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Lloyds avoids asset protection, RBS revises terms
9:53a ET November 3, 2009 (MarketWatch)
LONDON (MarketWatch) -- U.K. lender Lloyds Banking Group on Tuesday said it will avoid participating in the government's asset-protection program and will instead raise at least 21 billion pounds ($34.4 billion) of capital, while Royal Bank of Scotland agreed to take the insurance under revised terms.
The new plans will see the U.K. government inject a further 31.2 billion pounds into the two banks and will take the taxpayers' economic holding in RBS to 84.4%.
Both banks also outlined likely sales that will be needed to satisfy European Union regulators, including the disposal of branch networks as well as RBS' insurance business. See full story.
The agreements followed months of speculation about whether either bank could avoid taking the government insurance as market conditions have gradually improved.
Both Lloyds and RBS also made further commitments on lending and pay, including that they wouldn't pay discretionary cash bonuses for 2009 to any employee earning above 39,000 pounds a year.
Shares in Lloyds rose 1% Tuesday, outperforming compared to most other European banks.
RBS shares dropped around 10% as broader European markets fell sharply. Also see Europe Markets.
"However much today's news was expected, the prospect of hefty divestments [at RBS] and 84% taxpayer ownership is a bleak one, particularly when there is limited potential upside for shareholders in the future," said Paul Mumford, senior fund manager at Cavendish Asset Management.
"With the mammoth Lloyds, there is at least a compelling long-term case for huge earnings potential and a leading domestic market position once recovery is more firmly underway," he added.
Lloyds said it will raise 13.5 billion pounds in a fully underwritten sale of shares to existing investors -- the biggest-ever rights issue in the U.K.
It will also launch an exchange offer to swap existing bonds for new convertible bonds that will turn into ordinary shares if the capital ratio falls too low. The exchange deal will add at least 7.5 billion pounds of contingent core Tier 1 capital, the bank said.
The U.K. Treasury will fully participate in the rights issue, and with a 43% stake in the bank that means the government will buy around 5.7 billion pounds of new shares.
Lloyds said the capital raising will help protect it against rising bad-debt charges and is a more attractive alternative than the asset-protection scheme, under which the bank didn't expect to make any claims based on its current performance.
"These proposals provide a significantly more attractive, market-based alternative to participating in GAPS and offer superior economic value to shareholders," said Lloyds Chairman Winfried Bischoff.
"We believe that this represents a significant step towards meeting our, and the government's, objective that the group operates as a wholly privately-owned, self supporting commercial enterprise," he added.
Lloyds will pay a 2.5 billion fee to HM Treasury for the implicit protection the group has had since the government offered the insurance deal.
Macquarie analyst Dave Johnston said the new plan seems to be more efficient than the asset-protection scheme. He said under the original proposal Lloyds could have ended up over-capitalized, with a core Tier 1 ratio of over 15% by the end of 2011.
"Under the current scheme, and with Lloyds currently delivering within expectations, this is no longer the case," he added.
Credit Suisse analyst Jonathan Pierce said the bank is being forced to sell more assets than originally expected by the European Commission. But he added the new bonds will have a relatively low interest rate, saving the bank around 200 million pounds a year compared to expectations.
RBS fees cut
Under the revised terms of its asset-protection deal with the government, RBS will reduce the overall pool of insured assets to 282 billion pounds from 325 billion pounds. See sidebar on banks with protected assets
The first loss -- or the losses RBS has to absorb before the government starts paying out -- was increased to 60 billion pounds from 42.2 billion pounds. But the fee was also significantly reduced.
RBS will now pay 700 million pounds a year for the first three years, followed by 500 million pounds a year after that, compared to the previous plan for an initial upfront fee of 6.5 billion pounds. The announcement came after RBS said it will also cut a further 3,700 jobs in its branch network.
As well as the lower fees, RBS will no longer be forced to give up certain tax losses and allowances, which had been valued at between 9 billion pounds and 11 billion pounds.
Credit Suisse's Pierce said the new fee is "tiny" compared to the original plan, though he also noted that the government is standing by with another 8 billion pounds if it is needed.
