TheChek News Flow

Royal Bank of Scotland (RBS) has accelerated talks about a legal settlement with thousands of former investors, weeks before a trial that would see former chief executive Fred Goodwin called to give evidence.

Sky News has learnt that RBS's lawyers have been in negotiations with the RBoS Shareholder Action Group during the last 48 hours in a bid to resolve the final remaining claim relating to a £12bn cash call in 2008.

Talks were understood to be continuing on Friday, although one source put the chances of a successful resolution before a trial at "no better than 50-50".

The development comes just days after the judge overseeing the case ordered the claimant group to disclose further details of its funding amid concerns that it would be unable to cover legal expenses if it loses.

Mr Goodwin, along with Sir Tom McKillop, the former RBS chairman, are named alongside the state-backed bank as defendants in the case.

If the case does go to trial - which is scheduled to start in May - it would represent the fullest account that Mr Goodwin and senior colleagues would have given about the precursor to a crisis which saw £45.5bn of taxpayers' money injected into RBS.

The Government continues to own more than 70% of the bank, and there appears to be little prospect of it ever recouping the money it paid to rescue RBS.

The terms of any agreement between the two sides were unclear on Friday, although sources said they were unlikely to see any improvement in RBS's existing offer, which would see only a fraction of the group's £1.2bn claim paid out in settlement.

A number of institutional investors participating in the RBoS Shareholder Action Group are nevertheless said to be keen to pursue a settlement, and have made their views clear to Signature Litigation, the law firm handling the case.

Prominent investors including Aberdeen Asset Management and AXA are members of the group, which in total has signed up 27,000 former RBS shareholders as participants.

Most of them were ordinary retail investors who lost money after subscribing to the bank's £12bn rights issue in the spring of 2008.

In December, RBS reached agreement with three of the five shareholder groups suing it for allegedly misrepresenting its financial health.

It said at the time that it was "willing to make available settlement sums of up to £800m assuming settlement of all claims, to be split among all five shareholder groups, subject to agreement and claim validation".

Since then, it has reached a deal with another group, represented by the law firm Leon Kaye, leaving the RBoS Shareholder Action Group as the only remaining litigant.

Vowing to press on towards a trial, the RBoS Group said in December that: "We had no option but to reject this inadequate offer and remain committed to seeking justice for our members through the courts."

RBS declined to comment on this week's talks, but said in a statement: "RBS has set aside £800 million assuming settlement of all claims in its 2008 Rights Issue litigation, to be split among all five shareholder groups.

"The bank has reached terms with four of these groups - representing almost 80% of the value of the claim - and agreed a full and final settlement without any admission of liability."

To date, more than £100m has been spent by the bank defending the claims, a bill which includes the legal costs of Mr Goodwin and other former directors.

En effet, dans la grande tradition saoudienne d’ambiguïté quant aux véritables intentions de Ryad, souvent des annonces ayant trait à sa politique énergétique sont faites par des tiers experts liés au pouvoir. Or, l’urgence de l’annonce a coupé court à la tradition et amené directement dans la mêlée le gouvernement des Saouds. En effet, l’enjeu est de taille car le prix du brut a connu une chute de 10% en une seule semaine frôlant les 50 USD le baril. L’index américain du brut est même descendu de 11% pour descendre en deçà du seuil psychologique des 50 USD pour finir à 47 USD le baril. La remontée des cours depuis fin 2016 n’a donc pas duré.

Cette baisse des cours est d’autant plus préoccupante que l‘Arabie Saoudite est sur le point d’offrir jusqu’à 5% de son joyau national, la compagnie pétrolière ARAMCO aux marchés dans le cadre d’une introduction en bourse, probablement sur la bourse de New York. C’est du moins ce qui laisse présager la récente rencontre à Washington entre le Vice-Prince héritier Mohammad bin Salman et le Président américain. Une baisse soutenue des cours ne présage rien de bon pour la valorisation de cette société en bourse ni d’ailleurs pour le budget saoudien, fortement tributaire des recettes pétrolières. D’où la très grande inquiétude des Saoudiens.

Cette situation est principalement due à la facturation hydraulique des gisements de gaz de schiste. Les experts considèrent que la production américaine à horizon 2020 dépasserait la capacité maximale de la production saoudienne pour atteindre 11 millions de baril/jours soit 2 millions de baril de plus que la production actuelle et 1 million de baril de plus que la capacité maximale saoudienne se situant à un peu moins de 10 millions baril/jour. Triste ironie du sort que cette situation que Ryad avait essayé d’éviter en inondant le marché de son pétrole à bas cout d’extraction afin de pousser vers la faillite les producteurs de gaz et de pétrole de de schistes par manque de rentabilité. Or cette stratégie a eu l’effet inverse en incitant ces mêmes producteurs à améliorer leurs performances technologiques. Ainsi aujourd’hui le coût d’extraction de pétrole de schiste se situe à un seuil inférieur à 50 US le baril. Non seulement les Etats-Unis ne dépendent plus des importations pétrolières mais sont devenus de surcroit des exportateurs de brut. Ils disposent aujourd’hui dans le Bassin Permien qui s’étend sur l’ouest du Texas et le sud-est du Nouveau-Mexique d’un des gisements les plus importants d’hydrocarbures au monde.

