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A very sorry banker

Robert Peston | 17:55 UK time, Thursday, 20 November 2008

It's very rare indeed for a bastion of Britain's corporate establishment to say sorry about anything - let alone say it in a public meeting.

So Sir Tom Mckillop's big sorry to shareholders, customers and employees is a proper event.

Royal Bank has much to be sorry for.

The bank expects to make losses this year. There's a £20bn hole in its balance sheet, which is being filled by capital provided by taxpayers.

It doesn't get much worse - although there's evidence today that for Britain's banks, we're a long way from the end of the bad news.

A part of Northern Rock, called Granite - which packages up mortgages and sells them to investors as bonds - has disclosed that mortgage customers are 90 days or more behind with the payments on more than 2% of £35.5bn of mortgages.

That compares with less than 0.5 per cent of mortgages that were 90 days in arrears in mid 2007.

To translate, it means borrowers are in some difficulty on more than £700m of mortgages.

The Rock disclosed this serious worsening in mortgage arrears when also announcing that in effect it will be winding down Granite - which was the vehicle which financed the Rock's rapid growth over many years.

The demise of Granite is a setback for any recovery in the mortgage-backed securities market.

Such a recovery was always something of an elusive hope.

But if banks can't find any way to raise money for mortgages from wholesale markets, it means Britain's housebuyers will remain starved of loans for some time yet.


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  • Comment number 1.

    We all the economy will be in dire straits for much longer and deeper than the main talking heads would have us believe. It is afterall their job to talk it up big style. So if they say come 2010 we will be on the way up, then you can bet your house on it being much much longer than that.

  • Comment number 2.

    An apology is all fine and well but perhaps he should return some of his bonuses/salary gained over recent years?

    These losses happened on his watch.

    Why should the taxpayer foot the bill for his incompetence and let him keep his extravagances earned over the period?

    Or perhaps he can reimburse all the small and large businesses from whom he made nice profits.

    The grabbing hands grab all they can, everything counts in large amounts....

  • Comment number 3.

    Well, well.
    So 98% of the customers of Granite are relatively up to date on their mortgages. That's £34.8 billion of mortgages which are NOT seriously in arrears.
    Doesn't sound like bad enough news to be worth reporting in these doom-laden days.
    Anyone else for the sack-cloth and ashes?

  • Comment number 4.


    Robert, thats like a fiver at todays real inflation rate. Move on, nothing to see here.

    'A mere fleshwound'

  • Comment number 5.

    I have always suspected that we'll find a substantial portion of the Rock's book with be comprised of bad debt eventually. The salvageable assets will have gone elsewhere leaving the taxpayer to pick up the tab.

  • Comment number 6.

    Before anyone criticizes Sir Tom's apology for being "too little, too late", at least recognise that he has apologised unlike GB or the Treasury.

    Incidentally has there been an unintentional mass Freudian slip, or am I just wrong?

    I always used the term bale-out as in removing the water from a sinking ship, but everyone else seems to have been using bail as in get out of gaol/jail.

    Perhaps we should use the term banking jail-out from now on?

  • Comment number 7.

    It looks like the interest rate is coming down.

    Whether or not it will help any of these people, I cannot say. They may have balloon mortgages.

    How can anyone have ever thought they would be a good idea?

  • Comment number 8.

    To Moderator

    Can you ask IT department what encoding we should use (UTF-8, Auto,What)?

    I have noticed that some blogs apostrophies appear as question marks and some Pound signs print as a square.

    Thanks in advance.

  • Comment number 9.

    I wonder how many of those in arrears are on the svr? Are they paying anything back at all?

    What are Northern Rock doing with all the income from the 98pc of borrowers? Many of us have already paid charges upfront. Also, I suspect many of their existing borrowers are relatively new, so they'll be getting plenty profit from them too.

  • Comment number 10.

    Take the huge losses by these institutions, now imagine that these losses are like a farmer who has sowed seeds in this case mortgages. Now the customers are the seeds, and the crop has been hit by the potato blight.

    The harvest is disappointing now and the banks are having to get by on whatever scraps are left, along with aid from the government yet like aid given to poor countires, its only a one off fix. Give a bank some chips he can eat for one day, give a man some potatoes he can eat for a year.

  • Comment number 11.

