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London, London! RBS stake sale: Living with Treasury losses vs exiting with stake sale to ADIA

RBS - St Philips Place, Birmingham - glass sli...

RBS - St Philips Place, Birmingham - glass sliding doors (Photo credit: ell brown)

Despite the fact of the $100 bln in Bank Capital having been treated as sunk costs with more than $65 bln in losses since the bailouts were consummated, the UK Treasury could still get $0.50 for every buck invested ( or the Sterling) in the great institution of government saviourship, the paradigm of having invested in 89% equity of RBS and 45-50% equity of Lloyds’ If Abu Dhabi is indeed interested in buying upto 30% of the bank and as media suggests could start with at least 10% the $24 bln ( as of Monday close) that the UK Treasury holds  now in the bank. The ADRs quote at $48 bln market Cap in New York and the London listing is now trading at GBP 0.29 pence with ADRs up to $10 after the announcement. A calculation based on the Pence status bring its domestic valuation to $6 bln which makes the statistic an unlikely one, so please beware.

That means the UKFI ( The entity holding the stakes in Lloyds, Northern Rock and RBS) will not be considering playing by Vince’s plans. Vince Cable wanted RBS to be broken into two distinct banks with asset sales of most divisions while the core SME lending bank survives. UK Financial Investments, and its Director Jim O neill thus seem to have a different game plan and would probably like to leave the bankers’ pay issue also to the bank itself.

Sheikh Mansour also owns a stake in Manchester City, currently the English league’s no. 1 club and the royal couple have been in London looking up prperties at Canary Wharf and other to add to their sizable $850 bln SWF portfolio. It has a stake thru Aarbaar in the failed IPO of Unicredito, making 33% on the investment and is holding on to its stakes in StanChart bank and AgBank which it picked in the IPO from China in 2009.

UKFI invested $58 bln in RBS in equity for its 82% stake and even if the deal is made at double the price by Christmas, the UKFI investment would be valued at a total loss of $10 bln and depending on the sale percentage of equity, the booked loss could be a minimum of GBP 1 bln which is hardly a loss for the government in faceof the storm it has to bear.  RBS pay has fdropped nearly 20% below that of investment bankers BarCap which recently dropped the suffix Capital from its Barclays brand name for its Wholesale / Investment Banking division Th epublic interest will be fuelled of course by media like the Independent and the mirror whose lead makes interesting reading below.




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This entry was posted on March 27, 2012 by in Amitonomics, Banking, Europe, Financial Services, Global.


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