RBS said it doesn't expect to need the extra capital, but Pierce said it could suggest that existing calculations on the bank's capital are too optimistic.
Exit sought
RBS Chief Executive Stephen Hester told analysts the bank hopes to exit the asset-protection scheme within its five-year recovery plan, which currently has just over four years left to run.
"Effectively this policy is now more of a catastrophe insurance policy, where we wouldn't expect to have to make claims under our base case scenario," said Finance Director Bruce van Saun.
The Treasury will subscribe for the full 25.5 billion pounds of B shares that were announced in February, taking the government's economic interest in RBS to 84.4%, while its ordinary shareholding remains at 70.3%.
RBS Posts Quarterly Loss on $5.5 Billion Provisions
By Jon Menon and Andrew MacAskill
Nov. 6 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s biggest government-controlled bank, had a third- quarter loss after 3.3 billion pounds ($5.5 billion) of provisions for bad loans and credit-market writedowns.
The net loss was 1.8 billion pounds, compared with a profit of 871 million pounds in the year-earlier period, the Edinburgh- based bank said today in a statement.
“RBS is still a recovering basket case, but it’s going in the right direction,” said John Smith, a fund manager at private bank Brown Shipley & Co. in Manchester, which manages about 2 billion pounds, including RBS shares. “The news was bad, but could have been worse.” The shares gained as much as 8.6 percent in London trading.
RBS is getting a total of 45.5 billion pounds in capital from the British taxpayer, making it the world’s most expensive bank bailout. This week, the 70 percent government-owned lender said it would sell its insurance assets, more than 300 U.K. branches, an investment banking division and a credit card payment unit to win EU approval for taxpayer aid.
“This will be a marathon and not a sprint,” Chief Executive Officer Stephen Hester said in a conference call with journalists today. He hoped RBS would be profitable in 2011. The bank has written down 10.8 billion pounds in the first nine months of 2009.
The bank gained 7.5 percent to 37.85 pence at 10:15 a.m., paring its 2009 loss to 23 percent. The FTSE 350 Banks Index rose 1.5 percent.
Costs Controlled
The operating loss narrowed to 1.5 billion pounds from 3.5 billion in the second quarter. This shows the bank is controlling costs and profiting on the difference between its borrowing costs and the amount it charges customers on loans, Smith said.
“I would much rather they really write down the bad loans and get on with what they need to do,” said Lothar Mentel, chief investment officer at Octopus Investments Ltd., which no longer hold RBS shares. “What we don’t want to have in the U.K. after this entire banking crisis is a Japanese situation where you have zombie banks,” he said in a Bloomberg Television interview.
The bank plans to insure 282 billion pounds of risky assets with the government after posting the biggest loss in U.K. corporate history last year.
Assets Increase
In August, Hester said results will be poor for another two years because of the recession and related bad loans and funding costs. It posted a loss of about 24 billion pounds last year. The bank plans to reduce a balance sheet that climbed to more than 2.2 trillion pounds, about 1 1/2 times Britain’s annual economic production, under Hester’s predecessor Fred Goodwin.
Balance sheet total assets rose 2 percent to 1.68 billion pounds, from the end of the first-half. The loan to deposit ratio declined to 138.8 percent. That compares with about 84 percent at HSBC Holdings Plc, Europe’s biggest bank, which lends less than it gains in customer deposits.
“I am a little bit surprised by the numbers, I didn’t expect it to be this bad,” said Ralph Silva, research director at Tower Group Plc. “The difference between the haves and the have-nots in U.K. banking seems to be increasing month over month, which is frightening because if it increases anymore the value of RBS will be zero.”
The bank has cut almost 20,000 jobs since Hester became CEO a year ago. Today he said the cuts were “more than halfway through.”
Toxic Assets
In February, RBS said it would transfer 540 billion pounds of toxic assets, including derivatives and commercial and residential property loans into a new unit to be wound down or sold over three to five years. About two thirds of the provisions were made in the “non-core” division, the company said today.
