NAB - National Australia Bank

[sammy84]

It's not that simple. With this placement NAB's tier 1 increases to 8%, but ANZ is already 8.1%.

Anyway capital raisings rarely reverse price trends. Any price effect is just a reflection of the current state of the general market.

Agreed, this wont be good news for short term investors. However in the long run I think it will help strengthen the company. Does anyone out there think this might be NAB preparing to buy some of suncorp? I have no reason to think this besides the fact it is a very large amount raised.

 

[dhukka]

I nearly fell off my chair laughing when I saw the title of today's announcement by NAB.

NAB to strengthen further its capital position

The fact is NAB needs this capital to cushion the writeoffs coming down the pike. Assuming a 20$ issue price NAB will be issuing 150 million shares, a 9% dilution to existing shareholders, yeah that is something to happy about.

 

[CanOz]

I nearly fell off my chair laughing when I saw the title of today's announcement by NAB.


The fact is NAB needs this capital to cushion the writeoffs coming down the pike. Assuming a 20$ issue price NAB will be issuing 150 million shares, a 9% dilution to existing shareholders, yeah that is something to happy about.

Quite surprised that they got what they were after here Dhukka, does that say anything at all? The worst US banks couldn't even raise capital when they needed it.....or is it a reflection of the availability if capital now as compared to a month ago?

Cheers,


COz

 

[dhukka]

Quite surprised that they got what they were after here Dhukka, does that say anything at all? The worst US banks couldn't even raise capital when they needed it.....or is it a reflection of the availability if capital now as compared to a month ago?

Cheers,


COz

Agreed, the glass half full point of view would be that at least they could actually raise capital. Here is a quick quiz though, out of all of the capital injections to US financial institutions, how many of them are trading above the issue price?

 

[CanOz]

Agreed, the glass half full point of view would be that at least they could actually raise capital. Here is a quick quiz though, out of all of the capital injections to US financial institutions, how many of them are trading above the issue price?

This is just a guess, but a big zippo, nadda, nil, zilch, goose egg comes to mind?

The sad thing is some may not recover at all, and thats the tax payer who's now the long term investor.

COz

 

[oldblue]

Let's not forget that banks need to continually increase their capital if they are looking to increase their business ( assets).
In NAB's case they are effectively replacing the need to underwrite the next two DRP's which is what banks normally rely on for their incremental capital increases.

 

[magnets]

hi,
i'm new to shares and need some advice/help
The announcement yesterday about issuing shares has me confused, as i understand it if a company has 100 shares to sell and i buy 10 of them. If they then they release another 100, shouldn't i be issued with a further 10 so that i maintain my % stake in the company?

If this is correct, (i'm with etrade) will my portfolio jump in number of shares held? or do i have to manually adjust it. (and how do ifind out what numbers need adjusting)

If i'm wrong, ugh, I don't want to think if i'm wrong, i bought when they were 25.10

Thanks for helping!

 

[oldblue]

It's big subject but briefly, a company is not obliged to make a pro-rata issue to all shareholders every time it issues new shares. There are rules to follow of course but it means that a shareholder doesn't always get to keep his or her proportion of the capital.
In NAB's present case, they are making a placement to institutional holders to be followed by an offer to retail shareholders of $10,000 worth of new shares, ie 500 shares each. Note that the offer is not proportional - every holder gets offered $10,000 worth.

 

[nomore4s]

hi,
i'm new to shares and need some advice/help
The announcement yesterday about issuing shares has me confused, as i understand it if a company has 100 shares to sell and i buy 10 of them. If they then they release another 100, shouldn't i be issued with a further 10 so that i maintain my % stake in the company?

If this is correct, (i'm with etrade) will my portfolio jump in number of shares held? or do i have to manually adjust it. (and how do ifind out what numbers need adjusting)

If i'm wrong, ugh, I don't want to think if i'm wrong, i bought when they were 25.10

Thanks for helping!

Magnets got some bad news for you.

The reason they are issuing more shares is to raise capital so they will not be giving out shares to existing share holders for free.

