More news out today on our taxpayer investment in RBS. What I can't believe is the timing of all this change. The story goes that in the Investment bank the foreign units are going along with all of Equities and Corporate Finance (a business called Hoare Govett). Now neither of these are the really big pieces of RBS Global Banking Markets - but without them RBS is left with a very sub-scale debt business that is only good in a few areas such as corporate bonds.
But really, selling now, in midst of the Euro crisis? RBS will be lucky to get any buyers at all, let alone a decent price for these units. So in the end it may well have to sack everyone and close them down. yet in the last 2 years these units have been profitable. of course in the Brown Boom this was the unit that blew the bank up with all its bad buys, but now these are more controlled. So instead now it seems we are to throw the baby out with the bathwater - for RBS is already selling down all of its Non Core assets quite successfully.
All I can see here is the split of a bank in the worst possible moment which will int he long-run hamper shareholder return - which is rather crucial as the current share price of 20p is a long way off the 55p needed for the Government and ourselves to get out money back on the bailout.
Bizarre that this is being pushed now - there must be more to it? I have a feeling shedding the bankers with huge bonus' is clouding the issue here.
All in all though, Governments generally make the worst decisions with te worst market timing possible, see Gordon Brown's sale of the UK gold reserves. So perhaps this knifing of RBS will in time mark the nadir of Investment Banking in the current crisis.