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According to the Reuters’ news dated April 30, billions of pounds of cash were spent by many British banks buying back their shares not so long ago. Now, some of these banks are asking for their money back.
British banks have spent more than 5.6 billions pounds ($11 billion) to buy back their shares in the past three years. With this, they ran lean financial records and were often accused of being ineffective if they held onto more cash than the minimum required. The Royal Bank of Scotland and HBOS HBOS.L are asking for 16 billion pounds from the stockholders intended to reconstruct their balance sheets showing how far the financial markets have changed, as well as how the sentiments have reversed.
It has incited hearsay that some other banks, most especially Alliance & Leicester ALLL.L, Barclays (BARC.L) as well as Bradford & Bingley BB.L, have the possibility to also tap certain investors for finances. The large reduction on the value of risky assets and perspective of the slow economic and profit growth has caused pressure on the banks, worrying that those regulators and investors would build up a bigger capital as their protection against future shocks.
According to Leigh Goodwin, a bank analyst at Fox-Pitt, Kelton, the banks in the U.K. were running balance sheets that were geared for a world with abundant liquidity and rewarded leverage. This calls for a change, so now they have to adjust.
Goodwin also added that if there were buybacks, they must be justified. This is because investors were asking to have their capital back as banks have more than what they need. Businesses can benefit from branded usb drives to bolster their companies awareness. |
