Close Brothers Share Discussion Threads

[datait] 19/2/2024 10:02

Just look at all these buy orders hahahaha this is going blue soon.

[datait] 19/2/2024 10:00

Yep many of you left behind I think hehehehe

[datait] 19/2/2024 09:58

Buy not showing up lol

[datait] 19/2/2024 09:56

Going in for another 40k I think why not

[datait] 19/2/2024 09:56

Blue soon folks buys building up

[datait] 19/2/2024 09:53

watch and weep as I reap the rewards for my bravery hehehehehe

[datait] 19/2/2024 09:51

Dont be greedy now its not going to fall much further if at all. This is a bargain. lidl price lol

[datait] 19/2/2024 09:40

On the turn should go blue folks.

[datait] 19/2/2024 09:31

worth a dabble 10k easy money overdone

[damanko] 18/2/2024 00:13

As I posted several days ago:

A basket case.

And not one reply...

Ho hum.

[riverman77] 17/2/2024 17:57

Yes very cheap, although actually not much cheaper than the far less risky STB (either on P/B or PE basis) so not sure I'd rush to buy just yet.

[petersinthemarket] 17/2/2024 15:49

This is one heck of an share price fall.
Is anyone brave enough to buy at this level?

[tsmith2] 17/2/2024 14:20

it's bonkers when you do the maths

[karv1] 17/2/2024 14:09

If the 165m per year profit after tax is wiped out over the next 2 to 3 years , We will have a company valued at 450m making 165m after tax profits.

[pj84] 17/2/2024 12:28

From the above article:-

"Close Brothers was valued at almost £1.2 billion by the stock market before the FCA announced its review, but it now has market capitalisation of £450 million."

That is a drop in market value of £750m which certainly seems to be pricing in the worst outcome for Close Brothers.

[pj84] 16/2/2024 23:02

"flyfisher 12 Feb '24 - 17:01 - 626 of 727

Any opinions on dividend sustainability."

With hindsight a very prescient question which I didn't pay enough attention too. Having said that, given the reduction in share price that had already happened by the beginning of this week, I probably would still have decided to hold.

Now it is simply a case of waiting to see whether the outcome is better or worse than has already been priced into the share price.

If CBG ends up paying between £150m and £200m or less then I believe this will quickly rerate.

[datait] 16/2/2024 22:56

Very risky 😬

[flyfisher] 16/2/2024 19:14

Capital ratios.
The bank of england estimated in december that to comply with basel 3.1 the sector will need a 2% increase in capital ratios.
CBG have commented that basel 3.1 will increase rwa's by 10%.
CBG have about £600m in tfsme debts to repay, £248m of which is due this year.
CBG have forecast 8 to 10% banking cost growth, and recently have indicated they seek to improve their capital ratios.
They are close to ftse 250 exit, which would bring a rash of index sellers.
I guess they seek to sell the asset management side to boost capital ratios as a preference to a cash call on holders.

[chriss911911] 16/2/2024 15:53

No longer meets "high income criteria", try no income, they canned the whole dividend, to now focus on strong balance sheet, why if they claim it is strong, yet has been falling for 2 years and impairments rising, and an analyst puts the level at 11.6%.

If they thought worst case FCA, means they have headroom on capital they don't bin the dividend entirely, and kill their equity value, especially if they need it to prop up capital in future, they only do it, if they feel they have no choice.

The majority of shareholders cannot hold this stock now that's a major tequila overhang, so they compete bidding down much the same way each day. It's not about quality of income, it's about risk to capital and no income at all and getting out as fast as they can, at what ever price they can which inevitably means share price will keep falling...

[cirlbunting1] 16/2/2024 12:27

Only reason why price is falling is because this stock no longer meets the high income criteria for many funds. Thats it. Talking about capital ratios with an investigation not even concluded or even appealed yet is a farce.

