Sale of the century

Malthusian

The People's Banking Co-operative is the only thing standing between us and being like Greece?

I stand corrected, this is clearly the most important company in the country. Jeez, I never knew that by keeping my pennies in an RBS current account I was helping to prop up the entire UK economy.

Thrugelmir

kabayiri wrote: »

I think the government of the day overpaid for RBS

RBS was effectively insolvent and had to be recapitalised.

Since 2008 accummulated lossess amount to £58 billion.......

GreatApe

Malthusian wrote: »

Yes. Far more important companies than RBS have gone bankrupt and the world hasn't ended. You drastically overestimate the significance of the People's Banking Co-operative (formerly RBS).

Banks going bankrupt cause damage outside of the bank going bankrupt

If we had a 1% point additional drop in GDP for just 2 years that would be about £40 billion lost in value added that's about 1 million full time jobs.

The banks have to be saved one way or another. The reckless banks lost their shareholders close to 100% so its not like the owners were not punished.

Banking is and has to be regulated because it is not like your local greecy spoon going bankrupt. The question is why did brown not regulate the banks properly from 1997-2007?

Also I think this is a lot of hot air from the left. Government wastes billions each and every year much more than RBS will ever cost us. HS2 will be a £50 billion waste. Kicking the can down the road again on heathrow is costing us lost GDP which will add to the billions. The EU is costing us £10 billion a year. Foreign aid about the same again. We waste tens of billions sending kids to university so they can be educated shelf stackers etc

Arklight

GreatApe wrote: »

Banks going bankrupt cause damage outside of the bank going bankrupt

If we had a 1% point additional drop in GDP for just 2 years that would be about £40 billion lost in value added that's about 1 million full time jobs.

The banks have to be saved one way or another. The reckless banks lost their shareholders close to 100% so its not like the owners were not punished.

Banking is and has to be regulated because it is not like your local greecy spoon going bankrupt. The question is why did brown not regulate the banks properly from 1997-2007?

Also I think this is a lot of hot air from the left. Government wastes billions each and every year much more than RBS will ever cost us. HS2 will be a £50 billion waste. Kicking the can down the road again on heathrow is costing us lost GDP which will add to the billions. The EU is costing us £10 billion a year. Foreign aid about the same again. We waste tens of billions sending kids to university so they can be educated shelf stackers etc

Yes that's right, some bankers being briefly unemployed is the worst thing that could ever happen. As long as the money isn't spent on infrastructure or educating people everything should be OK.

Malthusian

GreatApe wrote: »

If we had a 1% point additional drop in GDP for just 2 years that would be about £40 billion lost in value added that's about 1 million full time jobs.

And one of the UK's numerous banks going bankrupt and the vast majority of ordinary savers being fully compensated by the FSCS would have resulted in a 1% drop in GDP for 2 years how exactly? Making up a random number and extrapolating it isn't an argument.

A bank with 70,000 employees (many of which would not have lost their jobs, as some of the branches would have been bought off the administrator, and others would have been re-employed almost immediately as rival banks scrambled for the influx of new customers) would have resulted in job losses of a million?

If the banks have a 14x multiplier effect on the overall economy, shouldn't we be pumping massive amounts of subsidy into RBS and the challenger banks so they can grow as fast as possible and bring a massive boost to the economy? If the loss of an RBS results in the loss of £40bn and 1 million jobs, then the creation of a new RBS will do the reverse. Why we are p-ing about with infrastructure and houses when we just need to found as many new banks as possible and make them as big as possible to generate millions of jobs and skyrocketing economic growth?

ilovehouses wrote: »

Maybe RBS fits into that systemic risk category? There were plenty of depositors that must now be thanking their lucky stars for the blanket support the taxpayer offered - those in HBOS, Northern Rock for example.

No reason they should. As depositors the vast majority of them were fully covered by the FSCS and taxpayer support made no real difference to them.

michaels

Don't know whether to laugh or cry, Labour who overpaid for the shares criticising the govt for selling something for what it is worth. The loss still exists whether you crytalise it or not and like most things I can't see the govt being the most qualified group to run a bank, I personally would rather the govt invested in hospitals rather than banks but labour seem to have other ideas.

If the bailout had not happened then either depositors would have lost money (any volunteers?) or the govt would have her to pay out to rescue them anyway and in general any business is worth more as a going concern than being sold off by administrators so no doubt it would have cost more taxpayers money if it had been handled as a bankruptcy.

Final note, labour seem keen to remain as much as possible under eu rules which preclude stated policies such as renationalisation, state ownership of banks etc which doesn't add up imho....

michaels

Malthusian wrote: »

And one of the UK's numerous banks going bankrupt and the vast majority of ordinary savers being fully compensated by the FSCS would have resulted in a 1% drop in GDP for 2 years how exactly? Making up a random number and extrapolating it isn't an argument.

A bank with 70,000 employees (many of which would not have lost their jobs, as some of the branches would have been bought off the administrator, and others would have been re-employed almost immediately as rival banks scrambled for the influx of new customers) would have resulted in job losses of a million?

If the banks have a 14x multiplier effect on the overall economy, shouldn't we be pumping massive amounts of subsidy into RBS and the challenger banks so they can grow as fast as possible and bring a massive boost to the economy? If the loss of an RBS results in the loss of £40bn and 1 million jobs, then the creation of a new RBS will do the reverse. Why we are p-ing about with infrastructure and houses when we just need to found as many new banks as possible and make them as big as possible to generate millions of jobs and skyrocketing economic growth?



No reason they should. As depositors the vast majority of them were fully covered by the FSCS and taxpayer support made no real difference to them.

So the face just had billions (trillions) down the back of the sofa at the time? Fscs funds come from other banks, would they have been able to pony up that much at that time? The answer is no, the scheme already had to borrow from the govt just to cover northern rock et al so the govt would have paid out anyway, it might have eventually been clawed back from the other banks but that would have been through higher charges to their customer this still taking money out of the economy. And that is ignoring the impact on losses by bondholders (pension funds), large depositors (those in the middle of a house sale and purchase?) and businesses. Sounds like a lot more cost to the tax payer than a 20bn loss on the shares to me.

Malthusian

michaels wrote: »

So the face just had billions (trillions) down the back of the sofa at the time?

The taxpayer is the sofa and guarantor of last resort. The taxpayer would have paid out less than we did, as we would only have to bail out depositors up to the limit, not the entire bank. In due course it would have been recovered in the same way that we eventually got our money back from Icesave when it was liquidated.

Regarding people with house purchase money, the "temporary high balances" FSCS rule technically didn't exist at the time (it was introduced after the credit crisis), but the need for it was obvious in hindsight and it would have been sensible and cheap to apply it retrospectively.

As for the notion that RBS would be worth more as a going concern than in administration, that's excellent news; the administrator would simply sell it and we'd've got our money back even more quickly. The reality is that a company is not worth more as a going concern if it's bust.

Losses to pension funds are not important. Pension funds are diversified across thousands of shares. If RBS went bankrupt today then if you ignore the ensuing market turbulence (which would recover), it would only make a small dent in pension funds. Pension funds already "lost billions" on RBS when the share price collapsed, it didn't plunge the nation into retirement poverty and it still won't if the remaining 5% of its value goes !!!!!!.