The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I'm guessing that when the market opened at that price a lot of sell limit orders were triggered which then balanced out a lot of the buy orders that had been placed while market was closed (after the BoE comments were publicised in the media). Good to see that it's remained up on yesterday though.
"Interest rates will need to rise by more than 1 per cent within three years if the economy recovers faster than the Bank of England expects, one of its policymakers has said."
Stirling bounced higher after Vlighe's comments.
If this is the reason it just goes to show what is in store for this stock when there is more material news about interest rate rises.
Spoke to Westminster Magistrates Court. Case was adjourned again to 21st July 2021 at 10am. Person I spoke to said that it's not entirely clear / she couldn't fully understand the notes but it seemed that the prosecution needed more time to gather more evidence. If that's the case it seems a bit disorderly on the part of the FCA; you'd think they would have everything prepared before going down route of criminal prosecution.
The failures in question occurred between Nov '11 and Oct '16, and the Bank has been assisting the FCA with their investigations since July '17. NWG made significant investments to financial crime systems and controls, every year, from/since July '17. While the failures relating to Fowler Oldfield, and whether they are an isolated case or part of a systemic issue is of concern, the good news is that the likelihood of an AML problem persisting to the present day is highly unlikely. The bad news is that a criminal conviction allows the FCA to levy an unlimited fine which could be of material impact to the Bank's capital position. That said, in deciding upon a fine, if one is forthcoming, the FCA would have to that said fine is ultimately attributable to the shareholders, and the uniquely dichotomous situation that the majority of whom in NWG's case are the British Taxpayer. That being said, the money collected from FCA fines goes to HM Treasury (i.e. the Taxpayer) so it's a little circular.
I did actually sell about 50% of my NWG shareholding yesterday; this case was a factor in the timing of it but I didn't sell because of this case. I sold because I have been way over-exposed to NWG stock for too long already; something my advisor has warned me about in the past. So I've finally gone boring and moved half the stock out and into a couple of broadly spread funds instead. I've kept 50% in though because I still believe that NWG has lots of growth and income potential and I believe that its current values and strategy reduce the likelihood of failures like this while making for a super sustainable business.
I think the other point to note is that the NWG SP seems to be strongly tied to the UK economy and what investors believe to be the macroeconomic outlook. Whether positively or negatively, this driver seems to override single issues which might normally have a SP impact for other companies. You can probably take some comfort in the fact that major institutional investors will have been briefed on the legal/regulatory risk associated with these criminal proceedings (announced 16th March) and they still went ahead with a purchase of 580 million shares (10th May).
I suppose in summary, if you are a speculative investor you could sell out now on a gamble to buy back in at a lower price so that your 230-250 sale is more profitable later on down the line. If you are more about time in the market than timing the market, then just stay put because this is likely to be a bump in the road (at most) over the long term. (IMHO, of course!)
"FCA fine on Monday for dirty laundry." = misleading / false information.
"Unfortunately, I have had so many posts deleted (by you ?) that I cannot remember what I said," = only the Mods can delete content so if they have deleted many of yours you must be regularly falling foul of the rules. One of the rules states that you must not post misleading or false information as this could constitute market abuse.
As Nate9076 says, FCA has launched criminal proceedings against NWG due to money laundering failures. The *initial hearing* is due on Wednesday. You would expect a preliminary hearing to determine whether there is sufficient evidence to go to trial (not to result in a fine).
If many of your posts are being deleted by the Mods, maybe try adding real value to the chat rather than firing out thoughtless remarks about dirty laundry.
The loss to the taxpayer occurred in 2008, at the point of bailout, due to the failure of the entire financial system (of which RBS Group was a poster child). But it was worth doing to prevent the UK economy from collapsing.
The fact that UK Government is able to claw back any of that rescue money at all is somewhat of a bonus thanks to the fact that funds weren't just given out, but provided in exchange for company shares. So I would try to see it in that light, unless you take the position that the Bank was never bailed out and HMT simply made a £45bn investment that performed badly (in which case be as mad as you like about the shares selling for less than £5). And the reason, by the way, that the shares are not worth a fiver today is because, in a totally self-defeating condition of the bailout, the Bank was ordered by the EU to sell off highly profitable parts of the Group: Worldpay (bought by FIS, shareprice now $150), Citizens Financial Group (SP $50), Direct Line Insurance Group (SP £2.90). If it had retained these businesses it would be swimming in profits, the SP would be in a completely different place, and the Government might well have already sold out of NWG entirely at a profit.
