Rbs

kabayiri

Pennywise wrote: »

The bigger question is how RBS (which historically was a small minor bank) was allowed to borrow so much to expand beyond it's abilities to service it's debt. Nat west alone was huge, so how did a smaller bank manage to buy it? Not to mention the other acquisitions. The whole thing stinks but it goes back much further before the bailouts.

Yep.

You can always get individuals in a company with the driving ambition to create the biggest bank in the world. I don't think Fred the Shred was short on self confidence.

But, there should be counter balancing mechanisms at board level to ensure that risk is assessed at all stages. There were dissenting voices when they bought Amro but it still went ahead.

Do non-execs actually fulfil a valid function, or are they just yes men/women?

Thrugelmir

kabayiri wrote: »

Why did we buy RBS though?

By balance sheet size the largest bank in the world. The largest bank in 51 countries globally. Banking presence in over 150 countries. Would have brought the whole of the UK banking industry to it's knees. RBS, HSBC, Barclays and the combined Lloyds\Halifax ranked in the top 5 banks globally.

Don't forget that it all happened over a single weekend. Wasn't time to make plans. At the time RBS was rescued. HBOS was lent £25 billion by the Treasury until the Lloyds merger was formalised. Barclays went to the Middle East for funds. HSBC was sound.

kabayiri

Thrugelmir wrote: »

By balance sheet size the largest bank in the world. The largest bank in 51 countries globally. Banking presence in over 150 countries. Would have brought the whole of the UK banking industry to it's knees. RBS, HSBC, Barclays and the combined Lloyds\Halifax ranked in the top 5 banks globally.

Don't forget that it all happened over a single weekend. Wasn't time to make plans. At the time RBS was rescued. HBOS was lent £25 billion by the Treasury until the Lloyds merger was formalised. Barclays went to the Middle East for funds. HSBC was sound.

I don't particularly have a problem with this, but there were quite a few pundits who said at the time that we would probably make a decent profit on the purchase at the time.

Was that just spiel to get the voters onside then?

I doubt anyone of Joe Public truly understood the scale of losses we would be seeing for up to a decade later.

Didn't our American friends make a profit out of their rescue program?

cogito

kabayiri wrote: »

Yep.

You can always get individuals in a company with the driving ambition to create the biggest bank in the world. I don't think Fred the Shred was short on self confidence.

But, there should be counter balancing mechanisms at board level to ensure that risk is assessed at all stages. There were dissenting voices when they bought Amro but it still went ahead.

Do non-execs actually fulfil a valid function, or are they just yes men/women?

They totally failed to do proper due diligence on Amro. Had they done so, they wouldn't have bought it. I thought at the time that they only wanted it because Barclays did.

cogito

kabayiri wrote: »

Didn't our American friends make a profit out of their rescue program?

Depends whose version of events you read.

[Deleted User]

I suppose the biggest laugh at the time and looking back was that the then tory opposition favoured letting at least one major bank go to the wall, with little thought for the chaos that would have ensued.
We are all brilliant bankers...with hindsight..Brown had but a few hours to make monumental decisions.

davomcdave

Thrugelmir wrote: »

Much easier to trade shares in a listed Company than sell off bits of a nationalised industry.

That the bank is still hanging about on the Government's books like a bad smell suggests that you might want to rethink your argument.

The fundamental problem is that the business itself if FUBAR'd and has been for a decade now. Selling the assets and binning the rest is exactly what should have happened.

We've hardly been in an economic land of milk and honey for the last decade. Maybe it's time for people to concede that maybe, just maybe, the policies of the last 10 years have been wrong or even made things worse.