In the core unit Ulster Bank and Citizens in the U.S. are experiencing increased bad loan provisions, the bank said. Bad debts have probably “plateaued,” said Hester.
The bank may seek a flotation of its insurance unit after selling its other operations within four years, said Hester. It will probably take a year before the first sale, he said.
Asked whether he regretted taking on the CEO’s job, Hester replied, “No.”
To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net
Last Updated: November 6, 2009 05:19 EST
Wondering if RBS has more room to fall...
U.K., Irish Stocks Fall; Bank Shares Drop as RBS Sells Assets
By Sarah Jones
Nov. 3 (Bloomberg) -- U.K. and Irish stocks fell to the lowest level in more than four weeks as Royal Bank of Scotland Group Plc announced plans to sell its insurance division and some branches after an agreement with the European Union to permit state aid.
RBS lost 7 percent, extending yesterday’s 7.8 percent slump, after agreeing to a 25.5 billion-pound ($41.6 billion) injection from the U.K., increasing the government’s stake to 84.4 percent. Allied Irish Banks Plc and Bank of Ireland Plc tumbled more than 12 percent in Dublin. Xstrata Plc and Kazakhmys Plc led a sell-off in mining companies as copper fell.
The benchmark FTSE 100 Index sank 67.29, or 1.3 percent, to 5,037.21, the lowest close since Oct. 5. The FTSE All-Share Index lost 1.4 percent and Ireland’s ISEQ Index dropped to a three-month low, falling 2.1 percent.
“The story of the banks is far from over,” said Keith Bowman, a London-based equity analyst at Hargreaves Lansdown. RBS’s announcement “certainly raises some questions overall of what the EU’s remit is. One thing investors hate is uncertainty and it does create an extra element of uncertainty in the wider EU banking sector.”
The FTSE 100 last week capped its worst weekly sell-off since an eight-month rally started in March as concern mounted that gains may have outpaced prospects for earnings growth. The gauge has still surged 43 percent since reaching a six-year low on March 3.
RBS Retreats
RBS tumbled 7 percent to 35.93 pence. The government’s plan to inject more money into the U.K.’s largest government- controlled lender pushes its investment to 45.5 billion pounds, making the rescue the most expensive bank bailout in the world.
The increased aid will boost the state’s stake to 84.4 percent from 70 percent after restructuring talks with the European Commission, the European Union’s executive arm. RBS said it will put 282 billion pounds of assets into the government’s insurance program, less than previously announced.
Allied Irish Banks and Bank of Ireland, which have received 7 billion euros ($10.3 billion) from the Irish government, slumped 14 percent to 1.45 euros and 12 percent to 1.41 euros, respectively.
Allied Irish Chairman Dan O’Connor last week said the bank could face “serious consequences” from its negotiations with Europe.
Lloyds Banking Group Plc rallied 2.7 percent to 87.33 pence as Britain’s largest mortgage lender announced plans to raise 21 billion pounds in the country’s biggest rights offering, denying the government majority control.
‘Soak Up’ Cash
“That’s going to soak up a lot of cash, not just for Irish banks, but for European banks,” said Oliver Gilvarry, head of research at Dolmen Securities in Dublin.
HSBC Holdings Plc, Europe’s largest bank, lost 3.3 percent to 667.5 pence. Barclays Plc fell 2 percent to 323.45 pence. Britain’s second-largest bank said its head of retail and commercial banking, Frits Seegers, resigned after Barclays handed control of his commercial lending unit to President Robert Diamond.
The European Commission today said losses at financial institutions may total as much as 400 billion euros and the industry remains “fragile.”
Xstrata, the world’s fourth-largest copper producer, dropped 2 percent to 903 pence. Kazakhmys, Kazakhstan’s biggest Producer of the metal, slid 1.6 percent to 1,120 pence. BHP Billiton Ltd., the world’s largest mining company, dropped 2.3 percent to 1,650.5 pence.
Copper declined in London as the dollar strengthened and Australia’s second interest-rate increase in a month fanned concern about the removal of economic stimulus measures.
