RBS sells RBS

Posted by Neil Hume on Jun 20 15:39.

RBS is the biggest faller in London on Monday.

The reason for the decline (apart from generalised Greek fear) is this — an RBS placing circular:

RBS is acting as a sole bookrunner on the below transaction:

Underlying: The Royal Bank of Scotland (“RBS”)

Selling shareholders: Computershare on behalf of RBS employees under deferred compensation arrangements

Listing: London Stock Exchange

Transaction structure:  Accelerated Bookbuild of c. 354.6m secondary shares

Selling commission: No secondary commissions Stamp duty is payable

Use of proceeds: There are no proceeds to RBS

Selling restrictions: Private placement exemption to qualified institutional investors in the US

Timetable: June 20th – Deal announced, books open June 23rd – Settlement

We are trying to get some more detail on these deferred compensation arrangements and whether we can read anything into the decision to sell. (The shares were eventually placed at 39p).

Based on what we know at the moment, the answer is no.

Most of the shares were issued to RBS’s investment bankers and they are thought to have retained almost as many shares as they have sold.

Moreover, the fact that the placing is equivalent to five times daily average volume in RBS, plus a bank-unfriendly backdrop (because of Greek default fears), means a 4 per cent fall is not extreme. In fact it’s pretty good.

Updates to follow.

Update: 3.55pm London time.

The shares sold today come from the 2009 bonus pool. A total of £1.6bn was awarded, the majority of which (£1.3bn) went to the Global Banking & Markets division. Of this deferred consideration a third was paid in bonds, issued last year, and two thirds in stock. The first tranche (i.e. one third) of stock was released today. The final tranche will be released next year.

RBS shares were trading at 37.87p when the bonus was announced early in 2010.

This entry was posted by Neil Hume on Monday, June 20th, 2011 at 15:39 and is filed under Capital markets, M&A. Tagged with , .

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