Compared to two years ago, when they touched 700 pence.
UPDATE: As John Ashton has pointed out in the comments: "RBS has a closing market capitalization of around £5bn. The government plan is to convert £5bn of prefs into 12% of the ordinary shares worth around £600m at close. £5bn into £600m in just one deal. Great stuff!"
The Fart of Doom
3 hours ago
8 comments:
Intersting that they use a logrithmic scale for the y-axis. This makes the decline appear to be not quite as dramatic as a linear scale.
RBS has a closing market capitalization of around £5bn. The government plan is to convert £5bn of prefs into 12% of the ordinary shares worth around £600m at close.
£5bn into £600m in just one deal.
Great stuff
JKA
Mark, when I ran a company I always favoured getting advice from experts rather than Going Through The Learning Experience.
(After the first, expensive GTTLE obviously).
So, does JKA's comment really mean that t'Gumment has just written off £4.4bn?
STB.
MW
Since at the time the RBS last paid a cash dividend there were no profits or reserves to pay such a dividend (and anyone within RBS knew - or should have known - that perfectly well) will the then directors of RBS be prosecuted for payment of an illegal dividend and will said directors have to compensate the company accordingly? In your immortal words - only asking!
U, be careful here. Dividends are looked at on a company-by-company basis, the group position is not so important. The holding company can ignore losses in subsidiaries (to a large extent) and pay dividends out of its own retained profits.
MW
"pay dividends out of its own retained profits."
Indeed it can. But in my (limited!) understanding, even the retained profits of a group's holding company would be affected by substantial losses (and write-offs against previous year's profits) further down the chain. Also, those "profits" were never real ones anyway. It must have been evident in May this year - particularly to an insider - that the RBS retained profits (wherever they were booked) were chimeras. As I wrote above - I'm only asking.
It is, I'm sure, difficult to prove that the dividends were paid illegally pursuant to whatever section of the Companies Act applies. However, consider the scale of the losses sustained by RBS (resulting from monumental incompetence over a period of years) as well as the scale of the hubris of its board in ploughing on with the takeover of ABN-Amro against all reason (and substantial shareholder resistance). To claim now that there was a quarantined reservoir of genuine unsullied profit somewhere in the group which could be paid out as dividends defies common sense (but not, perhaps, the mystery of accounting practice).
U "To claim now that there was a quarantined reservoir of genuine unsullied profit somewhere in the group which could be paid out as dividends defies common sense (but not, perhaps, the mystery of accounting practice)."
Exactly. Common sense says that you are right, but without printing off the accounts of every company in the group and going through them all with a fine-toothed comb to work out what should have been written down and which profits were unsullied, I can't give an answer to that.
MW
I didn't expect you to volunteer to go through the RBS accounts in fine toothcomb style but isn't this something the FSA was established to undertake? BTW I looked at the Companies Acts today (yes I know - I should have better things to occupy my time!) and, frankly re RBS and its directors, who knows? However and more to the point, S277 of CA 1985 (and whatever section it is under CA 2006) requires an illegal distribution to be repaid by the shareholder receiving it. I can see why no-one in authority would wish to open that can of worms.
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