The contract for three-month delivery fell as much as 2.8 percent to $6,372.25 a metric ton on the London Metal Exchange.
Aviva Plc retreated 2.5 percent to 379.3 pence. The U.K.’s biggest insurer by market value sold 63.5 million shares in its Dutch insurance unit, Delta Lloyd, at 16 euros each. The company had sought 15.50 euros to 19 euros a share.
-- With assistance from Dara Doyle in Dublin. Editors: Roger Neill, Andrew Rummer.
RBS rises on talk looking to buy back shares from govt
LONDON (Reuters) - Shares in Royal Bank of Scotland rose 3.7 percent in afternoon trade on Tuesday, with traders citing talk that the lender was looking to buy back shares from the UK government.
RBS was not immediately available for comment.
RBS shares outperformed the UK banking sector, which was down 0.2 percent.
More than 118 million RBS shares changed hands by 1413 GMT, compared with a daily average of 122 million in the past 30 days.
(Reporting by Dominic Lau and Atul Prakash)
Source : http://messages.finance.yahoo.com/Stocks...
Gloomy report by top man:
http://www.rns-pdf.londonstockexchange.com
Banking sector drops after RBS caution
8:56a ET August 7, 2009 (MarketWatch)
LONDON (MarketWatch) -- Traders took profits out of the banking sector as the Royal Bank of Scotland offered up a decidedly more pessimistic view on impairment levels than Lloyds Banking Group did earlier in the week.
The Royal Bank of Scotland slumped 12.2% after the bank said its first-half net loss widened to 1.04 billion pounds ($1.74 billion) due to soaring bad-debt charges and also warned that results may not improve significantly until 2011. See related story.
The bank's loss widened from an 827-million-pound deficit a year earlier and was worse than expected, driven by a five-fold increase in total impairments charges to 7.52 billion pounds.
It didn't go unnoticed that RBS said impairments will remain high, while Lloyds Banking Group said they had peaked.
"The overall figures are significantly lower than our estimates and the tone of the statement is notably weaker than the Lloyds comments," said Robert Law, an analyst with Nomura. "With book value set to fall further and the shares trading at 1.2 times book, our initial reaction is negative for both the shares themselves and for the sector as a whole."
Lloyds fell 3.3% and HSBC Holdings fell 0.5%. Barclays nudged up 0.1%.
The bank declines helped limit gains for the U.K. FTSE 100 to 0.4%, to 4,707.87, following data showing fewer U.S. job losses than expected and a declining unemployment rate. See full story.
famous
thnx
yep!
I'M A ALABAMA BOY, NEED TO REFINANCE
GUESS I'LL TRY TO ADD SOME AND AVERAGE
DOWN. OUR BANKS ARE GETTING HEAVY SHORTING
CHECK OUT COLONIAL (CNB) FEDS TOLD THEM
TO RAISE 300 MILLION TO GET TARP, STOCK
TOOK A DIVE. BOTH RELEASED EARNINGS
LOSS MOSTLY RESERVE INCREASES AND
"GOOD WILL WRITE DOWN" ?.
WE SHOULD GET A BOOST WHEN SHORTS COVER.
WE BOTH CAN USE SOME BETTER LUCK
Famous; WHY REGIONS BANK? $3.70 NOW .. THERE IS NO RF BOARD.
RBS's DIVIDENDS.. from alpha:
Will Royal Bank of Scotland Continue to Pay Dividends on Its Preferreds?
by: Global Investing Editor January 23, 2009 | about stocks: PGF / RBS
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Several readers asked me whether the newly nationalized Royal Bank of Scotland (RBS) will continue to pay dividends to owners of its non-cumulative preferred shares (and those of NatWest which it acquired).
My answer:
I do not know, but here is my best guess. the preferreds are a relatively minor part of the capital of the banks and are not currently being added to (like the common). So it is a free choice by the British PM Gordon Brown and and the Chancellor of the Exchequeur, Alisdair Darling, both of whom are Scots themselves, what they do about the biggest case, which is Royal Bank of Scotland. (Nat West is also RBS which acquired it before the mess hit.)
