Bradford & Bingley Shareholders

[whizzkid11]

Well - if the US Bail-out does not go through - then expect a financial MELT-DOWN! - the US that was looking to bomb the world into the stone ages will be heading that way itself!

And after what the UK treasury has just done to B&B - ie the seizure - and how it has affected me personally - I would be looking at emigrating.

For those individuals who had shares in B&B - worth over £3 a few months, and holding out to cut their losses.. then overnight the government 'seizes' the assets, and sells them off - while letting the shareholders bare the loss.

There are many people saying the shareholders are the stupid ones, but they are the ones who have invested their hard earned cash - and have been holding onto it in vain hope of cutting their losses. Every day has been a recession for them - only to wake up to find that some robbers have turned up and taken it away, made millions out of it - and then told them to take a hike!

Apologies for the rant - but I am feeling used and abused right now.

B&B have assets worth billions... out of the 'toxic' loans - is every single one dead? there is scaremongering going on - the government is telling everyone the taxpayer is paying this - its is cobblers... assume 10% of toxic mortgages default... its still means that the properties are owned by B&B - they have to sell to recover - ok it may not get the loan value but it certainly will not be 0. which is what is being told to the public.

Add to that the £600m sale to Santander (some say £150m) but with £21bn of savings/investments/190+ branches... and couple that with the statements of the head of B & B.

The takeover is being compared to Northern Rock, and being treated similar - but what the public is not understanding is that the Northern Rock was bailed out/funded by the Bank of England - so they had a financial interest in it... B&B raised funds from shareholders, and shareholding companies - nothing from the BoE. Earlier this year a £40m was raised through shareholders to help protect - and now the treasury step in and kick them in the teeth by snatching it from them and keeping it!!!

UURRGHHHHHHH!!! - it's making my blood boil..

Realistically the state of the financial world means downgrading - and the looking to join the government and start ripping people off.... and abusing the system!!!

Maybe I'll become an asylum seeker and have everything paid for me while I hanging around on street corners publicly denouncing the government/country that will pay my bills...

 

[Mudster]

Stocks and shares are a punt like any other form of investment.....that's just how it is, no matter how bitter it tastes.

That's why it's a good idea to buy trackers that follow and entire index or spread them around a little.

Quite honestly it's not like the writing hasn't been on the wall for some time with regards to B&B.

Sh*t luck....but the world carries on......

My business is severely effected by all this, I'd hazard a guess that 80% of my sales are somewhere financed by mortgages.....as are many industries related to the construction industry...no one would cry for me if it all went t*ts up....I chose to invest in my own business, you chose to invest in someone elses....the outcome is the same if it all goes wrong.

 

[manalishi]

Hang-on - the taxpayer (me!) is secretly getting a good deal here? Excellent!

 

[st4]

Stocks and shares are a punt like any other form of investment.....that's just how it is, no matter how bitter it tastes.

That's why it's a good idea to buy trackers that follow and entire index or spread them around a little.


Sh*t luck....but the world carries on......

Any good quality collective investment vehicle will do the same, but has the potential to out perform a tracker fund, or even holding a basket of well diversified individual "bluechip" equities is better than having 1 or 2 large shareholdings. Over a long period a portfolio constructed in this manner should out perform RPI - but even large companies could go under. B&B was never a particular good one, and a rights issue early this year that was a complete non success showed trouble, I'd have been out then.

 

[crockers]

Depends what index you're tracking ........... and in what part of a cycle you invest..

As for B&B shareholders losing out ... That company made stupid calls and invested badly in the buy to let market that has gone t*ts up. If the govt hadn't stepped in there would have been a run on the bank and guarantees would have come into play.. They failed ...as a bank...should have stayed a Building Society..and stayed in the business they understood.... you can't blame this on short sellers but on an incompetent banking management.

My dealings with them made me make a recommendation to my board not to do further business with them so I am not surprised at this outcome. Short term profits over long term sustainable growth.

So if it was a case of looking after the depositors or the shareholders ..no contest.

Saying that ... one tip .. when a share looks like sh*t, smells like sh*t, then there is a good chance it is sh*t and no sense holding onto it to get your money back...that is one failing that many people make ...

