Itau Unibanco Holding SA ADR Stock Split

Brazilian bank Itau Unibanco(ITUB) has announced a stocks split in the ratio of 1:1 on its ADRs. Holders will receive one additional ADR for each two ADRs held as of the record date. The full details of the stock split are detailed in the notice below.

Itaú Unibanco Holding S.A.

NOTICE TO STOCKHOLDERS

50% Stock Split: Periods and Instructions

Itaú Unibanco Holding S.A. (“Itaú Unibanco” or “Company”) informs its stockholders, in addition to the Material Fact disclosed on May 24, 2018, that the Central Bank of Brazil approved, on October 31, 2018, the resolution taken at the Extraordinary General Stockholders’ Meeting held on July 27, 2018 in connection with the Company’s stock split, to be carried out as follows:

• the current 6,536,090,232 book-entry shares with no par value that comprise the capital stock, 3,305,526,906 of which are common and 3,230,563,326 are preferred shares, will be 50% split. As a consequence, stockholders will receive one (1) new share for each two (2) shares of the same type they own;

• Baseline date: November 19, 2018;

• Trading: As from November 21, 2018, the Company’s shares will be traded ex-rights to the split, and it is certain that these new shares will be included in the stockholders’ position on November 26, 2018;

• Rights of the Split Shares: these new shares will be fully entitled to the earnings to be declared as from November 26, 2018, under the same terms of the common and preferred shares issued by Itaú Unibanco, as applicable;

• Dividends: Monthly dividends will be maintained at R$0.015 per share so that the total amounts monthly paid by the Company to stockholders will be increased by fifty percent (50%) as from January 02, 2019. The annual minimum dividend assured to preferred shares will also be maintained at R$0.022 per share;

• Fractions of Shares: Stockholders may transfer fractions of shares arising from the split in the period from November 26, 2018 to December 26, 2018, and any remaining shares arising from the fractions of shares will be separated, grouped in whole numbers and sold on the B3 S.A. – Brasil, Bolsa, Balcão (B3 – Brazilian Exchange and OTC) on January 11, 2018, and the net amount determined will be made available to the stockholders of these fractions as from January 24, 2018; and

• International Market: the securities traded on the U.S. market (ADR – American Depositary Receipt) will also be split by fifty percent (50%) so that investors will receive one (1) new ADR for every two (2) ADRs they hold on the base date. Accordingly, the ADRs will continue to be traded in the proportion of one (1) preferred share of the Company to one (1) ADR.

Source: Itau Investor Relations

Disclosure: Long ITUB

Banco de Chile ADR Stock Split

Banco de Chile(BCH) is one of the largest banks in Chile. The ADR closed at $88.26 on Friday but reached over $104 in the beginning of this year. According to a new from the depository the ADR will have a split in the ratio of 3:1 soon. The details of the split are noted below:

  • Ticker: Banco de Chile(BCH)
  • ADR Record Date: Nov 15, 2018
  • ADR Payable Date: Nov 21, 2018
  • ADR Effective Date: Nov 23, 2018

The original ADR ratio was one ADS to six hundred Common Shares. This is being changed to a new ratio of one  ADS to two hundred  Common Shares. As a result of this change, ADR holders will receive 2 additional ADRs for each ADR they own as of the record date Nov 15, 2018.

For many years now, BCH has issued two cash dividends and one stock dividend each year. The cash dividends were issued in March and July and the stock dividend also in July. Unlike those dividends, the planned ADR split is being implemented by the depository and not the bank. Lower share prices after the split may drive more liquidity in the ADR trading.

The long-term price return of BCH is shown below:

Click to enlarge

Source: Google Finance

Disclosure: Long BCH

On the Exponential Growth of Money and Credit in the US

The U.S. and majority of the countries in the world no longer follow the gold standard for money creation. Under that standard, a country had to backup its currency with equal amount of gold. That is no longer the case in the US as President Johnson removed the requirement for the Federal Reserve to hold gold to back the money it created. So since then the Fed has the authority to create money as much as it wants. Since it is just paper money billions of dollars could be created out of thin air anytime. An article by Gordon Long on the history of creditism provided some fascinating insights on money and credit. Below is a short excerpt from the piece:

Before 1968, a number of factors constrained how much Money and Credit could be created. Central Banks were constrained in the amount of Money they could create for two main reasons. First, they were required to own gold to back the Money they created; and there was only a limited amount of gold. The second reason was that they feared that too much Money creation would cause inflation.

Credit creation by commercial banks was constrained by the amount of Money created by central banks, and by regulations that required the banks to set aside liquidity reserves against the deposits they accepted. Beginning in 1968, all of those constraints were removed one after another.

Afterwards, Money and Credit Creation exploded.

 

Between 1968 and 2017, the US Monetary Base expanded 53 times, from $66 billion to $3.5 trillion; while total Credit in the United States surged 48 times, from $1.4 trillion to $68 trillion.

Source:  A Concise History Of Creditism , Gordon Long

The key takeaway is that the dollar today is backed by nothing but the faith the government. Explosion of credit has changed the US economy forever.

The World’s Longest High-Speed Train: Video

The longest high-speed train in terms of number of cars started operation in China back in July. The Fuxing train connects Shanghai and Beijing and has a maximum speed of 350 km/hr. It covers the distance of 1,225 kms in 4 hrs and 28 mins. To put this in perspective, its about the same distance between New York and Charleston, South Carolina.

The train has 16 carriages, twice number of regular high-speed trains and offers 1,193 seats. Below is a cool short video about this amazing new train:

Click to enlarge and play:


Source: New China

Animated Map of European High-Speed Rail Network

Europe has the second largest high-speed rail network after China. The following is an animated map of the high-speed network in Europe.

Click to enlarge

Source: GoEuro