REFILE-UK taxpayer moves into black on bank stakes

tomterm8

Sorry, Stevie, I think this is the information you asked for http://www.imf.org/external/np/exr/key/pdf/061710.pdf / (p3 and p4)

WARNING: you can't directly compare different countries debt, because there is no standard way to measure it. America, Japan, China, and Europe each measure GDP differently. Even debt/GDP figures on a national level are highly suspect, since europe has changed how we calculate public debt quite significantly since the euro, and since countries manipulate the figures in a lot of ways. Much of the problem with greek finances was that it turned out they were lying about their debt using various accounting methods.

Thrugelmir

tomterm8 wrote: »

1. All major banks borrowed significant amounts of money at a lower than commercial rate at the deposit window.
2. All banks in the uk benefited from a guarantee of contingent liabilities by the UK government... a guarantee that must be worth tens of billions of pounds.

You say all banks.

Are you sure that this is correct?

michaels

Oh - do we have an HSBC employee in our midst?!

StevieJ

tomterm8 wrote: »

Sorry, Stevie, I think this is the information you asked for http://www.imf.org/external/np/exr/key/pdf/061710.pdf / (p3 and p4)

Cheers Tom.
So as I thought the UK debt position of the UK was not that bad compared to the others. It must have been tough for the Baby Baby boomers looking forward to clearing that debt mountain of 200% of GDP in 1950, makes that 50% in 2010 look like a molehill

tomterm8

StevieJ wrote: »

Cheers Tom.
So as I thought the UK debt position of the UK was not that bad compared to the others. It must have been tough for the Baby Baby boomers looking forward to clearing that debt mountain of 200% of GDP in 1950, makes that 50% in 2010 look like a molehill

The debts more like 70%... that's the problem: we've added 20% if GDP to our debt in less than 2 years... unprecidented except in the Napoleonic war, the first world war, and the second world war.

It's not pretty but not the end of the world.

Thrugelmir wrote: »

You say all banks.

Are you sure that this is correct?

Yes. But I am willing to be corrected if I am wrong, as ever. Even HSBC, although the bank was nobbled.

Thrugelmir

michaels wrote: »

Tricky question - pre crash there was a lot of 'froth' ie record levels of housing market turnover, huge banking sector profits etc which were (with hindsight) clearly not sustainable. Yes I would agree that a period of below 'trend' growth is now likely resulting in a larger deficit but this is the result of a rebalancing of the economy to a more sustainable debt level again implying that the pre crash growth was artificially increased by excessive credit creation. Once this rebalancing has been factored in the 'structural' budget position may not be any different?

Agree with your sentiments. There is a structural gap that can only be bridged by a cut in the "payroll" costs of UK plc. Growth alone will not fill the void of the tax windfall from financial services.

Thrugelmir

michaels wrote: »

Oh - do we have an HSBC employee in our midst?!

Or Nationwide, Lloyds, Standard Chartered, or Santander even ?

Mr_Mumble

The government is back in the red on these 'investments'.

We now believe the most likely scenario is that the taxpayer will not have to pay out significantly on its guarantees.

The current expectation is that there will not be an overall loss on the Asset Protection, Special Liquidity or Credit Guarantee Schemes.

The total amount of cash used to support the banks as at 1 December 2010 is £124 billion

taxpayers were sat on £12.5bn worth of paper losses on the Treasury’s (although managed by UK Financial Investments) RBS and Lloyds shares, as of 1 December.

Ft Alphaville synopsis

National Audit Office Report

Linton

Mr_Mumble wrote: »

The government is back in the red on these 'investments'.





Ft Alphaville synopsis

National Audit Office Report

Or was at the start of December. Since then Lloyds and RBS shares have risen 10%.

Mr_Mumble

Linton wrote: »

Or was at the start of December. Since then Lloyds and RBS shares have risen 10%.

Heh, for anyone wanting to do calculate the losses/gains here's the NAO paragraph on costs per share:

The 90.6 billion shares in RBS were purchased at an average cost of 50.53 pence 1.4 each and the 27.6 billion shares in Lloyds cost 74.4 pence on average. The ordinary shares traded at 39.88 pence and 64.05 pence respectively as at 1 December 2010

Note the UKFI has a lot more detail about RBS and Lloyds costs in it's annual report and has slightly different numbers for costs to the taxpayer; on RBS:

The weighted average of these investment prices is 50.2p per share. This represents the cost per ordinary share of the Government’s total investment in RBS.
The Government has received underwriting fees of £305 million associated with the recapitalisation and preference share conversion. The cost of the Government’s investment in RBS net of these fees is £45,222 million, equivalent to 49.9p per ordinary share.

and Lloyds:

The weighted average of these investment prices is 73.6p per share. This represents the cost per ordinary share of the Government’s total investment in Lloyds Banking Group.
The Government has received underwriting and commitment fees of £381 million associated with these transactions. The cost of the Government’s investment in Lloyds net of these fees is £19,933 million, equivalent to 72.2p per ordinary share

At time of typing RBS is 41.39p a share and Lloyds is 69.20p. Taxpayers are still in the red.