 

[Dryce]

And after what the UK treasury has just done to B&B - ie the seizure - and how it has affected me personally - I would be looking at emigrating.

What happened to B&B was the equivalent of a sick cow in a herd being put down.

For those individuals who had shares in B&B - worth over £3 a few months, and holding out to cut their losses.. then overnight the government 'seizes' the assets, and sells them off - while letting the shareholders bare the loss.

There are many people saying the shareholders are the stupid ones, but they are the ones who have invested their hard earned cash - and have been holding onto it in vain hope of cutting their losses. Every day has been a recession for them - only to wake up to find that some robbers have turned up and taken it away, made millions out of it - and then told them to take a hike!

Shareholders buy shares in order to profit from them.

With profit usually comes risk.

And it was trying to perform to please those same shareholders that caused B&B to operate using the strategy that brought it to its knees.

B&B have assets worth billions... out of the 'toxic' loans - is every single one dead? there is scaremongering going on - the government is telling everyone the taxpayer is paying this - its is cobblers... assume 10% of toxic mortgages default... its still means that the properties are owned by B&B - they have to sell to recover - ok it may not get the loan value but it certainly will not be 0. which is what is being told to the public.

The question is could B&B make cover what is in effect a margin call on the
future of its own loan book.

Those who would lend to it clearly though it couldn't.

Add to that the £600m sale to Santander (some say £150m) but with £21bn of savings/investments/190+ branches... and couple that with the statements of the head of B & B.

Clearly there was a queue of competitive bidders ? Not.

The takeover is being compared to Northern Rock, and being treated similar - but what the public is not understanding is that the Northern Rock was bailed out/funded by the Bank of England - so they had a financial interest in it... B&B raised funds from shareholders, and shareholding companies - nothing from the BoE. Earlier this year a £40m was raised through shareholders to help protect - and now the treasury step in and kick them in the teeth by snatching it from them and keeping it!!!

UURRGHHHHHHH!!! - it's making my blood boil..

Realistically the state of the financial world means downgrading - and the looking to join the government and start ripping people off.... and abusing the system!!!

What you really mean is that you want me, and others, to cover your shortfalls in the stock market.

Given that we (or at least some of us) didn't choose to try and make profit from B&B shares why should we have to cover your risk because you did.

I'm not unsympathetic. But in this situation I'm not that charitable either.

 

[ceejaySL]

I sympathise with your loss.

If B&B had over performed and you had made a stonking profit would you have given some of it over to me as a non investor in their stock?

Probably unlikely. And I would not have whinged that you didn't either.

It was your gamble and you deserve the consequences - positive or negative.

 

[st4]

I sympathise with your loss.

If B&B had over performed and you had made a stonking profit would you have given some of it over to me as a non investor in their stock?

Probably unlikely. And I would not have whinged that you didn't either.

It was your gamble and you deserve the consequences - positive or negative.

Some folk got the shares from the demutulisation, and tbh they did come free, so why not have sold them when the market was falling, there was no loss to cut for these "investors"...

I feel your loss, as I do other investors in RBS and HBOS who have seen sizeable losses in value of shares, but it is a risk, and to reduce ones risk a diversified investment strategy is needed.

A large holding of a few banking companies who's shares have come to people via "demutulisation" is not a diversified portfolio and is badly "asset allocated" yet this is how the bulk of people who have UK shares are "invested".

 

[crockers]

A large holding of a few banking companies who's shares have come to people via "demutulisation" is not a diversified portfolio and is badly "asset allocated" yet this is how the bulk of people who have UK shares are "invested".

Very true... but even if the holding is spread over many equities it isn't necessarily a balanced asset allocation as no account of attitude to risk, objectives, time frame have been taken into account....

Also buying a tracker fund isn't necessarily balanced unless it is fully reproduced as many trackers out there are quantified sampled and aren't TRUE trackers as such...

 

[raymont]

Assume there are four stakeholder types in B and B:

Depositors

Mortgage Holders

Investors ( share holders)

Staff.

Depositors need to be protected otherwise there will be no confidence at all in banks and building societies. The current protection limit needs to be increased (like Ireland).

