Alliance & Leicester Share Discussion Threads

[acamas] 20/7/2008 18:59

Customer deposits equal £30 billion and represent 56% of loans. Therefore they must have about £55 billion out on loan. That says to me they have a potential at risk sum of £25 billion less the £6 billion already mentioned means £19 billion grey area which they expect will increase due to banking downturn problems.

Perhaps it was this large sum that spooked The Board into saying yes to the take over.

[acamas] 20/7/2008 18:33

Keith95,

There is something not sitting right here. You say £6 billion they have lent to other banks that they can get access to. I have not seen this figure quoted before. Mr Bennett says he doubts he will be able to borrow money next year to cover the expected increase in the shortfall on their mortgage book.

We need to do some more investigative work.

regards

[keith95] 20/7/2008 16:44

Indieman....

Small does not mean bad.

"Core operating profit excluding Treasury in the first four months of 2008 was similar to the same period in 2007. "

So do we conclude that this statement is false, that the market at any instance refelcts the true underlying value of a share? Absolutely not.

Santander itself notes that AL. falls within its own investment criterion. It is making a killing and seeking value where panic, fear & shorts have obliterated value. Well done Santander, but if you read between the lines, AL. has 6 billion invested with other UK banks, that it can use as cash flow if required.

Were this not the case, Santander would not be buying.

Apart from writedowns, please point me to a statement from AL. that says "we is in sh*t".

As with sub-prime .. they have bought near the top and sold (themselves) near the bottom... IMO.

You can do so for BB., but LLOY as you mention, is tarnished by the sector's woes. Would you be happy if an offer at £4.20 for LLOY was accepted?

I think not.

[indieman] 20/7/2008 16:01

Acamas,

I'm in broad agreement with your comments in post 3344. I just can't see a much higher bid coming in; the risk of unknown nasties is just too high in my view.

Keith,

A credit crunch hits banks hard. A&L is a small bank whoseshares have been trading on a largish bid premium for years. Given their retail business and small size, cashflow problems must be a potential concern for next year. The directors of many banks have been reasonably optimistic about the future; A&L is not alone. That hasn't stopped banks as conservative as Lloyds halving in value in less than a year.

[acamas] 20/7/2008 14:48

Might be that was on the cards if Santander had not come on the scene. Just perhaps A&L were playing for time.

Maybe The Government did not want another B&B type scandal to deal with at this time. Just look how much they themselves are in debt without bailing out another financial institution

[keith95] 20/7/2008 14:07

which begs the question why no RI?

[acamas] 20/7/2008 11:23

It says the same in The Sunday Telegraph. How would the FSA know the true financial position of A&L? Privileged information that forced them to bring pressure to the A&L Board on the take over outcome.

[keith95] 20/7/2008 11:06

from observer:

The Financial Services Authority is understood to have leaned on A&L to accept a takeover by Santander amid fears that credit crunch has much further to run.

Wonder if we can sue FSA ? (Jest)

[keith95] 20/7/2008 10:52

I think the point is that we are guessing.

If AL.'s books had declined by more than 15% they have a duty to inform the market: the proverbial PW.

[acamas] 20/7/2008 10:18

For anyone that is interested there is a very interesting article in The Sunday Telegraph, Business Section page 6 by Philip Aldrick on why The Directors accepted this take over so quickly. In a nutshell a pistol was placed against their heads and they were told what to do. In a year or 18 months time if the bank failed it would be taken over by the government and us shareholders would have got zero. Apparently Mr Bennett being a conservative banker was not prepared to take such a risky gamble in the present climate. The A&L mortgage book this time next year may look worse than it does today. Under such circumstances it did not take long for the board to decide A&L's future. Santander had done the deed a coup de grace.

One other bonus for Santander is that The Government will not expect them to take B&B off their hands. Santander can put forward the case that they have been proactive by not allowing A&L to fall into Government ownership. Therefore one of the other major banking institutions will have the delight of helping the Government with the B&B situation.

[acamas] 20/7/2008 08:03

Keith95,

Why the Board agreed so readily to this take over does leave you wondering just what was lurking in the A&L books. I only bought in recently as a recovery position not primarily for a take over. So even though I have done well I was not expecting a profit quite this soon nor did I particularly want it. I would have preferred a climb back to £6 or more over time.

As it has not come about I am left thinking that financially A&L cannot be too healthy right now. If Santander are going to inject £1 billion into A&L on top of the buy out price and cut jobs. Then in the current climate £3.17p per share must be looked upon as a get out of jail card. I accept it will not be seen that way by investors who have paid £4 or above per share and who can blame them. But these Directors would not have capitulated so readily without reason. imo

regards

Acamas

[keith95] 19/7/2008 15:27

Agreed Acamas ... I sold 30% of the shares I held in the 3.30's and moved it into LLOY @ 2.87.

Its not a great amount I have/had in AL. ... and Santander have played a good game ... just hate losing and not knowing why AL. keeled over so easily leaves lots of questions.

AL. has been around for quite some time ... and survived previous downturns.

[daftvader3] 19/7/2008 09:54

looking at how much other bank shares have risen this week .the share price is proberly where it would of been had there been no offer

[daveram13] 18/7/2008 23:39

Lost a shed load at £12. Will be voting no on principle. This deal is well dodgy......VOTE NO!!!!

[andrewlewis] 18/7/2008 15:07

What is the position of Standard life and other holders of A&L shares. Will they settle for this low price? What can they do?

