You wait for one rights issue then lots turn up

Apr 23 2008 by Tim Jenkins, Western Mail

NOT even the handout from the Bank of England of a staggering £50bn has been enough to cheer the market so far this week.

In fact, financial news was dominated by the relatively paltry yet record breaking request from RBS for £12bn from its shareholders.

This request isn’t impertinent and it’s certainly not desperate but it is hugely significant.

It’s akin to a bunch of suits at a high-powered meeting where biscuits are served with the coffee. Someone breaks ranks and gets their fist on a chocolate digestive signalling the others to pile in.

RBS is not shy in coming forward and will surely pave the way for more reserved bankers to go cap in hand to their shareholders.

The bank is also considering selling off the family silver which includes jowly insurer Churchill and Direct Line. Possible sales could net RBS an additional £4bn.

Under the rights issue investors will get 11 new shares for every 18 at two quid each. This represented a discount of 46% on Monday’s closing price of £3.72. However in trading yesterday the shares slumped to close at £3.58.

It would appear credit-crunch victims are not limited to top city bankers or over-leveraged homeowners – do spare a thought for the humble London cabbie.

Uncertainty in the Square Mile has hit trading at cab manufacturer Manganese Bronze. Sales have slowed but the company announced a deal yesterday with Tanfield Group to produce a car with zero emissions.

The cost of the new cab will be higher than the existing diesel option and so will face difficulties in breaking into the mass market.

That said, several cities worldwide have expressed an interest in the car and so this could be the start of a new greener black cab. The car will be launched in 2009 and whilst it may be enthusiastically received by hippies and yuppies alike, traders didn’t exactly enthuse yesterday.

Tanfield had a dreadful day hitting a low of 87p from a previous day’s close of 118.5p while Manganese Bronze did a little better, up fractionally to £4.79½. The stock is still streets off the year’s high of £9.50 and is reliant on developing momentum from sales in the Far East.

Oh, I forgot, RBS will be holding its AGM later today. If you go, do help yourself to the chocolate bourbons.