I’m somewhat shocked by this one. They are pricing the biggest rights offering in European history, at a 46% discount to yesterday’s closing price. If you notice, all of the new offerings are getting priced 30-46% below closing quotes.
Somewhat odd, no?
If you enjoy the content at iBankCoin, please follow us on TwitterRoyal Bank of Scotland announced a record 12 billion pound ($24 billion) rights issue on Tuesday to cover a potential 5.9 billion pound writedown on the value of toxic assets and help rebuild a stretched balance sheet.
RBS said it expects disposals to generate 4 billion pounds in core capital by the end of this year and could sell all or part of its insurance business.
RBS will offer 11 new shares for every 18 existing shares at 200 pence per share in the rights issue, Europe’s biggest ever, representing a 46 percent discount to Monday’s closing price.
“It’s a reassuring discount, and investors will be pleased that it’s such a large amount and not 5 or 6 billion — they want RBS to raise some money so that the company can move forward,” said Mark Sartori, head of European trading at Fox-Pitt, Kelton.
The bank said it had assumed there will be additional hits to the value of assets, including the ABN wholesale business it bought last year, due to the impact of the U.S. subprime mortgage crisis and subsequent credit crunch. It estimated the effect of writedowns on core capital will be 4.3 billion pounds net of tax, or 5.9 billion pounds before tax.
Both the rights issue and writedown were no surprise after several days of widespread speculation, but they mark an abrupt U-turn for RBS after it said earlier this year it did not need to raise capital.
Britain’s second biggest bank said it plans to keep core tier 1 capital in excess of 6 percent, which would make it one of Europe’s best capitalised banks. The ratio stood at 4.5 percent at the end of 2007, one of the lowest in Europe.
I read that too and was astonished. Do they not have spin-doctors in England? SKF is looking better all the time.
Here’s the liveblog of the call from FT Alphaville.
http://ftalphaville.ft.com/blog/2008/04/22/12493/blogging-the-rbs-conference-call/
We’re on hold.
Kick off time was 7.30 for the press conference call following news on Tuesday that Royal Bank of Scotland is raising £12bn at the shockingly discounted price of 200p a share on an 11-for-18 basis.
Here’s Sir Tom McKillop chairman! He’s nervous. Very nervous. A quiver in the voice.
These are difficult times times in the banking world, he says. We will all have seen the company announcement in which the board has taken “decisive action to rebase the capital ratios of our bank.â€
He takes us through the new planned capital ratios on a “look thru†basis. This is clearly different from the looking glass basis previously applied.
Sir Tom says the board has agreed a concrete set of actions, with various possible disposals contributing a further £4bn. RBS, meanwhile, has hard a hard look at potential writedowns over the next year, which may total £4.3bn after tax – that’s £5.9bn before tax.
Now Sir Fred Goodwin is on. He’s sounding calm and professional – as though he’s treating this is a regular, diary update.
The bank has turned in a satisfactory performance, he insists. This has been a “story of two parts.†RBS has seen “good momentum.†Indeed, even in global banking and markets, Sir Fred has seen “some very buoyant conditions,†although – yes, some areas have been becalmed.
But look, Sir Fred seem to insist, overall RBS has seen a satisfactory performance. Indeed, key metrics remain encouraging, with bad debts actually coming down in the UK.
The conference call continues…
(see parts two and three at the bottom of the posting)
—–
I suggest the comments should be read. This droll posting is one of the reasons I like FT Alphaville.
If RBS goes down, who’s gonna be there to marry the bride when the groom pusses out? Who will be there to fix the gondola over the alps when it breaks down?
This is very bad news indeed… still, the futures are up. Party on!
-DT
http://www.marketwatch.com/news/story/corporate-insiders-continue-buy-above-average/story.aspx?guid=%7B4BB5E54D%2D63DA%2D43BA%2DB12A%2DB4F61040F53A%7D
The RBS news surprised me. Then again, the ABN deal always seemed a bit like an accident waiting to happen.
This is fucking egregious:
“It’s a reassuring discount, and investors will be pleased that it’s such a large amount and not 5 or 6 billion — they want RBS to raise some money so that the company can move forward,†said Mark Sartori, head of European trading at Fox-Pitt, Kelton.”
If I hadn’t read that as part of the above press release, I would’ve thought it was some Fly parody or something.
Seriously, that tragically compromised — no, corrupted — motherfucker ought to be stripped of his HP12c and sent home to freaking Iowa.
I find it interesting that foreign banks are showing larger write downs and capital raises then the originators of the bad loans. Makes you wonder what we are really hiding.
Death to the banking sytem.
Yawn. Buy stocks, new bull market just beginning. I am never wrong.
I agree with Jake
Ridiculous. That guy is the head of European trading?
On a related note, even horrific deals are good deals nowadays, so watch the stock rally.
