Friday, 8 May 2009

Bank Profits: What Do We Imagine Is Going On Here ?

Further to CU's post, there's an interesting strand running through the BARC and RBS results. Here's Pesto:

RBS "generated record income for the first 3 months of the year - due in large part to astonishingly strong results from investment banking .. But the billions in extra revenue were wiped out by losses on loans and investments that have gone bad"

Barclays "is actually growing profits again - thanks to a boom in investment banking and the business of raising finance for big companies - which more than compensates for increasing losses on loans that are going bad"

So - the mainstream, 'real economy' banking is looking ugly. OK, Barclays is ahead of the game and RBS behind. But investment banking in today's climate ?

It seems most likely that it means the exploitation of a rich seam of opportunities for financial engineering in this bizarre era of TARPs,
QE, restructurings, recapitalisation ... in short, tapping the epic (and poorly supervised) flows of global bunce.

Good on 'em ? Up to a point: it may as well be good old British banks that hoover up jonny foreigner's largesse. But isn't this just more of the same self-referential nonsense that got us here in the first place ?

Take a long, hard look at those
increasing losses on loans that are going bad ... oh - and have a nice weekend !

ND

7 comments:

Letters From A Tory said...

One can only wonder how long it will take to clear out the bad investments and return to profit.

The sheer scale of the dodgy loans and investments is almost incomprehensible.

Demetrius said...

There is something out there in the forest, Carruthers, I do not like the sound of it. No Carruthers I do not think you should try to feed it by hand, I think we should kill it while we can, or it will eat us. More in the next episode.

The Great Simpleton said...

I didn't realise Emmerson, Lake and Palmer were involved in this. Are they reforming and doing a gig to raise money for the banks? I last saw them in '75 and wouldn't mind seeing them again.

Great musicians but I'm not sure about them sorting out the mess the banks are in... although...

Chris said...

The rot is deep, @letters from a tory, the rot is deep.

electro-kevin said...

Didn't Peston also say "Royal Bank expects to be in loss for the year as a whole, just as it was last year.

Even so, as for other big banks, there is evidence that RBS is on a path to recovery.

Which matters to most of us, because taxpayers own 70% of Royal Bank and we need it to recover if we're ever to sell our stake in it for a profit." ???

Good weekend to you too.

Stringy said...

Wait till the ftse collapses again when this 'recovery' ends

http://www.guardian.co.uk/business/2009/may/08/bank-england-recession-economy

Nick Drew said...

Stringy, welcome. The link you gave says it all

watch out below