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The Royal Bank of Scotland Group plc Message Board

  • crypton1te crypton1te Feb 10, 2010 10:36 AM Flag

    Preferred Shares dividend

    I was looking into RBS preferred shares and heard that they are going to stop paying dividend for 2 years. Does anyone know if this is true and if so do you know where I can find the press release from RBS about this? Thanks in advance for your help.

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    • yes, 2011. Sorry.

    • in last sentence: do you mean Q1 2011 but typed Q1 2010 for start of 2 years? otherwise the ABN's will have a one year suspension...

    • Read the message I'm responding to, by nonproinvestor. Says it all, consicely.

      To clarify, we are talking about the RBS preferreds that have been suspended. Not the ABN's (e, g, i).

      RBS's:

      a. Divis will NOT be paid in arrears after the suspension period; there is no mechanism for it, no obligation; indeed should RBS do so it would be in direct violation of the APS agreement's intent of burden sharing.

      b. Are under the 2 year suspension beginnning April 30, and so will not pay a divi again for 2 years.

      ABN's, the e, g, i:

      c. a bit more complicated, due to different language in the APS agreement.

      d. suspension should begin in 2011, and not pay for 2 years beginning with Q1 2010. For investment purposes, it is best to assume these will not be paid, ever, for the quarters that are not paid.

      good luck,

      jack

    • Also, the EC's intent in imposing the 2 year suspension of dividends was to enforce it's notion of "burden sharing" by debt holders and holders of preferreds. I can't see the EC allowing the suspended dividend amounts to be paid back later.

    • You are grasping at straws. The preferreds that were suspended by definition are NOT cumulitive. If/when the dividends again resume, the will NOT make-up for the missed dividends. Remember, RBS is a for profit company, not the tooth fariy. And the are >83% owned by UK's HMT.

      Hopefully, you now understand and give up your last hope that this will occur.

    • I understand that they are non-cumulative, but htey are not necessarily so- they may choose to make them non-cunulative. But the way they wrote the Offer to Purchase, it seems they are saying that the divis are "deferred" and will be paid at the end of the deferral period. Nowhere in that document does it say divis will not be paid for two years and they are not cumulative. I would have thought they would specify that somehow.

    • They may resume in 2 years IF
      1. They have distributable profits
      2. The FSA capital requirements are met
      3. There are no further restrictions by the EC
      4. The Board of Directors approve

    • bascot@prodigy.net bascot Apr 16, 2010 5:21 PM Flag

      Jack...Many thanks for the input..Bill

    • I'd probably buy the common (even today) and look for a couple dollar gain in the next month, then roll to the preferreds. But, that is not what you'd call risk adverse!

      On your inquiry, yes, I personally think you should look at the F's as comparable to any decent preferred (not top line ones, not yet) and they are a buy in my book for anyone adding preferreds. Remember to spread them out, you never want to have em all in one firm.

      cheers,

      jack

    • I also own F's (& H's) with a cost basis of $3.60-$6.00 in a taxable account. I am holding my shares (currently yielding ~9.25%) and not selling as I don't want to create a taxable event.

      However, I am NOT adding new shares. There are pleanty of other options yielding >8% that don't have as much risk. Expecially, if you are buying in a tax advantaged account.

      I have been accumulating the following securities (on dips) that are selling below par and >8% yield

      CBB-PB
      PJA (or PKH which ever is highest yielding)
      AFC
      AHL-PA

      These are all non-banks so it also helps diversify.

      For bank securities, you might want to look at the various Citigroup ETRuPS. These are all below par and yielding about 8%.

      Good luck to you. I am a long holder of RBS F&H, just not adding to my positon now.

      I'm not licenced to provide financial advice in your state, so I suggest you do your own research and consider the other components of your portfolio and investment objectives.

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