You will get nothing from this round of capital raising unless you buy more shares in the capital raising. Your % holding has been diluted as stated by a few of the other posters.

 

[dlcx]

Another newbie here.. so in a case like this, where the SP of NAB has fallen around 8%, is there potential here to buy some for short term gain?
Is there much chance of NAB going up again (eg by 5% in coming weeks)

Or in such a situation, would it contiune to slide?

 

[YELNATS]

$20 a share was never going to be a very enticing offer to existing shareholders.

With the price around $22-$23 over the past week, they should have been aware that this announcement would have at least a 10% deflationary effect on their share price, which is what has happened now.

A bit of a lose-lose situation. Lose if you don't take it up, lose if you do, or at best only break even.

 

[Ashsaege]

Didn't CBA do a share placement a few months ago? CBA's SP was smashed, but then quickly recovered. I think NAB will follow suit

 

[skc]

Didn't CBA do a share placement a few months ago? CBA's SP was smashed, but then quickly recovered. I think NAB will follow suit

CBA's placement was specific for the BankWest acquisition. NAB's placement is for general shoring up of capital... so can't really compare the two on even footing imho.

 

[dhukka]

Another newbie here.. so in a case like this, where the SP of NAB has fallen around 8%, is there potential here to buy some for short term gain?
Is there much chance of NAB going up again (eg by 5% in coming weeks)

Or in such a situation, would it contiune to slide?

What is the chance of it raining on Saturday? This is essentially what you are asking. What do we know about the current environment? There is great volatility at the moment, moves of 5% a day in either direction are possible, so no doubt there will be rallies that you can trade.

Other things to consider for longer term holders. The current capital raising dilutes existing shareholders by about 9%. Next years eps forecast for NAB was -1% (according to comsec). Given the capital raising, the current news on exposure to insolvent firms, NAB's exposure to CDO's and CLO's, and as we enter the really nasty end of the credit cycle, do you think NAB is more likely to be receiving earnings upgrades or downgrades in the next 6 -12 months? Then, even if you do believe earnings downgrades are forthcoming is it already reflected in the stock price at current levels?

 

[Ashsaege]

CBA's placement was specific for the BankWest acquisition. NAB's placement is for general shoring up of capital... so can't really compare the two on even footing imho.

imho? Sorry I don't know that lingo.

Well yeh cant compare most things on an even footing, though outcomes can still be the same.

 

[oldblue]

imho? Sorry I don't know that lingo.

Well yeh cant compare most things on an even footing, though outcomes can still be the same.

I think it means " In my honest opinion".

Some of this shorthand does take a bit of working out but stangely enough, once learnt it seems to stick!

 

[skc]

imho? Sorry I don't know that lingo.

I think it means " In my honest opinion".

I used it as "In my humble opinion" - but the opinion was also honest

A great function under google is the define: {subject}. Works for lots of acronyms, short hands and financial terms.

 

[Ashsaege]

I used it as "In my humble opinion" - but the opinion was also honest

A great function under google is the define: {subject}. Works for lots of acronyms, short hands and financial terms.

I kinda sound like an old fart who isn't up with today's lingo.. Though actually Im only 22 and I have clocked up many hours over the years chatting on the internet in short hand. IMHO is pretty much the only thing i haven't bothered to learn... i thought it was something similar to LOL

 

[magnets]

IMHO is pretty much the only thing i haven't bothered to learn... i thought it was something similar to LOL

heh
i spent a year trying to work out why my dad would send me emails, sometimes with very serious news in them and end it with LOL

he thought it was Lots of Love.

 

[nth brisbanite]

I've just received my offer to purchase up to $10,000 worth of new NAB shares. The most interesting thing for me is that the offer price will be the lesser of (a)$20 and (b)weighted average price during the 5 days before 12th December. At least I won't be paying $20, and losing money, like the institutions did with NAB's recent $3 billion placement. The current share price is $19.

I'll probably take up the maximum amount as I consider it to be a good buy. What is everyone else on this forum doing?