Wednesday 27 January 2016

RBS: Government owned until 2020

RBS has another year of losses to add to its list. Eight straight years, it is hard to think of another business outside the Guardian newspaper that can sustain such a dire record.

And not just a small loss either, a £2.5 billion loss. Yes it can be argued that the main cause here is yet more fines and covering for litigation and fallout from the financial crisis, plus the need to plus a huge hole in its pension deficit. On this basis the core bank is making money, is still the largest SME lender and gearing back up in the mortgage market with Natwest soon to top best buy mortgage tables once more.

However, a loss is a loss. The share price is around half of where it needs to be to break even in a Government sale. 50% loss of £48 billion. At least, with a tier one ratio of 16% we can be assured that the bank could survive another recession.

Pity its shareholders though, every year is the promise of Jam tomorrow in terms of dividends and profits. Every year it does not happen, we are far closer to the next recession than the last too; will RBS make it out of Government control before 2020, I would not bet on it.


Anonymous said...

Why would anyone at RBS want to do anything other than take the losses; add more write offs; put money aside for provisions etc. And then when released from the taxpayer's teat revalue, declare massive bonuses and triples all round.

Blue Eyes said...

I am sure we were told last year that the losses were being got out of the system and that everything would be sunny from there on in.

Pity the shareholders - us!

dearieme said...

Brown has much to answer for. "Bail-outs" were an unjustified rip-off of the taxpayers.

BE said...

Yup. All we need to know about the "bail-outs" is that he tried mightily to bail-out banks which didn't even want him to bail them out. He got pretty hacked off when Barclays found capital elsewhere.

And the left's favourite insult against any Tory policy they don't like is that it is "ideological".

Anonymous said...

And the left's favourite insult against any Tory policy they don't like is that it is "ideological".

Is the other one, paid for by special interests / lobbying?

I thought this was interesting series of accidental links.

CityUnslicker said...

Anon - fair point, but they will no get privatised at this rate of decline, the underlying bank is flat and the write-offs continued.

dearieme said...

Perhaps it's time to nationalise Fred Goodwin. Every little helps.

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