As for Goodwin; you can't just put people in jail for being bad at their jobs. There needs to be a criminal offence, and there wasn't one. In fact, to the contrary, the UK Government championed the light-touch regulation of financial services which provided tacit approval for much increased risk appetite and running down capital reserves to bare minimum that he oversaw. Like anyone else found to be incompetent he paid with his job, his reputation and pretty much anything else you can think of (except his freedom and his pension). IMHO :-)
The closer we get to full privatisation the better because there is a chunk of the market that won't invest in this stock while it is part government owned. The sooner UKG fully divests the greater the demand will be for the stock which will help push the price up. However, in the meantime, we have to take multiple hits to the SP as the Government makes deals with institutional investors to sell its own stake at less than market rates. I was very happy with 204.69 for a few minutes yesterday; fingers crossed it doesn't take too long to rebound. GLA
Found some general commentary from the Bank on this.
'It's the Bank's job to deliver on the strategy rather than to manage the Share Price'.
[J] That might be a bit of an affront to some shareholders (on the face of it) but I think it's fair comment. I mentioned before how this stock is like a weathervane for the macroeconomic situation so the Bank can be doing all the right things but the SP will have a mind of its own, to a degree. The Bank therefore acts in accordance with its values and strategy which will naturally promote the SP over time, rather than getting caught in trying to manufacture short term SP gains at any given moment.
'View from [external] Analysts was that -3.6% on the day felt a little harsh especially in the context of the results being announced'
[J] Nice to know it's not just the shareholders feeling that way!
'The order in which NWG announces results [Vs peers] can effect how its results are viewed. On this occasion NWG announced after Lloyds and HSBC who chose to use highly positive language. Meanwhile NWG (i.e. CEO/CFO) opted for a cautiously optimistic tone which played a little bit into the Share Price movement'
[J] This is where my head was at initially but it feels to me personally like that tone plays quite a lot into the SP impact rather than a little bit. It's good to know that the decision to take that tone is a very deliberate one though and that they recognise that it does have an SP impact. To be fair, 'cautious optimism' is aligned to the Bank's value of thinking long term; 'highly positive' (still in the midst of the pandemic, globally, as we are) a la LBG and HSBC, is not very transparent. So this is an example of NWG practicing what it preaches which I think makes this for a safer investment long term. I do wonder whether they might just find a way to balance cautious optimism with effect on SP a little better in future though (especially in light of the apparent effect of it this quarter).
'The market would have loved it if NWG would have reported great income delivery upgrades or done a very significant release of impairments, neither of which it did / felt appropriate to do'
[J] So this is another reason for the drop which I hadn't been aware of.
'Overall we are very comfortable that this is a good performance'
[J] I don't think you can argue with that.
[J] Hope that helps.
@Nate9076 I wondered this too, but then why the drop on results day? The AML story was announced some weeks before. It's quite difficult to find any explanation for the drop in SP online. I did see one news source making a point of income from the Markets business drying up but that is part and parcel of the bank's strategy to reduce risk and focus on serving retail and commercial clients. I'm going to try and find out today if the NWG CFO has commented on the SP impact as she has undoubtedly been asked about it.
I haven't looked into this properly yet but my first guess is that the Bank's penchant for caution and caveats and warnings is what has hit the SP on results day today - yet again. I wish it would take a ****!ng break and celebrate success without predicting doom for once. The main one today is "...However, there is continuing uncertainty for our economy and for many of our customers as a result of COVID-19". Coming from the Group CEO that is one hell of a red flag to the market. The sentiment applies to all Banks but only NWG seems intent on headlining risk alongside what are otherwise a great results. Maybe it is the moral, progressive thing to do, but does it really need to be done in precisely this way and always on results day.
Looks like it closed at 194.57 on Thursday then opened at 195 on Friday. It then closed at 198.70 on Friday which is about 1.9% rise. Seems within the range of a normal day's movement (albeit in the right direction!). If you look at the 6 month chart, Friday was unremarkable.
I get where you're coming from but it can't be as simple as that. Otherwise, where is our 10p per share? I think there's probably some nuance around the fact that taking the £1.25bn out of the business to purchase the shares was also attributable to ordinary shareholders so it ends up being a net zero position.