BRAVE gestures by top executives of Scotland's leading banks have resulted in big personal share losses as confidence has continued to ebb from the sector.
Calculations by The Scotsman show that Royal Bank of Scotland chairman Sir Tom McKillop is now showing a loss of almost £200,000 on shares in the bank he bought as a confidence-boosting gesture just seven months ago.
Andy Hornby, chief executive
at rival HBOS, has lost £126,000 in just ten weeks. And 250 other senior executives of HBOS who embarked on a £6 million confidence-boosting buying spree in March are now showing losses of almost £2m.
On 8 November, McKillop bought 118,000 shares in RBS at 419.5p a share in the hope that the worst of the credit crisis was over. Total cost – £495,010.
As we have tracked on these pages, the "McKillop Share Index" has continued to plunge in value – and the rights issue, successfully concluded yesterday, has added to his agony.
Taking up his allocation – 11 new shares at £2 apiece for every 18 held – McKillop would have had to write a cheque for £144,222 – more than five times the £27,140 dividend he was due to receive last week.
According to the bank, all of the directors took up their rights, so McKillop now holds 190,111 shares. The total cost of the holding would now be £639,232, or 336.24p a share.
When the rights issue was announced on 23 April, RBS shares stood at 360.25p and McKillop was showing a paper loss on his original holding of 14 per cent.
Yesterday, with shares standing at 234p, the chairman's RBS investment (including the rights) was worth £444,859 – a loss of £194,373, or 30 per cent on his total outlay.
There is, of course, the consolation of the dividend cheque. However, RBS has announced that future dividends will be paid – in RBS shares.
Meanwhile Hornby, chief executive of HBOS, is also feeling the pain. Back in March he bought 92,812 shares at £4.46 as a gesture of confidence in the bank. Total cost – £413,941.
Yesterday, with shares in HBOS sliding another 21p, or 6.3 per cent, to 309.75p, Hornby's investment had slid to just £287,485, a loss of £126,456 or 30.5 per cent.
No less than 250 senior HBOS executives are now under water after their buying spree, showing a paper loss of £1.83m.
An HBOS spokesman said the bank's "senior managers are significant shareholders". He added: "They believe in the group's prospects and its business model."
A spokeswoman for RBS said that the directors of the group had "demonstrated their commitment" by fully taking up the rights issue.
The full article contains 470 words and appears in The Scotsman newspaper.
