Two-thirds of eligible TD Waterhouse investors take up RBS rights

Angus Rigby, Chief Executive Officer, TD Waterhouse comments: "Royal Bank of Scotland (RBS) has led the field with its record £12bn rights issue and, understandably, has been the focus of our customers trading activity for the last few weeks. Initial figures show that around 67% of TD Waterhouse retail investors (eligible for the RBS Nil Paid Rights) have chosen to take up their rights to buy the extra shares.

"We have also seen a large number of customers (who are existing RBS shareholders) trading their Nil Paid Rights - the right to buy the additional shares. This has resulted in RBS Rights appearing as our number sell for the week; although some of these trades can be attributed to ‘tail swallowing' - in which a proportion of rights are sold to enable the shareholder raise money to exercise their remaining rights.

"This strategy could also play a key role in HBOS's impending rights issue, of which further details were announced this week. The bank is offering private shareholders a free share dealing service, which is not available to certificated shareholders who wish to ‘tail-swallow'. Neither will HBOS guarantee that the price obtained through its free dealing service will match the price obtained by a non-HBOS broker, this could lead some shareholders choosing to pay to trade through another broker in order to get market prices.

"Elsewhere, the spot light fell on Bradford and Bingley (B&B) this week, whose shares went south on Monday as it announced an £8m pre-tax loss in the first four months of 2008 compared to a £108m profit in the same period last year. In addition to calling for more cash from shareholders through a rights issue, B&B will also sell a quarter (23%) of the business to US private equity firm Texas Pacific Group

"Our retailer investors were split over the prospect of a cheap price and longer term performance of the Britain's biggest buy-to-let lender. B&B's initial rights issue proposal at 82p has already been abandoned and replaced this week at a reduced price of 55p, and it remains to be seen how successful both HBOS and B&B will be at wringing money from their shareholders."