My guess is that they will not halt payment of interest on the preferred for a couple of reasons: 1) they were targetted at US retail investors, not speculative Britons like the recent buyers of RBS common; 2) the government wants eventually to sell the bank to the private sector again and does not want to hurt its standing too much; 3) this is a minor amount of money in fact; 4) it is linked to the dollar business RBS does, which is mostly wholesale, and cutting the payout would hurt the bank's global rep 5) the government's own shares are also preferreds which presumably means that preferred get preference which is what they normally get (I am not sure which preferreds are senior but in theory it is the ones we own) and 6) Britain would lose standing as an international bank centre if these payouts were halted.
They really don't want to wind up as Iceland on the Thames.
Another imponderable is news that the Dutch Parliament is looking into the acquisition by RBS of ABN-AmRo which triggered the meltdown at RBS and of course also hurt Dutch investors.
However, I have no deep insights into the souls of these Labourite Scots and I am just guessing. People can make stupid decisions based on a desire to control moral hazard, like the Paulson decision to let Lehman Brothers go bankrupt, which was a dreadful mistake.
That is why I say to buy the non-bailout bank preferred stocks too, which is Barclays (no UK govt. money taken or wanted, and a yield nearly as high).
There is a huge amount of speculative in- and out-flow into RBS and the other government assisted banks. There is risk with the preferreds but not in my view as much. I am buying these using limit orders, but am also keeping my fingers crossed. I will not comment on U.S. bank preferred stocks.
*Here is another view from an independent analyst at Datamonitor, Jonathan MacDonald, Lead Analyst writing on the British govt. bailout today: "damned if they do, damned if they don't". "It is not yet clear whether the move will prove successful as the current climate has no precedent' acknowledges MacDonald. "This is leading stakeholders to proceed with caution." He writes from London, edited intially by Datamonitor's Marie-Ange Nouroumby:
"The UK government has announced a 2nd wave of bail-out plans to help Britain's ailing banking sector start to lend again, only months after an initial multi-billion pound bail-out program. The first bail-out has seemingly failed to stimulate the financial markets and the economy in general, but the new plan has a greater potential to achieve its objectives.
"The new agenda consists of three steps: an insurance element, which guarantees bank loans for corporate and consumer debt; a mandate issued to state-owned Northern Rock to increase lending; and new powers for the Bank of England, allowing the institution to buy up to GBP50 bn in bank assets. In addition, the government is changing the terms of the initial bank bailout, which will allow banks such as RBS to convert the government's preference share holdings, which pay a 12% premium, into ordinary stock.
"Overall, this new plan is necessary. The taxpayers' money invested in the original program has clearly been used by the banks to cover bad debt provisions and shore up capital reserves, rather than to boost lending as the government originally intended.
"The banking industry and RBS in particular argued that the 12% premium demanded by the government in the form of preference shares has limited its ability to resume lending profitably. Given the cost of credit on the open market, this high percentage represents the 'slap on the wrist' that was dished out to the banks which sought government funds. However, this strategy backfired, as banks have not been able to provide credit while also repaying their government funding obligations.
"The new bail-out plan is better structured to kick-start lending. Rather than blindly covering banks' bad debts, the government plan provides insurance against any potential loss, with legal obligations for participating institutions to increase lending accordingly. The depths of these obligations are not yet known but, in theory, the new plan appears to be better thought out than the previous one.
"Critics have argued that the government is intervening too much, and question the unusual haste with which it has moved to plough billions into the financial industry 18 months ahead of the election deadline. However, one wonders whether this will actually be enough to finally quell the storm in the financial markets.
"Despite any reservations, however, an increase in credit will certainly assist many businesses currently struggling to find working capital, and will also provide a much-needed boost to the mortgage market. Furthermore, the government may find that its insurance is not called upon, leaving the taxpayer with a healthy shareholding in some blue chip financial stocks and little in the way of pure debt.
"With the government only insuring against losses as opposed to writing them off entirely, it may take quite some time for the industry to get to the bottom of the existing toxic asset pool, which may deter shareholders from reinvesting for a long time. The UK banking industry is now all but state-owned, and therefore should be promoting the best interests of consumers and the economy as a matter of priority."
