Ahh yes. Another week, another bank post.
Yet another Canadian bank issues a share offering in these depressed times to raise capital.
As I said in another post, when a bank - this time the mighty Royal- offers to sell itself off at a time when it's share offerings will raise dramatically less than just 8 month ago, you take notice because it is not a good sign.
Should we panic... nope. Should we take notice... yep.
Take a look at the comments of Bloomberg.com (in bold) on the subject.
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Dec. 9 (Bloomberg) -- Canadian stocks fell the first time in three days, led by financial companies, after Royal Bank of Canada said it will sell stock at a discount to shore up capital reduced by writedowns related to U.S. debt investments.
Royal Bank paced finance shares’ biggest drop since Dec. 1 after announcing the sale of as much as C$2.3 billion ($1.84 billion) of stock. The move overshadowed a deeper-than-forecast interest rate cut by the Bank of Canada, which said that the nation’s economy is “now entering a recession” as the global slump deepens.
“Royal’s issue has shaken market confidence a bit,” said Michael Sprung, president of Sprung & Co. Investment Counsel, which manages $50 million in Toronto. “The public’s constantly told how strong the banks are, and yet they have to come to market at depressed prices. It’s not good for shareholders.”
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It's also your first warning sign that everyone might not be quite as strong as they would lead you to believe.
Yet another Canadian bank issues a share offering in these depressed times to raise capital.
As I said in another post, when a bank - this time the mighty Royal- offers to sell itself off at a time when it's share offerings will raise dramatically less than just 8 month ago, you take notice because it is not a good sign.
Should we panic... nope. Should we take notice... yep.
Take a look at the comments of Bloomberg.com (in bold) on the subject.
==============================
Dec. 9 (Bloomberg) -- Canadian stocks fell the first time in three days, led by financial companies, after Royal Bank of Canada said it will sell stock at a discount to shore up capital reduced by writedowns related to U.S. debt investments.
Royal Bank paced finance shares’ biggest drop since Dec. 1 after announcing the sale of as much as C$2.3 billion ($1.84 billion) of stock. The move overshadowed a deeper-than-forecast interest rate cut by the Bank of Canada, which said that the nation’s economy is “now entering a recession” as the global slump deepens.
“Royal’s issue has shaken market confidence a bit,” said Michael Sprung, president of Sprung & Co. Investment Counsel, which manages $50 million in Toronto. “The public’s constantly told how strong the banks are, and yet they have to come to market at depressed prices. It’s not good for shareholders.”
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It's also your first warning sign that everyone might not be quite as strong as they would lead you to believe.