    That's OK, Sir Tom!

    Just pay me the difference between what my RBS shares were worth last year and what they're worth now, and we'll say no more of the whole business...

  • Comment number 12.

    re 3. It may only be 2% now but what happens if equity shrinks to a point where even prime borrowers get the US sub-prime, hand the keys back mentality? Interesting times, but my glass is half full..back to the bar!

  • Comment number 13.

    Well said post 3. Try keeping stuff in perspective Robert.

  • Comment number 14.

    I'm not sure you can link the winding down of Granite as a sign of a slower recovery. Northern Rock's business is being deliberately shrunk by the government.

    Also, they're not offering new deals to existing customers. At least they're offering access to free mortgage advice.

    Expect the proportion of in-trouble borrowers to increase.

  • Comment number 15.

    Granite has the AAA+ mortgages and they are in arrears???????????

    Any % of these mortgages in trouble means that there is a hell of a lot mortgages out there in difficulty.

    Any how, the so called leaders, the so call people that to protect the system are stumped.

    Still the sub prime shoppers get taken in by 25% off and go and buy cra+p because its 'cheap"

    On Monday another set of clowns will sell UK down the river and when they do the run on stirling will continue.

    Sorry is a big word in hindsight, what about resigning?

    I truly hope that this continues to a point where the current monetary system collapses and people have to barter for their lives. We need local accountability , not globalist theft.

    Its going to be a cold, cold winter and I hope I lose everything, absolutely everything,because that will mean we are all on a level playing field again.

    It is not only our governments that can print paper money you know!

  • Comment number 16.

    Granite is an offshore trust based in Jersey which reputedly has the money siphoned off from Northern Rock . Too complicated for a simple brain but one of you will understand this piece:

    The really good parts of Northern Rock were bought by JP Morgan the day before Blair joined them for an amazingly large payment - what a coincidence!

  • Comment number 17.

    Apolgies aren't enough!! For RBS CEOs to come offering apologies is like a farmer going up to his sheep with a feed bag, only to reveal it's full of damp sawdust.

    We don't need aplogies now, we needed responsible investment and lending in the past! This is too little too late! If Tom Milksop was truly sorry he'd be selling off his assets to help reimburse RBS's shareholders and savers/home owners.

  • Comment number 18.

    Its easy (if a stain on the reputation) to say sorry. Shame he hasn't volunteered to relieve himself of much of the lucre he received personally whilst gambling ...oops... directing at RBS. That's when sorrow is really shown - it scalled shared remorse and financial pain. I don't expect its occurred to him or any banker.

    I still don't understand why the banks can't simply repossess and then let the properties they have. The property value will return in a few years and the mortgage repayments will be covered by the rent. Thus no real loss at all, just an asset dip on paper. Why then are banks so keen to repossess and simply firesale?

  • Comment number 19.

    With Northern Rock and banks like them, why hasn't there been a review?

    In the late 90s, there were the endowment and pension reviews. Basically these were because there were shifty salesmen stating that they were better off in a private savings arrangement than a mainstream product (repayment mortgage or company pension). Everybody mis-sold received the money they lost in a lump sum and were bought back into the schemes they opted out of.

    In Northern Rock's case, these shifty sales people sold a product that put the client into immediate negative equity (who cares if 30% was unsecured) on the advice that the property market would always rise and they would be back on an even keel ready for their first re-mortgage.

    Why are we not reviewing these cases? Plainly poor advice.

    I'll tell you why - because the fall-out would be massive.

    Basically, the rule under a Labour Government is if you want to be a crook, be a massive one that can take the establishment with you. Then, you'll never get caught.

    Nice over-egging again, by the way, Mr Peston. Wouldn't it be refreshing for him to go on the 'News' and say "Nothing to see here" for once!

  • Comment number 20.

    It's nice of Sir Tom to say he's sorry.
    Sir Fred's leaving email to staff said no more than he'd done nothing wrong and he was planning to leave anyway!

  • Comment number 21.

    One of our top bankers has said sorry?
    When is he returning his unearned bonuses?

  • Comment number 22.

    Let's see - a mortgage bank which is bust and desperate to get borrowers to leave. Hmmm - I'll take a guess that those who can, have left, those who can't or are waiting the end of their fixed terms are still with NR. So duh of course the % of bad debt will rise at NR because there is less good stuff to dilute it.

