Plenty of red pixels strewn across the London equity market on Tuesday. But what about this?
Shareholders who supported last month’s rights issue are now out of pocket to the tune of 28.8 per cent; those who bought “rump” stock from underwriters Goldman Sachs, Merrill Lynch and UBS are down 30.4 per cent. That’s in the space of five weeks.
Market wags have re-christened Sir Fred Goodwin’s creation RBUS – a large US regional bank with some high street assets in the UK and continental Europe.
On a serious note, US retail and commercial banking, including the ABN assets, is said to have contributed 15 per cent of profits at a the pre-tax level. Notes one analyst:
Obviously that’s a historic number. For comparison US business at HSBC was c. 25% of PBT before Household started going wrong, now it is 0%.
The stock is now yielding close to 12 per cent and sits on a discount of 40 per cent to forecast book value. All conventional measures say the shares are chronically oversold. And yet…