How safe is RBS?

rb10

Geoff_W wrote: »

My wife and I have banked with NatWest for decades. All of our income streams (pensions etc.) are paid into our current account. My wife also has over £8,000 of working capital in a NatWest E-Savings account.

My question is this....

Should we hope for the best or bail out of this dead duck asap. Having just recovered from being caught up in the IceSave debacle, I'm not sure we want to go through all that again. There seems to be nowhere safe for money these days!

Geoff

But do you want to have that much money in Natwest?? Unless the e-saver was opened when they had the recent promotion, you can get much, much better rates elsewhere. And, do correct me if I'm wrong, but doesn't the Natwest current account pay 0.1% interest? That's way behind the times, it's quite easy to get higher rates of interest on the money in your current account. Even if the money's not there for long, the interest that you are losing here does mount up.

cottager

Apologies to the OP for wandering off the point, but there's something I've been wondering about NatWest (purely for interest) which I've never heard a reference to in the media since all the banking woes started occupying everyone's attention a few months ago.

Does anyone know if the NatWest part of the operation is in the mire just as much as the RBS parent? What I guess I'm trying to get at is what their situation would be if they were still independent: would we be looking today at a bank in as much of a hole as most of the others, or is the mess more on the RBS side? I don't mean would NatWest be smelling of roses or blameless right now, and I know it's academic, but as a longstanding customer I'm just curious to know how their part of the ship compares with RBS. Or is it hard to tell since they became part of the larger group?

Andrew64

On Monday Fitch downgraded RBS's credit rating:

http://www.easybourse.com/bourse-actualite/marches/press-release-fitch-downgrades-rbs-group-individual-rating-599472

"Fitch Ratings-London-19 January 2009: Fitch Ratings has today downgraded The Royal Bank of Scotland Group plc's (RBS Group) Individual rating and that of its main operating subsidiaries The Royal Bank of Scotland plc (RBS plc) and National Westminster Bank plc (NatWest) to 'E' from 'B/C'. NatWest's Individual rating has been subsequently withdrawn."

In other words Fitch regards RBS and NatWest as having exactly the same risk!

SouthCoast

How safe is RBS?

Ask this guy:

Now there’s Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland. After yesterday’s extraordinary events, some will feel that Sir Fred is the leading contender for the title of world’s worst banker.

The case against him is lengthy. RBS, which Sir Fred ran until October, has so far swallowed more public money than any other British bank — £20 billion and counting — and yesterday it announced the biggest loss in British banking history, between £7 billion and £8 billion. Two years ago RBS was worth more than £75 billion; now it is worth a paltry £4.5 billion.
It was also discovered that RBS was part of a group that offered a £2.8 billion loan to Oleg Deripaska. The oligarch, who has links to Lord Mandelson, the Business Secretary, and met George Osborne, the Shadow Chancellor, in Corfu last summer, used the money to buy the Russian metals firm, Norilsk Nickel.
Eyebrows were also raised when it was discovered that RBS had lent £2.5 billion to Leonid Blavatnik, a Russian oligarch who wanted to expand his chemicals business empire. The entire debt had to be written off because LyondellBasell, one of Mr Blavatnik’s foreign companies, was near to collapse. The money was lent to Mr Blavatnik by the Dutch bank ABN Amro, which was later taken over by RBS as part of its dramatic expansion strategy, led by Sir Fred.
Then there is the gulf between Sir Fred’s personal financial prospects and those of the wider population. He was paid about £30 million in his decade at RBS. He waived a £1.2 million payoff, but still left with a pension pot worth an additional £8.4 million.

http://business.timesonline.co.uk/tol/business/economics/article5549510.ece

Mike1989

Not exactly surprising that they consider RBS and NatWest as having the exactly same risk. RBS owns NatWest and therefore if RBS collapses so would NatWest. But no idea whether NatWest are any safer or would be in any better position. As we coudln't just say remove RBS ownership and what would happen. Because there have been 'x' amount of years since the takeover, and no one can really predict how NatWest would have handled themselves during that period.Would they have done a Halifax or would they have gone done a safer route. Lots of variables and too hard to tell really. But I guess they would be as equally vunerable as other banks.

As for NatWest rates they are pretty lousey at the moment compared to other banks.

sabretoothtigger

Natwest was churning out 2bn profits every year over a decade ago.

It would be like throwing a grand piano on the fire to close down a long term successful bank like that, I think the branches, etc would be split off and sold like happened with b&b

royeee

cottager wrote: »

Apologies to the OP for wandering off the point, but there's something I've been wondering about NatWest (purely for interest) which I've never heard a reference to in the media since all the banking woes started occupying everyone's attention a few months ago.

Does anyone know if the NatWest part of the operation is in the mire just as much as the RBS parent? What I guess I'm trying to get at is what their situation would be if they were still independent: would we be looking today at a bank in as much of a hole as most of the others, or is the mess more on the RBS side? I don't mean would NatWest be smelling of roses or blameless right now, and I know it's academic, but as a longstanding customer I'm just curious to know how their part of the ship compares with RBS. Or is it hard to tell since they became part of the larger group?

Everything you read/hear from the media or the company itself refers to the RBS /Group/. Natwest was retained when RBS took over as a brand name so its business and branches were intergrated along with RBS itself into the RBS Group. So if RBS Group is down everything within it is down.

cottager

Interesting... thanks to all.

royeee wrote: »

So if RBS Group is down everything within it is down.

Yes, appreciate that, so it looks like a 'cannot answer' question as we can't tell...

Maybe it's not been said in so many words, but we've always had the impression from OH's business manager over the past few years that as far as possible NatWest, given certain constraints as they have 'masters' to answer to, has continued to 'get on with its own business', and more or less had the freedom to do that; and indeed have successfully argued the toss with RBS on certain matters to go one way when RBS wanted them to go another.

Whether that's the same now in the current climate, I wouldn't know... or even if it was an accurate impression in the first place on our part.

Count_Dante

Andrew64 wrote: »

On Monday Fitch downgraded RBS's credit rating:

http://www.easybourse.com/bourse-actualite/marches/press-release-fitch-downgrades-rbs-group-individual-rating-599472

"Fitch Ratings-London-19 January 2009: Fitch Ratings has today downgraded The Royal Bank of Scotland Group plc's (RBS Group) Individual rating and that of its main operating subsidiaries The Royal Bank of Scotland plc (RBS plc) and National Westminster Bank plc (NatWest) to 'E' from 'B/C'. NatWest's Individual rating has been subsequently withdrawn."

In other words Fitch regards RBS and NatWest as having exactly the same risk!

Er, an 'E' credit rating would suggest RBS is a disaster area.

Geoff_W

rb10 wrote: »

But do you want to have that much money in Natwest?? Unless the e-saver was opened when they had the recent promotion, you can get much, much better rates elsewhere. And, do correct me if I'm wrong, but doesn't the Natwest current account pay 0.1% interest? That's way behind the times, it's quite easy to get higher rates of interest on the money in your current account. Even if the money's not there for long, the interest that you are losing here does mount up.

Yes, the E-Saver was opened with a 2.1% bonus attached.

I know Natwest pay a derisory 0.1% on their current account and we have looked into changing. All spare cash is transferred to higher paying accounts asap. We do have a Nationwide account, but they've recently reduced the rate on their Flex account to 0% unless I pay in more than £1,500 per month, which is not possible at present. Other providers such as A&L or Abbey I wouldn't touch with a bargepole.

Besides, on our income, we calculated that we would gain about £5 a year in extra interest - it just wasn't worth the hassle.

Geoff