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?????????????

At last somebody talking some sense.

Agree with everything you say Guscavalier.

There are suggestions that the investment banks underwriting the rights issue have short positions to cover any "rump" of shares they may be left with when payment has been made by shareholders. If that is the case it is possible the sp will recover somewhat thereafter.

Yes, I heard that.

Can anyone help?
My missus works for RBS she has 3861 shares and has been allotted 2359. If she buys the 2359 how long would she have to wait to sell, if she wanted to. tia

If you tick Box 4 on the form, when they have processed your application, they will send the Provisional Allotment Letter back to you and my understanding is you can sell the shares using that letter.

Otherwise, you can't sell till you receive your share certificate which will be sometime at the end of June some 2-3 weeks after the new shares start trading.

Hope that helps.

Thanks dealer.

The dreaded pull-back as the sp creeks and groans it's way towards 2 ..

When do I have to send the cheque .... lol

forest I have not been following this too closely but I assume that she could sell the new shares nil paid, probably getting about 20p per share (FT will say amount). So she would get something like 270 to offset the dilution of her existing holding. The last day for this is presumably 6th June with the fully paid shares being traded from 9th June. You must then be able to sell your paid-up shares then - check the dealer re documentation.

No Eric. You can only sell your paid up shares once they start dealing if you have the Provisional Allotment letter back by ticking Box 4. The reason is you won't be seeing the share certificate till the end of June. This assumes that the shares are not going directly into Crest. As for the Nil Paid, I don't know for sure but Selftrade told me they stop dealing on 2nd June but they didn't sound totally convincing.

From The TimesMay 31, 2008

Deadline for Royal Bank of Scotland shareholdersPatrick Hosking: Business Commentary
It is decision time this weekend for shareholders in Royal Bank of Scotland. They have already approved the banks drastic plan to raise 12 billion in fresh equity, the biggest capital raising in British stock market history. Now they have to decide whether individually to take up their rights and buy the new shares.

The final deadline is 11am on Friday but RBS is recommending that private shareholders post their applications by Monday. Some institutional investors are already committed: by sub-underwriting the rights issue, they have in effect already committed themselves to it.

But for other institutions, together with the banks 175,000 small punters, the decision has still to be made and is far from clear cut. Investors are being offered the chance to buy 11 new shares at 200p for every 18 they currently own. If they decide against, they can sell their nil-paid rights in the market (the current price is 28p per share) or do nothing and have them sold for them.

There are a few persuasive reasons to buy.

1 History: rights issues by financial groups often mark the low point for their shares. The German insurer Allianz doubled in the first 12 months after its rights issue in 2002; the Pru was up 25 per cent in a year after its 1 billion demand in 2004. High street banks arent allowed to go bust, so when they get into trouble, like RBS, the only way is up, goes the thinking. There are exceptions, however. Barclayss 924 million rights issue in 1988 was the prelude to a disastrous property lending splurge.

2 Kitchen sinking: RBS cannot of course massage its figures too much, but it will have done all it can within the rules to overstate, rather than understate, its recent losses and dangerous exposures. The worst on structured credit and leveraged loans may well be over.

3 The prize of successfully integrating ABN Amro: Sir Fred Goodwin, the chief executives one indisputable achievement in the past ten years was the takeover of National Westminster Bank eight years ago. There are some who believe he can repeat the magic with the newly acquired chunk of ABN. Believers will not want to dilute their bets at this still early stage in the integration process.

4 Technical factors: it is a classic arbitrage play by hedge funds to short the shares of a company announcing a rights issue and to buy the nil-paid rights. The effect is to depress artificially the share price and to reduce the value of the nil-paid rights. Once the issue is over and hedge funds have to square their positions, the shares tend to bounce back. Anyone not taking up their rights is therefore disadvantaged.

Those are the attractions. What about the minuses?