Disclosure: I own 20 shares of RBS (calling card); 500 shares of RBS preferreds F and P, 200 shares of Nat West preferred; and am buying Barclays preferred if my limit orders go through.
My azz! 3.45.. IRISH Bbanks r better found bottom and started move up. RBS and BCS still screwing momentum players like u and long term investors. Get lost!
3.75 IN EARLY TRADING, BOUNCE UP!!!!
IN STORE ACCORDING TO MOTLEY FOOL YESTERDAY
Amazing loss:
LONDON (Reuters) - Royal Bank of Scotland's warning of a record loss, driven mainly by its investment bank, will likely foreshadow another round of grim results from European investment banks, analysts said.
RBS's investment bank, Global Banking and Markets (GBM), was hit by a string of problems, including a goodwill impairment charge of 15 billion to 20 billion pounds on RBS's purchase of Dutch rival ABN AMRO in 2007.
RBS will also take credit impairment losses of an estimated 6.5 billion to 7 billion pounds, with 3 billion of this in GBM.
"RBS's news made me more pessimistic on European banks. It's worrying how quickly things are deteriorating in corporate loan portfolios especially," said Andy Stimpson, a pan-European banking analyst at Keefe, Bruyette & Woods.
He said European banks' balance sheets were still not transparent enough to gauge the full extent of their problems.
RBS said on Monday that sharply deteriorating credit and market conditions in November and particularly December had hit the group, with GBM taking the brunt of the blow.
RBS's credit impairment losses include a provision of about 1 billion pounds relating to exposure to petrochemicals group LyondellBasell Industries, which has filed for bankruptcy protection for its U.S. business.
RBS will also write down about 8 billion pounds on its credit-market exposures, including structured credit vehicles such as collateralized debt obligations.
GBM revenue was squeezed by the bank's exposure to an alleged $50 billion fraud by Wall Street trader Bernard Madoff, which could lead to a potential loss of about 400 million pounds, as RBS indicated last month.
Second bank rescue plan:
By David Stringer, Associated Press Writer
Britain announces 2nd bank bailout, fears rise over losses at Royal Bank of Scotland
LONDON (AP) -- Britain announced a second rescue plan for the country's ailing banks on Monday, hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold.
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Stock investors, however, were spooked by fears that the second bank rescue plan in three months was a step toward full nationalization of one or more banks. Fears focused on the Royal Bank of Scotland, which disclosed that it is likely to report a record full-year loss -- its shares closed down 67 percent.
"There is a great deal of uncertainty. There seems to be some concern doing the rounds that the group will be totally nationalized sometime in the near future," said Keith Bowman, analyst at Hargreaves Lansdown stockbrokers.
RBS said its losses for the full year could be as much as 28 billion pounds ($41.3 billion), which would be the biggest loss ever by a British corporation.
Prime Minister Gordon Brown said on Monday that the government has increased its stake in RBS to almost 70 percent, but declined to say whether he believed the bank will eventually be fully nationalized. The government took a stake under a first round of bailouts late last year.
Announcing the new rescue package, Brown said the government would offer to insure banks against default on toxic loans in exchange in return for a fee and legally binding commitments to make credit more available to British businesses and home buyers.
Brown's plan will also see 50 billion pounds (about $74 billion) set-aside to create a special fund for the Bank of England to buy high quality loans and other assets directly from banks. That plan is also aimed at bringing down borrowing costs.
Britain's Treasury said precise details of the asset purchase program would be finalized later this month.
Both Treasury chief Alistair Darling and Brown acknowledged that October's pledge of 37 billion pounds (about $55 billion) to bail out Britain's banks hadn't done enough to encourage them to resume normal lending volume.
"Good businesses must have access to credit, jobs should not be lost needlessly," Brown told reporters at his Downing Street office. He said stimulating lending is vital to spark Britain's economy and to limit job losses as Britain tackles a recession prompted by the global downturn.
