Motley Fool forum schreef:
The EU now has an announcement to refer to which confirms which coupons RBS thinks it can pass, and which not. We can't say we haven't been warned!
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I concur that a deferral, or a threat of deferral, on those securities over which they have discretion, is looking closer than ever. Having said that, Hester's [RBS topman - Perplex] comments to date, along with this announcement, might just be enough to persuade a lot of holders to tender cheaply and, if done in sufficient size, that may well be enough to persuade the EC that "burden sharing" has taken place and the minority (and B share holders) might then be free to receive their dividends.
From a legal perspective, I'm not sure whether RBS could make a statement to say that they intend to defer if they then go on to pay once they've scared the crap out of enough pref holders to make payment to the balance immaterial.
I'm looking forward to the next installment of this little play, which is the tender offer that is due in coming weeks. My gut instinct tells me that they don't plan to be too generous, which is fine, since there is very little anyone can do to force me to accept.
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My view based on all that we have heard thus far is that it is highly likely that the discretionaries [d.w.z. RBS mag beslissen, tegenover mandatory - Perplex] will be deferred. If I were RBS I would concede to that in order to minimise asset sales.
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Today's announcement is a bit incomplete in that it doesn't mention the proposed B shares and the fact that discretion goes out of the window for all pref issues if the B shares' dividends are honoured. Maybe I'm grasping at straws here but this makes me naturally suspicious. I could see a situation where a tender is made with today's disclaimer ("Nothing in this announcement should be taken as an indication by RBSG, RBS or NatWest as to whether or not they will or will not continue to make payments on the securities listed below.") then the B shares are paid out making all other payments mandatory.
I don't think there's any harm at all in just assuming that everyone will be out to rob us blind (legally, that is) and so take an sceptical view of every maneuver made by all parties. Personally, I also intend to keep a very large baseball bat under the bed and plan to either crack someone's head with it when they come with their loot bag, or to insert it somewhere painful - I haven't decided which yet.
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You still think you have the Govt. over a barrel. In the great scheme of things, £2 billion missed payment on the B shares is neither here nor there to to the Govt. The Tory Press can play it up for all they want but the Govt. will not even blush. The Public will yawn because they now have an inkling now how much more the banks have cost the Public purse.
Brown and Darling did save the banking system last Autumn. There is still a price to be paid and political scores to be settled. Pref. holders have fluked it to have come so far with their coupons intact, now they are gaming the system to get the payments to continue.
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I think therefore after the RNS my opinion has shifted to a suspension for 1-2 years on pref payments until RBS starts to write back some write downs and is reorgainsed to be more profitable. Nobody gets any payments B shares included until this happens. I'd say this was 75% likely now.
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Isn't it looking more likely that the discretionary ones will be passed and the mandatory ones paid? To me, the announcement looked like a warning to the market that RBS's lawyers consider this possible, whatever others may argue in terms of interpreting the words "pari passu".
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As for straw clutching, I acknowledge that deferral is closer than ever, despite the above. However, I believe the same is also true for a tender so I'm perfectly happy with my position right now. I'm certainly not selling!
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Along with Hester's comments, I think the discretionaries have been well prepped for what in my view is the most probable outcome (75%+ chance) and there should be no whining if and when it happens. That does not mean that I think they are not good value. It just means that I think when factoring in the fair value of the deferral into the price there are better investment options.
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I am totally with you on the tender and am sticking tight also. I also agree that I don't think they fully factored in the Brussels equation and it will be somewhat embarrassing. This needs to also be put in the context that the UK option for bank rescue was much more punitive than the US option and in the end they all compete with each other.
However, IMO, if their investment is reduced as a result of a share offering or tender by more than the cost of the deferral then they will spin it as a win. Whether the public believes it is another question. I know what most of us on this board will think but the man on the street will probably soak it up.
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I actually think the key is that they limit the deferral to what is discretionary so that it does not spook the market and the entire capital structure. If rule of law prevails then it will provide greater confidence for tier 2 and all the other levels of the capital structure.
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Presumably a tender for prefs in Q4 this year would go some way - if sensibly priced - to (a) book an accounting profit and (b) bolster core capital. These are the 2 criteria putting the mandatories at risk.
boards.fool.co.uk/Message.asp?mid=117...[/quote]
Het bureau CreditSights wordt op dat forum ook nog aangehaald:
[quote=CreditSights]
While the bank says this is not a guide to whether payments will be made, it looks as if interest would be deferred on the majority of preference shares and innovative Tier 1 securities if the European Commission tells RBS to stop paying, but Upper and Lower Tier 2 securities should mostly be safe for now.