Finally, someone writes a decent article about oil prices.
http://www.nytimes.com/2008/04/20/weekinreview/20mouawad.html?_r=1&ex=1366344000&en=1a3fdf066686d094&ei=5088&partner=rssnyt&emc=rss&oref=slogin
http://finance.yahoo.com/q/bc?s=STI&t=1y&l=on&z=m&q=l&c=
At least one bank trades like it should, STI.
What the fuck. Any bank can shit the bed an the stock is up.
DD beats and is getting ass raped.
STI (SunTrust) now +. Buying KRE here (regional bank etf) for a daytrade.
xlf just bounced hard
PE ratios are now required to be at least 300.
FSLR must go to $4000….. today.
JPM,C,GS,STI,WFC say financials bounce for awhile today.
I give up.
I got no edge.
Sold all my FMCN into the opening strength.
Flecks gone long MSFT
==============
As noted last week, I’ve cut back on my short positions. I’m a little worried about the power of the bullish mindset and the ability of certain stocks to shrug off bad news. So, for the time being, I have just a few shorts. I really don’t even know if I’m going to get paid on those in the short run.
But I did want to pass along the fact that I have gotten long some Microsoft (in decent size). Partially as a hedge against my shorts, and partially because I think that if one needs to own a stock, one could do worse than to buy Microsoft. Certainly on a relative basis, MSFT is not particularly expensive, though I don’t happen to feel that 16 times earnings is cheap in an absolute sense, by any stretch of the imagination. But in this environment, it is cheaper and positioned better than a lot of stocks that the bulls tend to love.
Microsoft does have a bit of a catalyst, and I am not talking about the noise surrounding the Yahoo tender offer. Rather, when Microsoft reports Thursday afternoon, it should be clear that their enterprise-level products are being helped by strong adoption of the company’s SharePoint sever, which is a group of collaborative tools. If it becomes apparent that the Office upgrade cycle is being positively impacted by SharePoint, that ought to become a powerful catalyst. For those who believe (as I do) that “the network is the computer,” this is a way to capitalize on that trend.
All of this was brought to my attention by Fred Hickey a couple of weeks ago. I was hoping that as we approached Microsoft’s earnings report, the stock would maybe decline from $28 to $26. But it’s run from $28 to $30. Thus, I stepped up to buy some, as I’ve been a bit concerned that it might get away. Like I said, if I wasn’t short a few stocks, I’m not sure that I would own MSFT, although if I was more bullish on the economy, I most certainly would. In any case, it’s certainly worth passing along as food for thought.
Get the Chapter 11 papers ready for UAUA,CAL. They need to add two buttons on the overhead next to the light and air. In Chapter 11 and Out of Chapter 11.
Maybe the Fed can open a borrowing window for the airlines.
Fly,
Mark Sartori should get the asshat of the week award for a fucktarded comment like that…it sure is reassuring that tons of equity is evaporating before our eyes, rather than really getting into trouble
It is true that the 29 casino licenses granted in Macau are nothing in the theory of large numbers. However, to stop the issue of any further licenses seems a little bit of slamming the barn doors after the horses ran and bucked and kicked you in the chest. LVS up 12% on the news, MGM up 5%, Wynn up 7%. Sell them.
update.. the list:
* Casa Real Casino
* Casino Lisboa
* Casino Macau Palace
* Jai Alai Casino
* Kam Pek Casino
* Kingsway Hotel and Casino
* Mandarin Oriental Casino
* The Legend Club
* Golden Dragon Casino
* Grand Lisboa
* MGM Grand Macau
* Sands Macao
* The Venetian Macao
* Wynn Macau
* Rio Casino, Macau
* Babylon Casino
* Casino Crystal Palace
* Diamond Casino
* Emperor Palace Casino
* Fortuna Casino
* Galaxy Rio Casino
* Galaxy Starworld
* Galaxy Waldo Hotel and Casino
* Pharaoh’s Palace Casino
* Ponte 16
* Crown Macau
Done for the daytrading day. In and out. Off for a swim into the pool. 80 degrees and sunny.
Nice list of Macau licenses. Some day the casinos will be empty there and the ChiComs can use them to store nukes.
Nice call Calvin.
Along those lines, DSL had a “stupid spike” today, thanks to those seriously (and I ain’t kiddin’) egregious criminals at Friedman Billings and Ramsey, who no doubt are trying to get some seriously pissed clients out of that toxic waster barrel. DSL presented everyone with a “gift” at near $15 again….
Hope you indulged. I did.
Good news:
The Fed has announced losses will no longer be allowed in the equity markets.
If you incur a loss, send a copy of your trade confirms to:
Ben Bernanke
Federal Reserve -Washington, DC 20551
please allow 6-8 weeks for your refund.