Britain's Treasury said the government will offer to insure banks against losses on about 90 percent of specific shaky loans. The plan would require banks to identify their riskiest assets which could be insured with government backing.
It's hoped the offer will reduce anxiety in the banking sector about the value of past investments, boosting their confidence to offer new loans. Losses on securities backed by shakey U.S. mortgages has damaged banks' financial condition and threatened
Neither Brown nor Darling could say how much the plan will cost taxpayers, as details won't be agreed until banks start participating.
The problems facing the banking sector were stoked last week by Citigroup Inc.'s announcement of a massive $8.3 billion fourth quarter loss.
Bank of America Corp. also revealed a $2.4 billion quarterly loss and said last week that it would get an additional $20 billion in support from the U.S. government's emergency bailout fund, plus guarantees against losses on up to $118 billion in troubled assets. The $20 billion will come from the government's $700 billion rescue fund, called the Troubled Asset Relief Program, or TARP.
Opposition Liberal Democrat lawmaker Vince Cable said some financial experts claimed British taxpayers face losses of up to 40 billion pounds ($58 billion)
Brown said the "investments will be held for no longer than is necessary to ensure stability," but could not specify how long the government expects to operate the program.
"Governments across the world are having to do all sorts of things that they might not wanted to have done a few years ago," Darling told reporters.
Some critics called the latest rescue plan a gamble, coming only three months after October's bailout.
"We still think that the government may eventually have to set state-decreed targets for the banks to lend, perhaps via further nationalization," Vicky Redwood, an economist at Capital Economics Ltd., said in a statement.
Bank shares closed broadly lower on the news, with Lloyds Group off 34 percent, HSBC down 6 percent and Barclays down 10 percent.
The European Commission said Monday that the bank-rescue programs, along with falling tax revenue, would push Britain further into debt.
It predicted that Britain's deficit -- the difference between annual spending and revenue -- will rise from 2.8 percent of gross domestic product in the financial year that ended in April 2008 to 5.7 percent in the current financial year. The Commission predicted Britain's deficit would reach 9.5 percent in 2009-2010.
Overall debt will likely soar to nearly 72 percent of gross domestic product by fiscal year 2010-2011, way above the government target of 40 percent or less, the EU executive said.
Associated Press Writers Robert Barr and Nancy Zuckerbrod in London and Aoife White, in Brussels contributed to this report
HOLLY SHIT! $10... All english scottish welsh banks as a matter of fact all european and US banks decline ...
$11.80 NOW JAN 15.. lost almost half of post reverse split value.. Amazing!
20 billion govt money.. almost 60 percent in social sphere now.. preffereds down big time.. dividend for old preffereds remain big question mark?
yep! Allied irish bank news along with Barclay ...!
What is up with pps? This is like 0.62 pre-split.
next time may be!
Considering Volkswagen went up to 1000 euros per share due to short fuvking everything is possible in today's markets! But in this case only dilution!
R/S .. 1 for 20 shares... trading around 0.95 cents by pre-split levels!
Ok, I was saying, "Holy trilobites batman!" But it was a R/S. Wow, unusual for a big board stock...usually only see this with pennies. However, these are interesting times...
Thank's I thought i got lucky for one moment lol.
20 for 1 reverse split.
is this trading at $19.80 this morning???? what the hell happened it was at 1.04 yesterday
government backed bonds issued. preferreds went down a bit!
Symbol Qtr Div Yr Div Price Yield
RBS-PQ $0.42 $1.69 $10.83 15.58%
RBS-PR $0.38 $1.53 $10.32 14.84%
RBS-PS $0.41 $1.65 $11.15 14.80%
RBS-PT $0.45 $1.81 $12.25 14.80%
RBS-PM $0.40 $1.60 $10.84 14.76%
RBS-PP $0.39 $1.56 $10.71 14.59%
RBS-PF $0.48 $1.91 $13.25 14.43%
RBS-PN $0.40 $1.59 $11.30 14.05%
RBS-PL $0.36 $1.44 $10.37 13.86%
RBS-PH $0.45 $1.81 $13.08 13.86%
dividends
"Some commentators are also predicting the moratorium on dividend payments that the UK Government introduced as part of its £37bn rescue of RBS, HBOS and Lloyds TSB may be lifted, or at least revised, this week.
