Heroic shorting of HBOS by its own underwrites seems to have saved the face of its terrible rights issue. Only 8.3% of shareholders wanted to take up the rights.
My reactions to this:
- How come the Board is not asked to make any sacrifices for this wreckage?
- The banks will kill each other (RBS was shorted so much for proxy purposes its shares fell by 25%) for money - so not much change there.
-With the £4 billion to cover potential losses, HBOS should escape a Northern Wreck scenario. Just don't plan on buying in now and getting any capital growth of dividend payouts until the recession is over in a couple of years.
- The rights issue model for banks is now closed. Any other companies in big trouble from now on have very limited options to get hold of new money. No wonder Mervyn King is trying to get the BOE to be able to borrow secretly.