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AVIVA prefs offering v. good value for a v. good reason...

Gilts, bonds, and interest-bearing shares
Tara
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Re: AVIVA prefs offering v. good value for a v. good reason...

#297448

Postby Tara » April 3rd, 2020, 4:14 pm

ChrisNix wrote:
GoSeigen wrote:
ChrisNix wrote:Do you hold any NWBD -- payment due today, I think?

CN


Good to see you back BTW. Yes, have a few NWBD and have added recently sub-120p. You?

GS [Talking to myself here, of course.]


I hold a fair number. Bargain hunting elsewhere at mo, but think they're great value at these levels.

CN



So if you think that NWBD are great value at these levels, do you think that there is very little risk of the situation for RBS becoming much worse?

What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.

In such circumstances RBS may require a bail-in or it may be fully nationalised. Do you think that the risk of such things is very small? Is there no chance of these things happening? Many economists are forecasting a depression now.

Do you think that NWBD would still have any value if any of these things happened?

GoSeigen
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Re: AVIVA prefs offering v. good value for a v. good reason...

#297481

Postby GoSeigen » April 3rd, 2020, 5:25 pm

Tara wrote:What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.


Would you mind demonstrating this with actual figures from the balance sheet of one of the main banks?

GS

Tara
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Re: AVIVA prefs offering v. good value for a v. good reason...

#297556

Postby Tara » April 3rd, 2020, 10:04 pm

GoSeigen wrote:
Tara wrote:What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.


Would you mind demonstrating this with actual figures from the balance sheet of one of the main banks?

GS



It is self-evident.

Shareholder Equity = Assets - Liabilities.

When the loan assets of a bank default in a depression, the assets of the bank will soon be worth less than the liabilities.

The shareholder equity will be wiped out and the bank will become insolvent.

Take a look at this as a quick primer.

https://positivemoney.org/how-money-wor ... insolvent/

GoSeigen
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Re: AVIVA prefs offering v. good value for a v. good reason...

#297587

Postby GoSeigen » April 4th, 2020, 7:52 am

Tara wrote:
GoSeigen wrote:
Tara wrote:What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.


Would you mind demonstrating this with actual figures from the balance sheet of one of the main banks?

GS



It is self-evident.

Shareholder Equity = Assets - Liabilities.

When the loan assets of a bank default in a depression, the assets of the bank will soon be worth less than the liabilities.

The shareholder equity will be wiped out and the bank will become insolvent.

Take a look at this as a quick primer.

https://positivemoney.org/how-money-wor ... insolvent/


Sorry I know the UK banks and it is not self evident to me, which is why I asked you to demonstrate what you were claiming with actual figures from the accounts. [This is not a question about generalities so the above does not cut it.]

Many thanks.

GS
[EDIT: In the case of LLOY for example Loans are only a fraction of Liabilities and Shareholder Equity > 10% of Loans, ...but I'd very much like to know where I am going wrong.]

ChrisNix
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Re: AVIVA prefs offering v. good value for a v. good reason...

#298220

Postby ChrisNix » April 6th, 2020, 11:28 am

GoSeigen wrote:
Tara wrote:What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.


Would you mind demonstrating this with actual figures from the balance sheet of one of the main banks?

GS


It is easy to pluck numbers of out the air, but without specifying which assets you're referring to, and the average recovery rate it;'s pretty meaningless.

A depression is rather an extreme scenario, and if you think it realistic I'd stick to three month US Treasuries.

CN

ChrisNix
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Re: AVIVA prefs offering v. good value for a v. good reason...

#302486

Postby ChrisNix » April 22nd, 2020, 1:13 pm

GoSeigen wrote:
Tara wrote:What if bank loan defaults reach say 10% in the next recession or depression? And even 10% would be a very optimistic default rate for bank loans in a depression. This would be enough to wipe out all of the UK banks equity several times over.


Would you mind demonstrating this with actual figures from the balance sheet of one of the main banks?

GS


Dividends received, so seems all good for the time being.

everhopeful
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Re: AVIVA prefs offering v. good value for a v. good reason...

#351079

Postby everhopeful » October 27th, 2020, 3:18 pm

Good to see Aviva getting a telling off from the FCA for the pref debacle. Interesting that Aviva never intended to cancel their prefs at all. Whatever, it must be good for the stability of prefs in the future.

Alaric
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Re: AVIVA prefs offering v. good value for a v. good reason...

#351082

Postby Alaric » October 27th, 2020, 3:23 pm

everhopeful wrote:Good to see Aviva getting a telling off from the FCA for the pref debacle


A google search for "fca aviva" finds the FT's report.

The headline is
Aviva censured by UK regulator over preference share debacle

swill453
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Re: AVIVA prefs offering v. good value for a v. good reason...

#351084

Postby swill453 » October 27th, 2020, 3:24 pm

everhopeful wrote:Good to see Aviva getting a telling off from the FCA for the pref debacle. Interesting that Aviva never intended to cancel their prefs at all.

Interesting that that part, specifically, is what they were censured for i.e. giving the impression they were going to cancel, but not (really) intending to.

If they had followed though and actually cancelled them, they wouldn't have had this censure.

https://www.fca.org.uk/news/press-relea ... les-breach

Scott.

Alaric
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Re: AVIVA prefs offering v. good value for a v. good reason...

#351097

Postby Alaric » October 27th, 2020, 4:12 pm

swill453 wrote:Interesting that that part, specifically, is what they were censured for i.e. giving the impression they were going to cancel, but not (really) intending to.


There are those who argue the toss that the term "irredeemable" doesn't preclude mandatory repayment at par. One might suspect that included some of Aviva's then senior management even if it's now denied that they intended to implement their threat.

88V8
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Re: AVIVA prefs offering v. good value for a v. good reason...

#351303

Postby 88V8 » October 28th, 2020, 11:54 am

Thirty months since Aviva's bum announcement.
The FCA makes glaciers look dynamic.

V8

ChrisNix
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Re: AVIVA prefs offering v. good value for a v. good reason...

#355200

Postby ChrisNix » November 10th, 2020, 12:47 pm

swill453 wrote:
everhopeful wrote:Good to see Aviva getting a telling off from the FCA for the pref debacle. Interesting that Aviva never intended to cancel their prefs at all.

Interesting that that part, specifically, is what they were censured for i.e. giving the impression they were going to cancel, but not (really) intending to.

If they had followed though and actually cancelled them, they wouldn't have had this censure.

https://www.fca.org.uk/news/press-relea ... les-breach

Scott.


FCA looks down on kite flying!


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