The Government has faced a backlash for its stipulation in the bailout that ordinary share dividends will not be made available until its own preference shares have been paid off.
There have been suggestions that this measure cannot be scrapped because of European Commission rules, but analysts are speculating that an announcement by the Government on the situation could be made to coincide with RBS and Lloyds TSB issuing their offer documents.
Mamoun Tazi, analyst with Man Securities, said: "If there are any surprises this week, it could be that the moratorium on dividend payments is abolished.
"The Government has been asked to reconsider its stance and this could be reflected in the prospectus being published this week."
source scotman nov 2 2008
Thanks, I was just reading the board for some general information on RBS.
charts turning up...higher lows each of the last 3 days
WHAT IS HUGE ABOUT IT? do you know what it may boil down?
GL2U
By Michael Wilson
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--U.K. bank HBOS PLC (HBOS.LN) sold the first sterling-denominated bond issue under the U.K. government's debt guarantee program Wednesday, establishing a benchmark for other issuers looking to tap that market. The U.K. mortgage lender said Wednesday that it had decided to price the sterling issue in response to inquiries from investors following the success of its EUR3 billion two-year deal, which attracted EUR4.5 billion of interest from investors earlier Wednesday. HBOS said that given that the deal was based on reverse inquiry, it was too soon to tell the total level of demand for the sterling portion of the deal. The GBP600 million, three-year bond was priced at 25 basis points over the risk-free benchmark mid-swaps rate, while the EUR3 billion, two-year bonds were priced at 20 basis points over mid-swaps. This compares with Barclays PLC (BCS) EUR3 billion, three-year deal, which was priced last Wednesday at 25 basis points over mid-swaps. Investors said that the sterling portion of the deal could act as a litmus test for capital market sentiment. "The sterling market contains the natural investor base for the U.K. banks, the first sterling deal will set the scene and the mood for all the other deals and so there is a lot riding on whether or not the first sterling deal is a success," said Adam Cordery, portfolio manager at Schroders Investment Management. The question is whether other U.K. banks will now attempt sterling deals. "I think it was always part of everyone's plan to tap the sterling market," said Aubrey Simpson-Orlebar, head of bond syndicate at Lloyds TSB Group PLC, which acted as a lead manager on both deals. "Now there is a sterling benchmark out there, it should make it easier for other issuers to tap that market. However for the next two or three issues, euros will continue to be the more favored currency," he said. The U.K. Treasury said Oct. 13 it would guarantee certificates of deposit, commercial paper and senior unsecured bonds and notes issued by eligible institutions as part of a larger bank aid package that will see the government inject capital into Royal Bank of Scotland (RBS), Lloyds TSB and HBOS PLC. The eight eligible institutions are Barclays, HBOS, HSBC (HBC), LloydsTSB, Natiowide, Royal Bank of Scotland, Santander/Abbey (STD), Standard Chartered (STAN.LN). To benefit from the guarantee, banks have to pay the government half the median spread on their five-year credit default swaps in the 12 months to Oct. 7, plus 50 basis points. So far, Barclays and HBOS are the only issuers to take advantage of the guarantee. However, several market participants have indicated that other issuers are also looking to tap investors. "As we approach year-end, everyone is very keen to demonstrate that they can access capital markets," said Schroders' Cordery. However, while all eligible banks will be keen to sell bonds, they will be all to aware of the dangers of crowding the market and exhausting investor demand. "There is quite an orderly process about this," said Simpson-Orlebar. "Barclays did an excellent job last with last week's deal. Now I think it's likely that we'll see most, if not all, of the eight banks who signed up to the government's plan taking advantage of the guarantee."
HUGE News
RBS News
Sorry about the link but i couldn't get it to post correctly.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7b81C83B53-A621-424D-AC0A-03B077D3778A%7d&siteid=yhoof2
RBS is doing well!
anybody else here?
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