You would hardly think so as you survey the wreckage of your holding, but Standard Chartered has been a nice little earner for the City’s fee-harvesters in the last decade, and last week’s £3.3bn rights issue will yield another bumper crop. The two-for-seven call is Stan’s third in seven years, and in return for back-stopping a grand total of £8.5bn, fees will have added up to £180m.
Put like that, the price of around 2 per cent seems almost reasonable, but it disguises the way the underwriters of each issue, who are supposed to bear the risk of being left with unwanted stock, have effectively transferred that risk to the existing shareholders.
Before this week’s announcement, Standard Chartered’s market capitalisation was £18.1bn, with the shares at 715p. The new shares are offered at 465p each, the price to which the old ones must fall before the underwriters risk losing any money. At that price, the market capitalisation would be £15.2bn – including the the £3.3bn of new shares.
It’s possible that Stan’s price will collapse by a more than third in the next four weeks, but if you think that’s going to happen, you should sell every share you own and buy a FTSE100 put with the proceeds. In practice, these terms are a tax on the shareholders, although not on all of them. The biggest, Temasek of Singapore, will take up its 15.8 per cent entitlement, and has gallantly promised to join the underwriting gravy train.
The driver of the train is, as usual, JP Morgan, with Bank of America displacing Goldman Sachs and UBS from the previous issues. Fortunately for them all, there is no sign of anything as vulgar as an outbreak of price competition to disturb this cartel. Bill Winters, formerly of Morgan but now facing the gruesome task of getting Standard Chartered back on the rails, should be proud of his old boys.
Going green with carbon dioxide
There is more oil and gas around than we can possibly use. Having been told for decades that we would run out, it comes as something of a surprise to see BP predicting that there will be more reserves available in 2050 than there are today.
 The advances that have given us fracking, enhanced recovery and deep-water drilling are enough to keep us warm and moving, even before new techniques emerge. Of course, as the oil industry has discovered the hard way, all forecasting is difficult, and if BP’s 35-year predictions turn out hopelessly wrong, the company will not rush to remind us.
However, this is good news for oil consumers (us) and plentiful hydrocarbons make replacing them less urgent. The push for renewables has been driven by worries about “peak oil” on the one hand, and the perils of more carbon dioxide on the other. So if peak oil turns out to mean peak demand, rather than peak supply, this is something of a setback for the wind farmers.
And what if adding CO2 to the atmosphere helps the world rather than threatening to destroy it? This is even more heretical than claiming that we’ve plenty of oil, but Patrick Moore, formerly of Greenpeace and now a thorn in their side, argues that we need more CO2 in the atmosphere, not less, if the earth’s vegetation (which would starve without it) is to thrive. He has been roundly abused by those who claim that the science is “settled”, but it is not, any more than $100 oil was a floor rather than a ceiling.
Sustainable until my share options mature

Dividends matter. They matter more than growth over the long term, and as the City saw goes, capital may keep you warm at night, but you can eat and drink income. Yet like other income, dividends must be earned first, as those running some of Britain ‘s biggest companies seem to have forgotten.

Consider the dividends declared by the five largest constituents of the FTSE100: HSBC, Royal Dutch Shell, BP, GlaxoSmithKline and BAT. Did you spot the odd one out? The only company earning a payout which looks truly sustainable is the one whose customers are, let’s say, the least sustainable.

Of the others, HSBC’s third-quarter statement disclosed “reported” profits up 32 per cent and “adjusted” profits down by 14 per cent, while BP admitted to a $5.8bn loss along with an “underlying” $1.3bn profit. Shell’s third-quarter loss was $7.4bn. Glaxo did at least make a profit, but despite its cheerful presentation this week, it’s doubtful whether it can earn the dividend the board has pledged to maintain.

To claim a dividend is “sustainable” or even “progressive” should mean being earned as far as the management can see, not just until the executive share options mature three years hence. In the last crisis, much of the British banking industry sank beneath the waves with its dividend nailed proudly to the mast. This year’s crisis is mostly in oilers and miners, and the lesson seems to have been forgotten. We shareholders like the prospect of a running return, but if the money is not earned, who is fooling whom?

The curse of the successful CEO
 An uneasy feeling comes over us National Grid shareholders, as Steve Holliday reveals he is to step down as CEO in March. That will be nine years after he stepped up, during which time the shares have returned 136 per cent, impressive indeed for a low-risk utility. However, the return owes something to a re-rating, and the risks seem to be increasing, as the results of our fruit’n’nut energy policy threaten to become apparent if we have a harsh winter. There’s also the old adage about what happens next after a long-serving, successful CEO decides it’s time…
This is my FT column from Saturday. The second piece wasn’t considered PC enough to run…
Advertisements