[fevertreeman] 16/2/2024 12:09

FCA and in particular Martin 'multi-millionaire consumer champion' Lewis who's ego in person has to be seen to be believed are the absolute villains here. The Board though has not covered itself in glory at all......pity the staff, who's shares have melted quicker than an ice cube in Riyadh

[elsa7878] 16/2/2024 12:06

A payment for redress of £185 million, net of the £100 million dividend saving would reduce the CET1 ratio to 11.6% below the 12-13% range but manageable through additional capital preservation measures.

The point Chris makes is an important one and not to be taken lightly. That's why I think it likely they will forego the dividend if necessary for 2 years.

Another take.

Berenberg now assumes consumer redress of £250m during FY 2025.

"This simplistically assumes redress equal to 5% of estimated gross loans made during the 10 years prior to 2021 (based on average loans of circa £1.5bn and an average loan term of about three years)," it said.

This equates to around 240 basis points of CET1 capital. After this, Berenberg expects the company to remain within its 12-13% CET1 ratio, with a buffer of around £100m to 12%.

[davius] 16/2/2024 11:34

Poorly written gibberish

3/10

"Chris tries hard but needs to work on his English and Mathematics"

[chriss911911] 16/2/2024 11:29

I would be careful here there is a good reason why the price keeps falling, they need 10.5% capital ratio for regulator reasons, so arguably need at least 11.5%, the analyst estimate mostly 11.5% to 12%, not my numbers, theirs, so sailing to min needed without FCA penalty. What happens if you hit it with 200m of cash overnight, there is not enough capital headroom to meet regulatory requirements or is at the limit, so a capital raise is inevitable, but an if, right now that is the risk to capital.

The yield was so high, because very high risk to be cut without this FCA issue. The risk was even worse of course when it became known, but lets not forget they were already heading to issues with covering dividend with falling capital ratio, and growing impairments, the clues to this debacle were there in the last annual reports.

Using averages is okay, but not in isolation, the carve out to Close is too generous they ean't higher, for longer and deeper across the business, the relative payouts if they come will hit much harder yet they are relatively small institution, so a real problem relatively speaking compare to peers.

What we don't know is the overall FCA ruling. The 99m on divi they were pushing out, was too much and not sustainable causing capital ratio to erode, 50m is more realistic to rebuild capital but hang on we have also maybe 200m to find, too, so maybe forget any dividend for a few years if the penalty does not force a debt/equity raise which at this rate will be for peanuts, killing any chance of a return. They have already hinted of no dividend next year, dependant on FCA ruling.

Why would invest for a small return, when the value was all in predictable income, take that away, and add in high capital risk, then there is not much value in the shares, because if you win, you might get back to £600m market cap, if you lose, you could see a heavily diluted capital position, sub £200m, risk reward is unbalanced.

If you cannot pay cash out because you don't have the capital coverage, and they think they will not, which is why divi cancelled, otherwise they don't do it.

This is not a capital gain thing, it is a structured income investment which yields income, it is not the same thing as a growth share, far from it, it's value, is ability to achieve income for investors, and low risk to capital, both are clearly in a very bad place. The funds holding this will not want to be holding it, if the FCA issues proves more divisive, or it impedes the quality of their reported yields, to them which is the case already. It's is worth more than the share price, so anyone's guess how low they are willing to go, and right now they have a lot more to say on the topic judging by the continued action down as there is an awful lot of shares to dump yet, so this is going to get ugly and desperate, which is why the price continues to collapse.

What would make anyone buy, certainty on FCA, what would make anyone buy without that, pure speculation on what the FCA outcome will be, so not invest able in short.

[cirlbunting1] 16/2/2024 10:38

So interesting. A company who has weathered all economic downturns throughout history is now plagued by 'potential fines' when car rates were at an all time low. You could get rates at 0-3.5% back then easily. Now, you would be lucky to get a rate below 7% on a new car (and GL getting a rate below 10% if it's second hand). Thats the crime. Now. Next FCA will be looking into mortgages etc.