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Common shares at the lower end of the stocks price

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common shares at the lower end of the stock’sprice band once Unity SFB goes public. Sincepreferred stock delivers pre-set dividends (of 1%per year in this case) before other shareholdersget any, it resembles debt—so long as the banksurvives and profits are made. This debt-likerisk profile makes it better suited than regularequity as compensation for entities that hadeffectively lent PMC money by placing deposits.These entities may or may not wish to becomeshareholders of the resurrected bank, of course,but such a scheme beats imposing a major hair-cut on all big depositors. A simplified version ofthis plan may even serve as a model for futurecases of insolvent-bank bailouts. An 80:20 splitbetween preference and ordinary shares, how-ever, could be avoided to reduce complexity.Once a firm precedent is set for turning a bank’sentire liability to other entities into assets ofownership offering a conditional-but-priorityyield, say, client-creditors would be clear aboutwhat to expect. Retail repayment schedulesshould also be less jagged. All said, a simplerplan could shape people’s perceptions of howmoney gets recovered from bust banks that aretaken over. This would boost public confidence.A simpler plan could bea model for future casesRBI’s proposal for PMC Bank rescue seems broadly fair, with retail depositors offered moneyback, and others, shares in the bank bailing it out. A simplified version could act as a guideOURVIEWEXCLUSIVEPARTNERNewDelhi, Mumbai,Bangalore,Kolkata,Chennai,Ahmedabad,Hyderabad,Chandigarh*,Pune*Thursday, November24, 2011Vol.5No.279`3.0032PAGESSENSEX15,699.97æ365.45NIFTY4,706.45æ105.90DOLLAR`52.36Æ`0.06EURO`70.06æ`0.65GOLD`28,665æ`115OIL$107.42æ$0.91Cyrus Mistry is 43years old, youngerthan what Ratan Tata waswhen he took over at thehelm of the Tata group in1991. His appointmentwill be part of a largergenerational shift in theTata group, after leader-ship changes in many ofthe operating companies.Mistry’s record is notvery well known. So hewill have time on hisside, but also the burdenof high expectations.After all, he steps intothe shoes of a manwho has transformedthe Tata group.Ratan Tata globalizedthe group and also cen-tralized it, the latter onlyafter bruising battles withthe men who ran largeTata companies, all closeassociates of J.R.D. Tata.One big question ishow Mistry will run thegroup: A loose federationin the J.R.D. style or morecentralized in the Ratanstyle? Will Mistry focuson capital allocation andgroup strategy, and stayhands-off at the level ofindividual companies?Investors will watchwhat choice is made.QUICKEDITThenewTatabossCHANGE OF GUARDSurprisepickMistrytosucceedRatanTataBPRSJSK·························After an internationalsearch and reports ofwell-known global chiefexecutive officers (CEOs) be-ing considered for the job, theTata group decided to play itsafe and picked a member ofthe family that has a signifi-cant shareholding in holdingcompany Tata Sons Ltd as thesuccessor to the group’s cur-rent chief Ratan Tata.

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Term
Fall
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Square foot, Square yard, Rajiv, Neighbourhoods of Delhi

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