banking news

[devonwoody]

Any bets on all UK banks being nationalised by Friday?

http://newsvote.bbc.co.uk/1/shared/fds/ ... efault.stm

 

[RogerS]

But do you really want to know who the real plonkers are in all of this? Why our good old Labour Government who bailed out the banks by buying preference shares. Preference shares don't have any voting rights so the Govt can jump up and down all it likes but the banks can simply give them two fingers as the Govt haven't got any voting rights - which they would have done had they bought normal shares. So Golden B*ll**ks and Chancer Darling are the 2008 Pillocks of the Year.

Preference shares have other (in the circumstances, massive) advantages, and only a ****** would have invested the money through ordinary shares.

Bumping this as I'd like to understand this better.

Especially as the FT frontpage yesterday was rather scathing about BrownDarling's efforts to restore stability/rejuvenate/etc and came to the conclusion that BrownDarling had done virtually the wrong thing at every critical point.

 

[RogerS]

"A weak currency arises from a weak economy, which in turn arises from a weak Government"

Gordon Brown - 1992.

 

[Paul Chapman]

"A weak currency arises from a weak economy, which in turn arises from a weak Government"

Gordon Brown - 1992.

Well, at least he got one thing right :lol:

Cheers :wink:

Paul

 

[newt]

Read in the telegraph today how all the banking fat cats have made a fortune when they got fired, particularly the RBS guy. It almost seems that there was and incentive to go crazy, buy up as many banks as poss, because it does not matter, they get huge severance deals and a pension which they can draw on around mid 50's. None of this money can be clawed back from these b------- therefore poor performance = I will be very rich. I needed to go in a darkened room after reading the article. There must be some nice hard working, profit making bankers somewhere, that are good value for money. :evil:

 

[andrewm]

But do you really want to know who the real plonkers are in all of this? Why our good old Labour Government who bailed out the banks by buying preference shares. Preference shares don't have any voting rights so the Govt can jump up and down all it likes but the banks can simply give them two fingers as the Govt haven't got any voting rights - which they would have done had they bought normal shares. So Golden B*ll**ks and Chancer Darling are the 2008 Pillocks of the Year.

Preference shares have other (in the circumstances, massive) advantages, and only a ****** would have invested the money through ordinary shares.

Bumping this as I'd like to understand this better.

Preference shares pay a fixed dividend and must be paid before any other shareholders get a look in.

So, if the government has (say) 7% preference shares in a bank and it makes a profit this year the taxpayer will receive 7% of the value of the share as a dividend.

If it does not make a profit but does make a profit next year then both this year's dividend and next year's have to be paid before other shareholders receive anything.

If the bank in question makes a loss for five years running that is a heck of a lot of back dividend that has to be paid to us before the normal shareholders will get a penny.

Since the value of an ordinary share is largely dictated by the expected future returns that will depress the share price as well. I'm not holding out much hope for my RBS holding in the short term :-(

The downside of all the guarantees is that you have no votes on how the bank is run.

The advantage or ordinary shares is that in good times the preference share dividend is fixed so there is more left over for ordinary shareholders.

HTH etc.

 

[RogerS]

Thanks, Andrew.

So putting it another way, by having preference shares the Govt gets first dibs. But given that the raison d'etre is to try and stimulate the economy as well and get the cash flow moving again then that's not much incentive. If the Govt had ordinary shares then (a) they would have a more active say in what the banks did and (b) would be in the same position as other shareholders - no better and no worse. But they would be in the driving seat.

As it is, all that they have done is bunged a load of money at the banks and are keeping their fingers crossed.

 

[RogerS]

Read in the telegraph today how all the banking fat cats have made a fortune when they got fired, particularly the RBS guy. It almost seems that there was and incentive to go crazy, buy up as many banks as poss, because it does not matter, they get huge severance deals and a pension which they can draw on around mid 50's. None of this money can be clawed back from these b------- therefore poor performance = I will be very rich. I needed to go in a darkened room after reading the article. There must be some nice hard working, profit making bankers somewhere, that are good value for money. :evil:

Yup...I'm surprised that no public spirited individual hasn't trawled through Company House records for the names and addresses of the bank directors and published them on a website so that Joe Public could write directly to them and express their anger.

Personally for the likes of Goodwin et al I'd confiscate all their money, sell their houses etc, remove their pension funds (and any knighthoods), leave them with one shirt and a pair of trousers, delete their NI number from all Govt databases so that they became a non-person. Let them doss out on the streets in the cold.

 

[newt]

RogerS, Thats a good point perhaps this would be a good time to name and shame. After all they have it appears, brought this country close to being financially embarrassed. I still find it very hard to accept that they could not see this coming, but as my previous message states, so what they will still be rich.

 

[Jake]

Oh sorry, missed your question Roger. Andrew has done a good summary of some of the advantages - others being that you can dictate terms (such as the penalty interest which for moral hazard reasons they wanted to impose at the time (14%), and critically, they rank above ordinary equity in a bankruptcy - of you are shoehorning a bunch of public money into a busted flush, do you want the public money to carry full equity risk?

They do have to make a decision about whether they want to control the banks, but having a minority (or even majority) stake in ordinary shares wouldn't give them that in the way you mean - if they are going to go that route, they have to just fully nationalise them (and then refloat them down the line, Scandinavian style).

 

[eggflan]

Lets help Gordon by throwing some cash at him :? :?

Great stress relief,, :lol: :lol:

http://www.bailoutbrown.com/

 

[devonwoody]

Saw this BBC report today re the banking/mortgage ,nearly £300 billion, how many mortgages is that.

http://news.bbc.co.uk/1/hi/business/7867355.stm

 

[thomvic]

That's 2,000,000 at £150,000 each. However, the most at risk mortages, and therefore the assets most likely to be 'sold' to the Bank of England, are probably much higher than £150k.