[davron8] 18/7/2008 11:47

Keith95, it looks as if we have both been sold short on Thus and AL. I have been trying to ave down on a number of other shares but there is a limit to how far one can go.

[keith95] 18/7/2008 10:44

Indieman .... my gripe are the general upbeat comments from AL.

one example

"Alliance & Leicester has made good progress during the first four months of 2008." From may this year.

Reading between the lines ... there has to be some gross problem which AL. have decided not to share with the market which is I believe contrary to their duty to inform shareholders. AL. has not... informed us, so the best we can conclude is that the malaise in share price is down to the wider market which Santander are quite rightly taking advantage of.

Santander are to inject 1 billion cash into AL. If BB. can mange 400 million then AL. should be able to grab the cash it needs from the market given its upbeat statements.

Morover, Sandander point to numerous benefits in taking over AL. which satisifies their "investment criterion"... no surpirse there.

Looking at the number of shares held by AL. management, its no big loss to the majority of them with the exception of two who have significant holdings.

I certainly won't be voting in favour of the offer.... but have seen pretty much the same thing happen with THUS which has been taken over at a large fraction of its true value by C&W under pretty much the same circumstance.

Anyway .. whats done is done: One moves on.

[acamas] 18/7/2008 09:46

Tricky,

I am not am expert on Banco Santander yet but are they not becoming global what with UK, Latin America and Spain. They may be in trouble but I have yet to visit a branch of Abbey that does not need me to queue for five or so minutes. One of the unbreakable rules of high street investment is "put you money in companies with long queues, because it is always a good sign when people are prepared to wait to hand over their own money or draw it out without complaining".

Cash is king at the end of the day

regards

[tricky1992000] 18/7/2008 09:35

deano

i am not convinced santander is on solid ground itself, the spanish economy is looking really really dodgy

[deano1967] 18/7/2008 09:22

No counter offers coming here...lucky to get the offer they did, and it'll be taken. Pity the job losses to come. Management again at fault, like most of the banks top brass, they directed themselves thinking nothing would stop the credit splurges of the last 10yrs.

[tricky1992000] 18/7/2008 09:19

IMF lifts its forecast for UK economic growth over next two years

By Edmund Conway, Economics Editor
Last Updated: 1:10am BST 18/07/2008

The International Monetary Fund has signalled that Britain is likely to avoid recession, upgrading its economic forecast for both this year and the next.

The surprise move came as the Washington-based institution updated its closely-watched economic projections - also sharply increasing its forecast for the US. The Fund raised its estimate for 2008 UK growth from 1.6pc to 1.8pc, and lifted its 2009 projection by 0.1pc points to 1.7pc.

The move will come as a welcome relief for the Chancellor, Alistair Darling, who is preparing to downgrade his own optimistic growth forecasts of 2pc and 2.5pc for this year and next respectively in his Pre-Budget Report this autumn.

However, with many City experts warning that Britain may already be in recession, the revisions may be greeted with scepticism in the Square Mile.
# Comment: IMF looks as irrelevant as some of its forecasts
# More on economics

IMF economist Charles Collyns said the upgrade reflected hopes that the Bank of England's Special Liquidity Scheme and successful capital-raising by banks may help alleviate the crisis.

However, he added: "The flow of data over the past month or so has been quite negative - especially the news on house prices, manufacturing, and consumer and business confidence. On the other hand, the hard data on activity, especially on consumption and employment, has shown considerable resilience.

"Overall, we do feel that the risks to the current forecast are to the downside."

The IMF lifted its 2008 world growth forecast from 3.7pc to 4.1pc, saying that the economy had remained more resilient than expected in the first half of the year. However, it warned that it is still facing some serious challenges from high oil prices, slowing economies and falling house prices in a variety of advanced economies.

The IMF said earlier this year that the Bank of England may have to raise borrowing costs in the coming months, and it repeated this general warning for central bankers in yesterday's update.

A Treasury spokesman said: "The IMF expect all countries to be affected by the current global economic challenges, but the UK economy remains strong, and is well placed for the future. As the IMF recently noted, the UK has 'strong policies and policy frameworks, which provide a strong foundation to weather global shocks'."

However, no sooner had the upgraded UK forecasts been released than Bank of England policymaker Andrew Sentance told Bloomberg that he thinks growth of 1.3pc this year seems a "reasonable summary of my assessment".

[tricky1992000] 18/7/2008 09:17

IMF says no recession in the UK

18 July, 2008

The IMF has said it believes the UK will dodge recession and that global growth will slow further during the second half of 2008 but recover gradually in 2009.

Updated forecasts in the IMF's World Economic Outlook (WEO) also raise inflation projections, particularly for emerging markets and developing countries.

The WEO expects a moderation in global growth from 5% in 2007 to 4.1% in 2008 and 3.9% in 2009. Following a better-than-expected performance in the early part of 2008, WEO projections for the United States, the euro area, and Japan show a slowdown in activity in the second half of 2008.

Expansions in emerging and developing economies are also expected to lose further steam, with growth in these countries projected to ease to around 7% in 2008-09 from 8% in 2007. China's growth rate is expected to ease from near 12% in 2007 to around 10% in 2008-09.

"The global economy is in a tough spot, caught between sharply slowing demand in many advanced economies and rising inflation everywhere, notably in emerging and developing economies," the WEO says.