    And as stated 98% non deliquent loans - not bad really compared with what 5% credit card defaults.

    I'll also take punt there is a proportion of these labouring under the misapprehension that HMG will bail them out for free as NR is public owned rather than put them through repossession and the press campaign showing nasty Gordon made me homeless. Not can't pay but won't pay.

  • Comment number 23.

    All very well Sir Tom but when will Sir Fred apologise ? He is the real culprit here.

  • Comment number 24.


    how about repaying some of the ill gotten gains?

    how about renouncing the "night hood"

    how about taking some really substantial personal material pain?

    how about shaving off the ridiculous beard?

    otherwise what's the point of saying sorry


  • Comment number 25.

    maybe he should try lsoing all his property and money and have to live on not much money, we should confiscate all the top bankers etc money and spend it on equipment for the armed forces this would stop our troops from dying and would start to get us out of the recession, credit crunch whatever we are calling it now, see we spend money on armed forces like say improving barracks and new tanks/jeeps this means that workers are keeping their job making stuff this keeps some companies in business they and their workers spend money in local shops on supplies etc and soon practically everyone will be out of this recession. but instead they get to sip champagne, whilst the government lowers tax for a few years lending more money and bailing more banks out instead of spending it on the economy and creating/ keeping jobs by spending more. christ im 16 and i have a better idea than the goverment and all these bankers.

  • Comment number 26.

    #15 Peterskitchen

    Get real, we only have about 3 days food supply in this country, if things really go pear shaped 80% of us will starve.

    By the way Stirling is a town in Scotland

  • Comment number 27.

    If FT's Alpahaville blog is to be believed, Granite is the single biggest funder of the UK mortgage market (a 28% share). Winding such a vehicle down is far from trivial.

    My understanding is also that Granite's problems are in part caused by Northern Rock failing to maintain its minimum seller share level - a failure which in turn is likely to trigger severe rating downgrades and the beginning of a very slippery slope.

    I get the feeling we may be dismissing the apparent end of Granite's relationship with Northern Rock a little too lightly. It may be more than simply £700 million worth of underperforming mortgages that we should be worrying about.

  • Comment number 28.

    peston you are a pest on all you do

    all this speculation as made things worse, and all your negative speculation is making things even worse, you are not clever to work on such a blog and there are never any proper ideas and solutions on how to sort the problems out.

    but hey you and your type have made the problem much more worse, and you should all shut up shop and get back to just telling us the news with out your negative input.

    if we look back at what you were saying 18 months ago you did not for see all this turbalance, so you got it wrong. you should be sacked like anyone else who gets their information wrong.

    i may as well look at my tea leafs as listen to you, go away

  • Comment number 29.

    He should make another apology - to the English taxpayer who will be bearing the brunt of the bailouts.

  • Comment number 30.

    Gobbly de gook!
    What it appears to say is remember the bucket of cash we poured into NR which the chancellor said we'd get back as the mortgages got paid? Well we won't get a penny back until everyone else has and the chances of this aren't good.

  • Comment number 31.

    From a very confused Celticace18,

    Santander have two mortgage providers in the UK through Abbey and A and L. I am an A and L mortgage holder who is i little upset/confused. Abbey, following the recent BoE rate cut, agreed to pass this on to its customers and now advertise their svr mortgages at 5.44%, the A and L are still undecided on how to treat this rate cut and are still advertising svr mortgages at 6.94 %
    Now it's all very well being a sorry banker, but what about the very sorry state of the market at the moment. How on earth is this allowed to continue? The market appears so constipated these unfair variations are accepted because from a consumers end nothing can be done, the demand side appears impotent against the supply side, and companies are taking all the advantage they can of the situation that has given them this opportunity Sometimes sorry is just not good enough.

  • Comment number 32.

    Banking reform. Which political parties are offering it?

  • Comment number 33.

    Surely banks can raise money for mortgages by offering high interest rates for savers to attract funds?

    Old fashioned I know but it worked in the past.

    (Anyway with the shortage of funds it means that house prices are going to continue to drop - good news for 1st time buyers I suppose)

  • Comment number 34.