La tragédie pour les Saoudiens réside aussi dans le fait que face à cette explosion de la production énergétique américaine, il n‘y a pas une augmentation de la demande mondiale en face. En effet, la demande de la part des pays importateurs ne saurait dépasser le million de baril/jour d’ici 2020 contraignant les Saoudiens a encore baisser leur production s’ils ne veulent pas voir les cours pétroliers s’écrouler. Ceci est sans compter sur le retour de la production iranienne qui a rajouté un peu moins d’un million de baril/jour à sa production depuis la fin des sanctions internationales frappant son secteur énergétique le 16 janvier 2016. Ce pays voudra surement augmenter sa production pour rattraper le temps perdu des années d’ostracisme dont il a fait l’objet. D’ailleurs le dernier accord des pays membres de l’organisation des pays exportateurs de pétrole (OPEP) n’a pas exigé une baisse de la production chez les Iraniens. Demain, il en ira de même pour l’Irak qui une fois Daech mis hors d’état de nuire voudra exporter encore davantage sa production afin de pouvoir mener à bien la reconstruction des infrastructures détruites du pays.

Cette situation de baisse des cours ne présage de rien de bon pur l’Arabie Saoudite qui a besoin d’un maximum de recettes pour maintenir la paix sociale sur un plan domestique et contrecarrer l’émergence inéluctable de l’Iran comme l’hyper puissance régionale au Moyen Orient. Avec la chute de ses réserves pétrolières, l’Arabie Saoudite avait déjà fait en 2015 l‘objet d’une alerte de la part du Fonds Monétaire International : faute de restriction budgétaire ce pays allait être dépourvu de réserves financières à horizon 2020 même si depuis la situation semble s’être améliorée avec la hausse des cours pétroliers.

Les Saoudiens vont vite comprendre que les jours noirs ne sont pas derrière mais devant eux.

Marmite manufacturer is not a national champion and shareholders should be free to sell

Time to raise a Magnum Black to Warren Buffett and his Krafty krew. In a single month, they have added £20bn to the wealth of Unilever shareholders, without our having to do anything, let alone agonise over whether Dove is a national treasure or a commercial enterprise.

The share price is now above the (presumably) sighting shot of $50, which shows how clever Mr Buffett was to spot an undervalued business. Whether by luck or judgment, Unilever CEO Paul Polman had his defences in place, allowing him to set off a fine display of defensive fireworks without breaking Takeover Panel rules.

We don’t need Kraft; we have our own version of zero budgeting; we’ve got plans to bring the future nearer and we’ve got so much capital that we could borrow to give some away. This is called “making the balance sheet more efficient” and next to an actual takeover, it’s what investment bankers like to do best.

What’s more, it can be worth doing for the company too. Unfortunately for the bankers’ bonuses, it’s hard to see why in this case. Risk capital allows more risk, to reap higher long-term rewards. The chart of the Unilever share price looks less like one for a steady supplier of soaps and fats to the world than that of a dotcom rocket, only measured in decades rather than months. Over the years, investors who have taken their capital out of the business have lived to regret it.

Yet despite this record, Mr Polman still feels Unilever has had a lucky escape from the ravening beasts of Kraft. The takeover rules are strict about forward-looking statements, and he was fortunate to have sufficiently worked-through plans to respond immediately without breaking them.

Now he wants those rules to be tilted towards the defence of “national champions”. Never mind that Unilever’s structure already makes it a dual-nationality champion, this is a thin argument. The Marmite manufacturer is not a national champion but a commercial business owned by its shareholders. If they collectively decide to sell it, they may be misguided but should be free to do so.

There are always things that a big company can do better, and jolts like this provide the impetus to find them. Mr Polman should thank Mr Buffett and keep Unilever looking to the long term. It seems to work.

Our money down the drain

Macquarie is finally cashing in its Thames Water chips. The investment bank has made a stonking return from a low-risk investment, although exactly how stonking is hard to say. Infrastructure consultant Martin Blaiklock, a careful analyst of opaque utilities, puts it between 20 and 27 per cent annualised over the decade of ownership.

He can’t be more accurate, he says, because it’s unclear about a little matter of where a £500m dividend went when Macquarie bought the business from RWE. Then, the last vestiges of transparency disappeared via the Cayman Islands, leaving Thames Water Utilities, which actually runs the water, submerged under seven corporate layers.

The steady replacement of equity with debt contributed to Thames’ inability to pay for the super-sewer now starting to grind its way under the river. A separate company, also Macquarie, was needed, offering the prospect of more specialist, opaque financial engineering now the Thames Water game is over. Not for nothing is Macquarie dubbed Australia’s version of Goldman Sachs.

He’s blue as well as purple

It’s hard to blame the executives at Purplebricks, the new model estate agent, for selling a slug of their holdings. The shares had more than doubled since Christmas when in February the company announced plans to conquer America, raising £50m at 220p a share, a small discount, to pay for the adventure.

The price carried on, mysteriously, all the way to 360p ahead of this week’s shareholders’ meeting to approve selling the new shares to outsiders rather than to existing owners. They’ve since come back to 307p and on Thursday the executives placed £24m-worth at 300p. Spare a thought, though, for lettings director Richard Jacques. On January 20, he sold 35,000 shares at 160p. Seven days later, after the price hit 193p, the company issued a “no idea why” statement. How true.

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