Mortgage Holders should be protected against foreclosure. The book can be sold to either another bank, if it’s not too toxic, or to the government if it is. Govt should get quite a lot back through mortgage payments. Need to do this to support the overall economy.

Shareholders take their chances, if prices rise they make money, if they drop they lose money. Shares are a risk investment. I’ve certainly lost some money recently!

Some staff will be retained to run the business but there will be redundancies. They might get redundancy pay but I suspect it will be limited. This is the group I feel most sorry for.

 

[whizzkid11]

Some very valid points raised by all, Crockers, Dryce, ***.

Its good to get different viewpoints, and angles which why I raised the issue as we have plenty of knowledgeable professionals here.

Obviously life goes, and my loss is not as bad some others, but what infruiates me is a combination of my own holding onto the shares in the hope of trying to reduce my losses, and moreover not being given the opportunity to sell them even at a reduced price. Some may say that its my fault for holding onto them for so long - think about it, if every shareholder did that the bank would have folded a long time ago and even the depositors would have lost out.

So its a case of - £3.00+ --> 175p --> 50p --> 20p ---> OH IT DOESN'T EXIST

Its the 'oh it doesn't exist' that I am struggling to come to terms with, upto 20p stage - any loss is my personal fault so I have no gripes - but from 20p to not having anything... for a bank that has £bn's in assets, and is subsequently partly sold for £600m+ - somebody somewhere is lining their pockets!

I have no issues with the loss in share price - thats my own fault for holding onto them... in hope... but to have what I was holding in my hands taken away and sold is my issue - with having the opportunity to decide what I want to do with it.

 

[Dryce]

for a bank that has £bn's in assets, and is subsequently partly sold for £600m+ - somebody somewhere is lining their pockets!

The real value includes the liabilities as well.

And banks don't actually own all the assets they control.

 

[crockers]

to have what I was holding in my hands taken away and sold is my issue - with having the opportunity to decide what I want to do with it.

You are the owner of a technically bankrupt company.....you're actually lucky that your responsibility ends....you have no-one coming after you for money...

Owners of small companies can lose their homes etc... all you lose is some money...Your life will continue and you will learn from this. I got burnt for being greedy in the tech boom...I ignored the basics of value etc and paid for it. We all make mistakes - some more expensive than others - the biggest mistake we can make is not to learn from them.

Don't invest in shares unless you're prepared to lose your money or are a strict disciplinarian and will close a position and not ..................hold on.

Good luck for the future -- and believe it or not I do feel for you personally.

 

[Smiley]

The £bns in assets is mainly depositors money - it does not belong to the bank - they have access to it to make money on over and above the interest they pay out to the depositors. So Santander has paid £600m to get access to those depositors funds - but it has not paid £600m for £xx bn of assets - noone is stupid enough to do a deal like that

I am afraid it is a common mistake that investors make - if a share is worth £3 and it drops to £1.50 then it looks cheap and surely it must bounce back.....sometime....trouble is as you have found out it can keep going down to 0. If there had been no bail out then B+B would have gone bust after a run on its deposits and your shares would have performed the same - they would have been suspended and then been valueless.

 

[richard]

I am so sick of the constant lies we're being told. "Its all the US housing market". "Its a global problem, not our fault"

At the end of the day, it works like this
- If there are lots of buyers for something, the price goes up as long as there is restricted supply of that item

We've had a real double whammy
1) interest rates have been low
2) The regulation system was a lame duck and allowed money to be lent to people that could never afford to pay back
- the double whammy is it was lent at low interest rates - i.e no room for error - to people who couldnt pay it back in anycase.
- so this create a whole bunch of house buyers who had no financial clue and thus house prices went up and up and up
- because of the unregulated banking practice people borrowed money from their houses and spent it
- the above 2 create lots of tax (Stamp duty & VAT at least) so government was quite happy not to regulate the banking industry.
- and the goverment seems to have spent it all (I really hope I'm wrong here)

And, now its all gone bang.

And the only thing I can be certain about is that the lending culture will never be the same again.
- So, all those assets that have benefitted from free credit (houses, shares in banks, fine art, stamps, etc) can not possibly maintain their growth rates, and probably not even their current values.

