In Dublin today, a place where the Government have less than 17% support in polls - three weeks before Lisbon referendum, but more importantly...the state government fund NAMA is going to announce the "price" i.e discount by which it will take over the "bad loans" of the banks in ireland.. (http://tinyurl.com/n39j5w)
I am EXTREMELY bearish on Europe, its fiscal positioning and its willingness to deal with this crisis - it smells of: Lets buy some time (Obama style) and see if this does not go away.. meanwhile the ordinary people lose their jobs as seen in Non-farm today - but hey:
Things are good .. the data is improving...... joke.. utter joke....Maybe it is time to buy some gold coins, store some water, and canned food....the market, the politicians, my friends all want an easy ride out of this.. but as you learn as a speculator.. .there is no easy way out...only hard work - over and out from Dublin...
Article below courtesy of my partner Jesper Christiansen....
Safe trading and nice week-end
RBS Told Not to Call Subordinated Bonds After Bailout (Update1)
2009-09-04 08:55:32.64 GMT
(Adds analyst comment in fourth paragraph.)
By John Glover
Sept. 4 (Bloomberg) -- Royal Bank of Scotland Group Plc,
the largest bank bailed out by the U.K., won’t call $1.6 billion
of subordinated bonds after regulators objected to using state
aid to pay holders of the lender’s lowest-rated securities.
The Financial Services Authority, the U.K.’s market
regulator, told RBS not to redeem early four series of bonds
after the European Commission stated Aug. 19 that banks
shouldn’t use government money to repay equity and subordinated
debt, the Edinburgh-based lender said in a statement today.
One of the four bonds, a 400 million-euro ($571 million)
undated 6.625 percent note, plunged 17 cents on the euro to 69.5
cents today, according to price data compiled by Bloomberg. RBS
is 70 percent owned by the U.K. government after receiving a 20
billion-pound ($33 billion) bailout last year and putting 325
billion pounds of assets into a state insurance program.
“The concern is other U.K. banks could be forced to follow
suit by the regulator,” credit analysts at BNP Paribas SA wrote
in a note to investors.
The Commission is taking a tougher stance on banks rescued
with government cash amid the deepest recession since World War
II. Northern Rock Plc, the first lender nationalized by the U.K.
in the credit crisis, said last month it would defer interest
payments on eight subordinated bonds with an aggregate face
value of about $2.74 billion.
The executive arm of the European Union already told
Bayerische Landesbank, Germany’s second-largest state-owned
lender, and Anglo Irish Bank Corp. to defer payments on
subordinated debt as a condition of getting government money.
State Aid Rules
Last month’s statement from the Commission “made it clear
that banks subject to restructuring under state-aid rules should
not use state aid to remunerate their own capital,” the FSA
said in an e-mail today. Calling the notes “would adversely
affect the ongoing state-aid discussions in relation to RBS,”
the London-based regulator said.
The cost of protecting RBS’s subordinated bonds using
credit-default swaps rose, with contracts climbing 19 basis
points to 321, according to CMA DataVision. Default swaps tied
to subordinated notes sold by Lloyds Banking Group Plc, whose
predecessors were bailed out by the U.K. in October, increased 9
basis points to 297, CMA prices showed.
‘Impacts All Financials’
RBS’s decision not to call the subordinated notes “clearly
impacts all financials where there is government involvement,
most obviously Lloyds,” said Marc Ostwald, a strategist at
Monument Securities Ltd. in London.
Lloyds is “working closely with” the U.K. “to
demonstrate to the European Commission that the group has a
strong plan to exit state aid,” London-based spokeswoman Leigh
Calder wrote in an e-mailed response to questions.
RBS said today that it won’t call the four notes at their
early redemption dates in October. Two of the bonds, with a
combined face value of 500 million euros, are so-called upper
Tier 2 notes, while the other two, totaling A$1 billion ($840
million), are more-senior lower Tier 2 notes, RBS said.
RBS was hurt after taking over Amsterdam-based ABN Amro
Holding NV, which left it saddled with bad debts and depleted
cash reserves, leading to the biggest-ever loss
reported by a U.K. company. RBS stock rose 2.6 percent to 56.45
pence in London today.
Credit-default swaps pay the buyer face value in exchange
for the underlying securities or the cash equivalent should a
company fail to adhere to its debt agreements. A basis point on
a contract protecting 10 million euros of debt from default for
five years is equivalent to 1,000 euros a year.
For Related News and Information:
Top bond stories: TOPH
Top Finance news: TOPFIN
For RBS bond stories: RBS LN
Credit crunch news: NI CRUNCH
--With assistance from Michael Shanahan, Andrew Macaskill and
Tony Aarons in London. Editors: Paul Armstrong, Michael Shanahan
To contact the reporter on this story:
John Glover in London at +44-20-7073-3563 or
To contact the editor responsible for this story:
Paul Armstrong at +44-20-7330-7185 or