Another £25bn to add to taxpayer debts

Graham_Devon

A new measure of the scale of our big banks' recklessness in the boom years has been provided in the Treasury's annual report for the past year.

It says that it expects the public purse to incur a loss of £25bn in respect of the Asset Protection Scheme.

That's the safety net provided by the Treasury for Royal Bank of Scotland and Lloyds, which was announced on 19 January as an alternative to full public ownership of these banks.

It involves taxpayers providing insurance to RBS and Lloyds against possible future losses on £325bn of loans and investments made by RBS and £260bn of credit extended by Lloyds.


http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/07/treasury_forecasts_77bn_loan_l.html


It does go on to say that the treasury say this may not cost us a penny, so long as Lloyds and RBS don't suffer any more losses. But, the treasury also say that they expect the banks to suffer more losses.

On the radio, they said this could turn out to be another £400 per head, or £900 per taxpayer.

I'm not sure just how bad it is though, as Robert Peston seems to be covering every angle, good, bad and somewhere in the middle!!

Degenerate

Why is it "another" £25Billion, when it's part of the same lot we've been discussing for the past 6 months?

Thrugelmir

Degenerate wrote: »

Why is it "another" £25Billion, when it's part of the same lot we've been discussing for the past 6 months?

This is hard "cash", lost money. As opposed to being a potential loss.

The question has to be how much of the remaining £585 billion turns into bad debt.

Estimates vary between £40 to £120 billion. No one knows....... Maybe in 10 years time we'll find out.

Degenerate

Thrugelmir wrote: »

This is hard "cash", lost money. As opposed to being a potential loss.

I'm aware that this represents the crystallization of some of the losses we were expecting. My point was aimed at Graham, and bears in general, who like to report the same loss a dozen times over like a new bit of bad news making the situation worse.

mbga9pgf

Ah well, only another couple of zeros on the bill...

Graham_Devon

Degenerate wrote: »

I'm aware that this represents the crystallization of some of the losses we were expecting. My point was aimed at Graham, and bears in general, who like to report the same loss a dozen times over like a new bit of bad news making the situation worse.

It's not the same loss, and we were not necessarily expecting it.

This was not meant to be a loss, thats the whole point.

michaels

So the tax payer sold lloyds and RBS insurance on further default for £10bn and it turns out the payout on this insurance is a min of 35bn. This was not an insurance contract at all it was a subsidy paid directly to the banks. Previously with the equity injection bailouts at least the taxpayer took ownership for our money - this is simply giving the money to the banks - of course with RBS most of the bank belongs to us anyway so there is only a small percentage that can be attributed to private shareholders, with lloyds a lot more is being given to shareholders.

I wonder what the EU will have to say about the scheme?

Thrugelmir

michaels wrote: »

So the tax payer sold lloyds and RBS insurance on further default for £10bn and it turns out the payout on this insurance is a min of 35bn. This was not an insurance contract at all it was a subsidy paid directly to the banks. Previously with the equity injection bailouts at least the taxpayer took ownership for our money - this is simply giving the money to the banks - of course with RBS most of the bank belongs to us anyway so there is only a small percentage that can be attributed to private shareholders, with lloyds a lot more is being given to shareholders.

I wonder what the EU will have to say about the scheme?

Demand the break up of both Lloyds and RBS.

Graham_Devon

Thrugelmir wrote: »

Demand the break up of both Lloyds and RBS.

The competition commission in the EU might force break ups apparently. Something to do with the banks who have had state aid now being in a better position when competing with other banks that have not had state involvement, but at the same time royally ripping off those who saved them, us.

Thrugelmir

Graham_Devon wrote: »

The competition commission in the EU might force break ups apparently. Something to do with the banks who have had state aid now being in a better position when competing with other banks that have not had state involvement, but at the same time royally ripping off those who saved them, us.

But we own them. The more money they make the sooner the shares can be sold back into the market.

As a heavilily indebted taxpayer owing thousands to the UK Government this is something I don't object to.

Graham_Devon

Thrugelmir wrote: »

But we own them. The more money they make the sooner the shares can be sold back into the market.

As a heavilily indebted taxpayer owing thousands to the UK Government this is something I don't object to.

This is the problem, it's a double edged problem.

Should other banks lose out in terms of gaining business because they cannot offer such competitive rates, BUT, they have stood on their own?

Or should we implement competition policies which protect not only the banks we have already protected, but also those who are standing out on a limb, which means taking longer for our tax money to be paid back?

Personally, I would say the whole thing has to be fair.