How will re-capitalisation effect my existing shareholding in the banks?

[Yellow Belly]

I have a substantial sum invested across a spectrum of Irish banks- how will any re-capitalisation effect the value of my shares (which are already on their knees)?

 

[jpd]

Any sums invested in the re-capitalisation will directly reduce the value of your shares held by the existing shareholders, unless the also subscribe (and are given the oppurtunity) to the recapitalisation.

The future profits and dividends will be shared by the existing sharelholders and the new sharesholders so this will automatically diminish the value of the existing shares.

Of course, this might be the lesser of two evils, as in the case that the recpaitalisation fails for some reason, the value of the existing shares could very well be zero.

 

[Padraigb]

Any sums invested in the re-capitalisation will directly reduce the value of your shares held by the existing shareholders ...

I don't think that is necessarily the case. A great deal depends on what scheme of recapitalisation is adopted.

It is difficult to judge if the current market values of the shares reflect even approximately the true values of the banks. Yet the government will have to do its best to ascertain those values.

I suspect the government will recapitalise the banks on terms that leave some value there for existing shareholders (except, perhaps, for Anglo-Irish).

I would not buy bank shares today.