1 Track record: RBS just isnt very good at delivering long-term value to its shareholders. Over five, ten and 20 years, it has underperformed its peers. Since Sir Fred took the chief executive post in March 2001, the performance, though stellar for periods, has overall been pedestrian; 1,000 over eight years with all dividends reinvested has grown to just shy of 1,500. A high-interest savings account would have done just as well, with none of the risk.

2 Culture: the bank is in denial about its failings. The billions of pounds of structured credit losses are an emphatic reflection of its misjudgments. Yet no senior heads have rolled and, beyond a little lip service paid to improving risk analysis, there has been no change to the management philosophy.

3 People: for some investors, Sir Fred was already in the Last Chance Saloon even before the sub-prime disaster. His card was marked when he piled into the battle for ABN just weeks after reassuring shareholders that organic growth was his preferred strategy. He then compounded the sin by paying too much for it.

4 The weak board: the megalomaniac tag is unfair, but Sir Fred does dominate in a boardroom thin on tough eggs. And there is no obvious succession plan, which leaves the board in a hole if it does sack him.

Neither outcome is attractive; either shareholders are being asked to double up on a chief executive who has already failed them, or they are betting blind on an unknown successor.

5 ABN: the bank is probably not another NatWest. Its customers are corporate, rather than retail, and less sticky, and the Dutch culture will make squeezing out NatWest-style synergies considerably harder.

6 The darkening economic outlook: Britain and the US, RBSs two biggest markets, are plunging into a downturn. If it proves either deep or prolonged, bad debts are going to rise for all banks as businesses fail and personal customers default. A bank as widely based as RBS is a geared play on overall economic conditions. Much of the downturn is already discounted in the lowly share price, but, like most big banks, RBS could not dodge a recession.

7 The credit crunch: this is not easing as quickly as expected. Libor remains way above base rate. Spreads on bank credit default swaps the cost of insuring against bank failures are actually on the increase. The paralysis is going to take time to pass, inflicting more pain on banks and their customers. Tougher rules on balance sheet strength and liquidity will add to the difficulties.

8 Instability: investors are being asked to commit to the 200p share price five days before the rights issue closes. Thats a long time. While a collapse in the market price from the current 228p is unlikely, there is an intrinsic instability here. If it were to drop close to 200p in the next few days, the sub-underwriters would rush to short-sell the shares to hedge themselves, thus propelling the market price lower still.

Investors who shun the rights issue may well be sacrificing some easy short-term gain. The nimble may be tempted to bet on a bounce and buy. For investors with longer time horizons, however, RBS has not done enough to show it has learnt from its mistakes. They should pass.

Not in RBS at the moment but watching quite closely for when funds are available. The Times piece comes over as biased. Taking a long term view the sp must be at or around its normal trading level of 5 (less some dilution) in three or four years time. In the short term, as he accepts, hedge funds will have been shorting the price down whilst they make a killing on the nil paid shares. RBS has a more international profile than its UK competitors (other than HSBC) and I see it as the best long term bet in the sector.
Eric

Eric- agree long term should be ok but, lets see some management changes first. I recently dipped my toe in around 140p level with a view to increasing once we have seen some board changes. I am afraid it was a case of a bridge too far with AMRO.

correction 240p was purchase level.

Gus, I thought you were lucky! I took up my rights but sold my original time at they went X-rights and at the moment still hovering.

Well, its looks like a successful issue as far as the city is concerned. Fair bit of short closing going on I shouldn't wonder.

when do the nil paid stop trading? anyone

Selftrade told me 2 wks ago it was the 2nd June so that's how much they know!

New shares start Monday 9th so maybe nil paid stop Friday 6th.

Morgan Stanley have upgraded target to 280p from 260p stating the obvious that the rights issue has solved many of the problems. Also rumours swirling around of stake building from hedge funds with high demand to purchase the rights. sp 244p

well they got it wrong then.....just like stupid hedge funds....whats new though!!

At least this has sorted out the men from the boys - comparing RBS with HBOS. Good demo of financial muscle compared with naivete. Not sure who would want to take HBOS on but there will be opportuntiy for RBS to strengthen position in sector. Eric