ANYONE KNOW WHY THE ROYAL BANK OF SCOTLAND IS SHOWING A SHARE PRICE AROUND THE 6.59 MARK WHEN IT WAS 18.00 OR SO THE OTHER WEEK OR AM I GOING STRANGE?????????????

I have a substantial holding in these and I am in a quandary.
In common with many others I have insufficient cash to take up my full
Rights allocation, which I am inclined to do based on the substantial discount. The average cost of the shares I hold is 4.34 which at todays close is down 89p or 20%.
Given the above would it make sense to consider selling some RBS now (25% of my holding) albeit at a loss, as a means of raising the required capital to take up my rights in full ?

Any general guidance/thoughts on above would be most appreciated.
Regards.

annie38 if you really wish to take up your rights entitlement without investing anymore cash then you should instruct your broker to sell sufficient nil paid rights to take up the balance. At present the nil paid rights are theretically worth around 90p each therefore to take up some of your rights you would have to sell slightly more than half of the nil paid share allocation. However if RBS share price continues to slide then the nil paid rights will be worth less and the number of new shares you could take up will diminish.

Annie I don't think it makes much difference as the price is adjusted automatically to take account of the new shares. A little better to sell the nil paid as there are no dealing costs (agree Halifax's comment re selling part and using the cash to take up the rest). Its hard to call where the price will head, perhaps a bit further down. I am down about 10% and holding to see where the dust settles. Two or three years down the line they will probably be double where they are now! They will start moving when we can see the end of the tunnel - but it may be a rocky ride before then.

Eric

Hope this isn't a silly question but what are nil paid rights, please?

Halifax & Eric: Thanks for taking the trouble to share your thoughts, it is very
much appreciated.

Maggie: The following example may explain.
You hold 1000 shares. Under the terms of the Rights issue you would be entitled to purchase in this case 611 "new" shares at a cost of 1222.
If for whatever reason you do not wish to take up the "right" to these shares you may, via your broker, sell this right for whatever premium over 2 may be available on the market ,without actually laying out any money. eg. You may be able to sell
your allocation of 611 shares for say 0.90 each and thereby gain 549.90 having paid nothing for them. This transaction would be described as a sale of nil paid rights.
I trust this makes sense.

Thanks Annie understand now.

Property shares badly hit today .

this is only at early part mitzy.....much much more misery for property.....at least 25% decrease in england....maybe even 50% if it gets bad in next 18 months, haha

Just to come back on the tactics for selling some of the Nil paid rights in order to fund the balance, the formula is mx=(1-x)*200. 200p is the the purchase price of the rights issue. m is the amount by which the actual sp exceeds the rights issue price. x is the proportion of the nil paid shares that should be sold. As an example, assume the sp is 300p, then x=2/3 so you would sell 2/3rds of the rights and take up the balance. The argument for doing this is really, as I see it, to prevent your holding being diluted. We might call this "Annie's law"!

Sold my holding today at approx. 337p (10% loss). Its not so much that I feel their is that much risk of going a lot lower, rather that my funds can do better elsewhere in the short-term (I think!). So I have reinvested the funds in ASOS (ASC, increasing my holding) and Telecom Plus (TEP - I'm a subscriber and very impressed). Looking for short-term gains on both during the reporting season and then, hopefully, will come back into RBS. Need to see the back of this credit crunch first.

Good luck all, Eric

Cheers Eric....I think ? . Only scraped an O level in maths don't you know. Regards.

Interesting comments on RBS in IC today. Page 8 and 14. The figures on p14 tie up with Fundamentals from Sharescope and I think I will hold for rights. There is a temptation to trade, but even at probable prices I doubt dividends will be cut much if any as they should have enough cash in their coffers.

It still seems a safe boat in prevailing waters and should eventual reach land.

Yields and future growth potential should be rewarding, unfortunately the time period will be longer than I expected.

Dont forget they are selling assets which will reduce earnings plus fines/compensation to pay on illegal overdraft charges and lower profits from capital market activity. All that adds up to lower profits in a slowing world economy. If the directors are prudent then they will re-set the dividend after the rights issue is out of the way.

Todays Times says hold/sell.

Average of 9 brokers (I think) is average on Hemscott, i.e. a hold. Press comment in Times suggests that they would never have gone for this elvel of write-offs if it hadn't been a rights issue, i.e. taking the most pessimistic view of outcome. I suggest there should be a good buy opportunity once the rights issue is out of the way. Clearly, from values put on insurance investments, the sum of the parts is much greater than the whole. Back to the upper regions in two or three years time so it would buy and go away opportunity.

Eric

Its the same every day why do we bother..

Just to keep informed anyone interested.

The RBS document has arrived today.

Record date for Rights Issue entitlement is 9 May (so presumably already ex?)
Dealings in new shares, Nil Paid 15 May
Last date for payment for rights 6 June
Dealings in new shares fully paid 9 June

Bought some shares today @ 241p taking a longer term view. My guess is that advisers have allowed for extra funds when considering the size of the rights issue assuming that conditions may deteriorate further. Once the rump has been placed, the sp may stabilise but short term sentiment is also effected to a degree by the outcome of the insurance sale. This issue will strengthern the balance sheet and hopefully a new conservative approach to banking will ensue in future. Mr Goodwin will no doubt go in a year of so.

RBS extend deadline to sell insurance business looking increasingly desperate to raise capital.Perhaps seriously bad news on the cards?

who knows Halifax, perhaps due diligence takes longer or other party may enter at later date. Asset at end of the day is quality so if it is price that is the problem, then they will not sell it. Yes they would like the cash but, not at any price.