Sorry, I have such a miserable view

Richard

ps. I seem to recall that there is 1 more bank that adoped the Norther Rock / B&B model - but I cant remember who t was.

 

[Parrotman]

Some very good points have been put forward and although much critiscm etc has been laid at the Banker's door I cannnot, in my naivety, see why members of the public are not also open to critiscm.

Money has been cheap to borrow for years and years, and the society we have now is a must have it ..............now society! We don't really need it but must have it so we'll borrow a couple of grand, or run up a c/card debt and then move the debt around ( exactly like the bankers).

What's wrong with saving up for what we need and instead of chucking good stuff on the council tip put it to one side or more practical, repair it and make it like new again?

Yes, like others I've lost money on shares by not being disciplined enough to operate a stoploss strategy but apart from a mortgage I've never borrowed a dime in my life nor added any other form of loan onto the mortgage.

The money I did have went to paying off the mortgage early instead of paying off unnecessary debt.

As I said, perhaps I'm being too naive but my savings are now earning extremely good rates of interest.

 

[whizzkid11]

So Santander has paid £600m to get access to those depositors funds - but it has not paid £600m for £xx bn of assets - noone is stupid enough to do a deal like that

That is my point... Santander has paid that for the access to the funds... so who have they paid and where is that gone/going? - the easy PR answer is it will be written down against losses - the real answer is there are some cats suffering from obesity...

And yes, I appreciate everyone's comments, and yes it is my own fault for holding onto the shares in hope - its something I have and still am learning from... much wiser - but it causes issues short-term which I know shall overcome.

Thanks for everyones wise words and views.... much appreciated.

 

[Dryce]

And the only thing I can be certain about is that the lending culture will never be the same again.

Be assured that the banks will find another lending bandwagon!

Back in the late eighties it was commercial property. In the late nineties it was the Asian markets. In the late noughties it was residential property and securities.

The problem has been compounded this time by the commoditisation and unconsidered trading of risk. If bank A buys securities from bank B that are based on mortgages it doesn't scratch its head and take a look at the underlying mortgage book - it looks at the rating. That rating is generated by a third party. All the institutions use the same clutch of ratings.

What has happened is that the system is suffering not just a shock from the downgrading of the underlying value of the securities but also a shock from the inability to trust ratings.

It's a bit like somebody who buys products based on magazine reviews. Suddenly they realise the journalists have been writing arbitrary nonsense to keep their readers happy. So the 5 star ratings on a movie DVD and 84% rating on a camera model can no longer be trusted. They walk into the shop or showroom and no longer have the confidence to buy the products on display because they lost the ability to evaluate their merits and downsides for themselves. And that car they bought last year doesn't seem so good as they thought it was yesterday.

The mortgage market was symptomatic of this. Lending criteria went out the window. Demand and ability to pay went up so did prices and the apparent security of the loans. And another new behaviour was based on people assuming that they could fix their mortgages and roll over to new deals - in effect the public started to paly with hedging on interest rates without realising.

This isn't new behaviour. The commercial property bubble in the late eighties was not dissimilar. Just the scale of it his time round is massive.

Consider that two years ago around the dinner table with guests that some of us were being gently chided as fools for not investing in property. This time it was pervasive. And that is where the similarity to 1929 comes in.

 

[oldcro]

With house prices rising by the day, mortgage lenders were not interested in whether borrowers could pay as they held the deeds. Any defaulting meant they could reclaim a property worth much more than the loan. Then the longer they had to wait meant even more money and a chance to lend even more to the next mortgager.

Until the unthinkable happened and the bubble burst.

 

[glojo]

I feel for Whizzkid,
We are more than a forum, we are a family or at least a bunch of folks who I like to think of as friends.

Whizzkid has lost a significant amount of money and I guess is really after a little sympathy? I also guess he knows all about the risks of buying shares, but at this instance in time I guess a little sympathy might be appreciated as opposed to 'tough, you know the risks

Hopefully this loss is not too bad and your lifestyle has not been damaged by it

Regards
John


Hi Whizzkid,
Wot kind of idjut buys dodgy shares? Only a fall wood invest in such a dodgy organisation and u deserve all u r getting Lern frum it and muv on