RBS has lost all of the taxpayer bailout

wymondham

ERICS_MUM wrote: »

1.Public debate on RBS has focused on customer deposits, overdrafts and mortgages - i.e. banking for the man in the street, sole traders etc. It's possible to make a case for letting the bank go under on this basis and allowing the state to cover the losses (i.e. the FSCS).
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Thanks for the post, it explains it well - I know more now than I did in earlier posts!


The thing that I don't understand or agree with still is that a private business gets to have such an underpinning role in the economy that it cant fail.... so many conflicts here...

CLAPTON

wymondham wrote: »

Thanks for the post, it explains it well - I know more now than I did in earlier posts!


The thing that I don't understand or agree with still is that a private business gets to have such an underpinning role in the economy that it cant fail.... so many conflicts here...

do you think that innocent depositors (i.e. people will a current account or savings account or companies with similar) should be protected in the event of a bank failure?

Thrugelmir

ERICS_MUM wrote: »

1.Public debate on RBS has focused on customer deposits, overdrafts and mortgages - i.e. banking for the man in the street, sole traders etc. It's possible to make a case for letting the bank go under on this basis and allowing the state to cover the losses (i.e. the FSCS).

2. Very little has been made of the impact failure would have on the thousands of corporates in account with the RBS group, among which are several major airlines, mining, engineering, oil/gas, large retail chains. All of whom use a myriad of high volume, high value and some complex products and services to support their businesses.

RBS failure would have triggered the failure of many of these companies too.

3. RBS is a major "contributor" to the daily CHAPS business (as at 2002 it had 35% by value and 40% by volume). Take them out of the equation and you cripple the other CHAPS members' ability to move money around, thus jeopardising customer payments and settlement of sterling moneymarket deposits & loans. Foreign exchange deals with a sterling leg would not be settled in either currency. Global impact not just UK.

4. Fred Goodwin and the Board should have been prosecuted. When RBS acquired Nat West both banks were fairly cautious companies, but risky and unnecessarily (dangerous) complex derivative products mushroomed very shortly after the take over. It's clear now that FG was a megalomaniac.

5. The bulk of the losses reflected in today's figures were set up years ago as long term deals. Those responsible have mainly left the bank now, it is not they who are being paid bonuses.

6. The bank has an excellent core range of products and services for all market sectors from personal to public/gov to multi-national corporates and makes a good profit. This where the bank should concentrate it's long term future.

7. This profitability is being eroded by the losses from deals set up years ago and are still being unravelled/realised - they are casting long shadows but nobody seems to know how long.

8. To a great extent the people being paid the big bonuses now have shown a "realised" profit in terms of interest margins, fees & commissions, active new business etc, not "promised pie-in-the-sky, Friday- afternoon- euphoria, 10 years down the road profit projections).

These are people the bank needs to drive it forward, reduced bonuses could cause them to leave.

What is getting overlooked is that RBS was an international bank. At it's peak it operated in 57 countries around the world, and owned the largest banking operation in around 30. So the issues were extremely complex to unwind. Had RBS gone bust the carnage would have been global and done little for the UK's financial services sector. Something which the UK is highly dependent upon even today for the revenues it generates.

lvader

grizzly1911 wrote: »

Where did the money come from?

Not from tax payers for sure, tax payers can't even fund regular governnment spending which is why we have a deficit largly funded by QE.

wymondham

CLAPTON wrote: »

do you think that innocent depositors (i.e. people will a current account or savings account or companies with similar) should be protected in the event of a bank failure?

No, not really. If you invest in a private institution why should your money be protected by the state?

Thrugelmir

RBS should have been carved up 5 years ago. Into profitable and non profitable businesses. Looks like there's potentially another 5 years to go even now. What a shambles.

CLAPTON

wymondham wrote: »

No, not really. If you invest in a private institution why should your money be protected by the state?

That's a reasonable view as long as you accept the probably consequences.

lvader

Thrugelmir wrote: »

RBS should have been carved up 5 years ago. Into profitable and non profitable businesses. Looks like there's potentially another 5 years to go even now. What a shambles.

I bet they are profitable again within 2 years, probably earlier.

CLAPTON

Thrugelmir wrote: »

RBS should have been carved up 5 years ago. Into profitable and non profitable businesses. Looks like there's potentially another 5 years to go even now. What a shambles.

how would that help?

obviously every company could be profitable if you take all the debts out.

how would we get a better return?

Thrugelmir

Relaunching NatWest, Coutts and W&G as separate retail banks would have allowed shares to be sold off. Direct line likewise. Allowing repayment of Government debt.

The bad news simply keeps on coming. RBS is becoming a tainted brand.