
2) If the shares aren't priced to be good value, no-one buys them, the sale fails (and has to be repeated) and costs the government a f
ckton of money, so everyone loses.Alex said:
If Labour think it's such a good idea to hold onto to the shares in case they go up, why don't they propose buying even more shares in other banks? The government could make a killing!
Because it's not the government's job to speculate on the stock market with taxpayers' money. Osborne is quite right to start unwinding the position. He hasn't sold the shares too cheaply; it was Labour that paid too much for them in the first place.
Absolutely.Because it's not the government's job to speculate on the stock market with taxpayers' money. Osborne is quite right to start unwinding the position. He hasn't sold the shares too cheaply; it was Labour that paid too much for them in the first place.
+1 to Zod's point earlier.
Unfortunately the government may end up losing money on the purchase and sale of RBS (I can't see the share price recovering to 500p+ per share in this government's term) however a few £bn lost is relatively minor compared with the prospect of RBS being lost altogether if it hadn't been bailed out.
Unfortunately much of the general public are a bit too thick* to understand matters such as these and focus on the headline rather than the context behind it.
*thick may be a bit harsh - contextually unaware is probably fairer.
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