Thursday 3 December 2009

Can RBS stand up to the Government?

This is going to be an interesting story. The Government, retreating rapidly into a left-wing core vote strategy, has hit upon a winner. Seize the excessive banking bonus' for itself and claim in a shroud of moral superiority that it won't allow greed to dominate.

RBS in return have clearly been consulting their lawyers and have reasonably decided that if this goes ahead the board will resign in protest at not being able to run the company.

it was always going to get messy when a left-wing Government took over the world's biggest bank (by assets).

Clearly, there is a need to pay the staff at RBS what is needed to retain their services, otherwise the bank will fail over time and the taxpayers investment will be for nothing. At the same time, a left-wing government just can't stand to see people make million pound bonus'

It is a purely ideological clash, it will be interesting to see who wins, time is on RBS' side with and election coming up, but that may cause the Government to act presumptuously.

I note Peter Mandelson being rather equinamical on the radio this morning, suggesting it will be hard for Labour to really push this through.


James Higham said...

The Dark Lord knows the entwined tentacles can reach up and throttle Labour by the throat.

tory boys never grow up said...

Do we ever learn anything?

While there is nothing wrong with RBS investment bankers (BTW isn't dealers a more appropriate term than bankers) participating in profits that they generate - I would also like to see them be given some responsibility for the (far greater) losses which they have occurred.

Once they have made some contribution to the losses which they created and we have all underwritten - then they might be entitled to a bonus.

If you guys cannot see that allowing the dealers to take one way bets has been part of the problem - and certainly will not be a part of the solution - then all that Tory guff about people being responsible for their own actions is just meaningless platitudes.

If other banks are paying bonuses on a similar basis then the FSA should be taking action - and imposing a substantial increase in their capital requirements to reflect their risk appetite for one way bets.

So can I assume that it will be business as usual in the City if the Tories are elected - because it certainly sounds like it!

PS Do you really think that there will be much of an employment market for the vast majority of RBS's cast offs?

Budgie said...

Whilst, to my surprise, I tend to agree with some of Tory Boys points here, I wonder if he is, in turn, prepared to admit that:
a) the 'bankers' tax receipts kept Gordon Brown afloat during the last decade, and
b) Brown has squandered far more than the 'bankers' have lost, on his gold sales, pension busting, inappropriate legislation, tax complications, sheer incompetence, political class war, and on and depressingly on.

I won't hold my breath.

Steven_L said...

"So can I assume that it will be business as usual in the City if the Tories are elected" TBNGU

Redwood has being saying the gvt should be acting like a bank manager to them and making them cut costs for over a year now.

I agree with him, if a banker makes a loan to a firm that looks like it might get into difficulty they tell them to cut costs, wages included.

If the taxpayer is making loans and injecting equity capital into the banks then we should be supervising them.

Labour Minister's don't seem to have a clue how to. Nothing good about a weak government.

CityUnslicker said...

TBNG - Always welcome your opinions. IS there a market for yes. Many of the big US banks are now hiring agaih, as is Barclays and HSBC. Plus all the hedge funds and brokers are out there adn there are a lot of the smaller 2nd tier banks looking to pick people up.

Jobs for all of them, of course not...but then we don't want now state owned RBS to go bust.

As for the mess they caused, I quite agree, I also am quite sure that the realy toxic areas have been scaled down and the people fired. Fact.

Therefore punishing those who are left is not justice either. You can;t do worse in the world of work than fire someone. All those bits of RBS that are now Non-Core, they are the bits that caused the problems and they now have skeleton staff.

What is wrong is banks pushing up mortgage charges on borrowers to eek a better margin - but this will see taxpayers get their money back faster.

Consider another realm too - Gordon Brown. He has wrecked the country in very short order. He will lose the election, by your standards we should pursue him further for the damage he has caused...

Demetrius said...

Whoever wins, I lose.

Saturn V said...

Gordon Brown.. has wrecked the country ... He will lose the election, by your standards we should pursue him further for the damage he has caused..

At last. A platform we can all agree on.

Anonymous said...

If memory serves me correctly Stephen Hester’s pre-condition for running RBS was no political interference. I were he, I would be pulling what was left of my hair out by now. First political interference from Brussels and now from Darling. Also if Hester and the Board went, whom on earth would they get to replace them? This would make ITV's problems look like Childs play in comparison.

Steven_L said...

There is a market for bankers CU, there's also a market for 419 scams and plenty of gullible people that keep stumping up the readies until they are skint.

This is looking more and more like a 419 scam to me. They get their begging bowl out, Brown gives them loads of our money to 'save the world'. They spend it on villas and fast cars then a few months later they want more.

At what point do we stop giving them money? Have you a figure in mind?