    Watch Survivors on Sunday. Plot synopsis:

    Having single-handedly caused the global financial meltdown, AND lit a garden bonfire which just tipped the earth into a cataclysmic climatic temperature rise, the evil Peston releases a deadly virus which... (sorry, mustn't spoil it)

  • Comment number 35.

    31, I noticed the same thing with nationwide, look at their website and their rates.

    When you compare this to what was printed on the BBC site after the 1.5% cut, nothing has changed (very suspect!)

    Whats going on Peston, what are they not telling us.

    Oh and btw, we are the people ;)

  • Comment number 36.

    Still, it's nice to think that they wouldn't choose this particular time to spend a big pile of money re-branding all of the ABN Amro ATMs and ABN Amro buildings and branches here in Romania as RBS.


  • Comment number 37.

    Firstly - any shareholders who are complaining have little or no grounds for complaint. Capitalism means that share prices go up and down dependent on the prevailing markets.
    Secondly - shareholders will have approved all the bonuses at the AGMs they obviously attended.
    Thirdly - the fact that less than 2% of mortgages are in arears is hardly news
    And finally - I would suggest to Mr. Peston that it is far easier to berate those who have made mistakes than offer solutions, of which I can't remember him offering one! So as someone whose influence is a factor in our financial services industry I would suggest that rather than looking for problems he should suggest solutions and drop his vendetta against RBS.

  • Comment number 38.

    re 18 i believe it is because they repo the property, sell it for whatever..the difference is made up by the underwriter and the banks get the full mortgage redeemed then the underwriter chases the original morgage holder for the shortfall.No incentive for banks to work with customers,path of least resistence i think.

  • Comment number 39.

    If the gap between mortgage funds raised domestically and funds shipped in from overseas grew from zero to 625 / 650 Bil GBP over the 5 odd years of the bubble, and the overseas money has disappeared, it is hardly going to be sorted overnight is it. The problem remains the stablisation of debt and the most troublesome is domestic mortgage debt which like it or not can only be dealt with by some stability being brought to house prices. That can only be achieved by economic recovery or significant time. Either way things are not going to be sorted overnight. Just how is that fact going to be sold to the public.

    It is noteworthy that an exec has the nounce to say sorry, it is all to rare. Perhaps the shareholders who were so keen on the large dividends received and so bullish in demanding endless growth should also publically apologise. Bradford and Bingley, to name one building society opposed becoming a bank, but was forced to by shareholders. It was then demanded by shareholders that B and B grew and grew which made it vulnerable as by definition it had to chase increasingly unsound borrowers as the traditional high street banks held the existing customer base. It is facts like that which are glossed over in this event. It is difficult to have much sympathy with some of these shareholders. You cannot have capitalism on the way up, socialism on the way down, and capitalism on the way up again.

  • Comment number 40.









    SO he DID apologise.

  • Comment number 41.

    # 1 peterbaldwin

    Spot on. Apart from Mr Peston and a few other intelligent commentators, most of our mainstream news media continues to treat most of the UK population as possessing the reading age of a 9 year old.

    You could be forgiven for thinking that we were through the worst of things and that by late 2009 and into 2010 we'd all be in the swim again.

    Forget it. Our global financial and economic systems remain in an unholy mess and we've barely started to see the start of our problems. The shocks that will hit us in 2009 will hurt bad.

    If you factor in the end of cheap energy (currently either unknown, ignored or misunderstood by most of the aforesaid commentators and virtually all politicians) then you'll realise just how bad things are going to get over the coming years. Really bad. Most people are focused on "the global banking crisis", but the forthcoming "global energy crisis" will make our current woes look like a cakewalk.

    As someone once said " You ain't seen nothing yet ...".

  • Comment number 42.

    Crocodile tears.

  • Comment number 43.

    "A very sorry banker"

    Ah, but is he sorry enough to pay back his salary and bonuses? And if the board are sorry too and the senior management will they pay back their pay and bonuses ?????


    So not really very sorry then!!!!

  • Comment number 44.

    "Setback for any recovery in the mortgage-backed securities market"

    Sorry, but this business is dead and will be dead for years to come. Nobody will have any confidence in the rating agencies view of the value and quality of the security. They are the Ford Edsel's** of the mortgage industry.

    ** Ford Edsel's - topical reference to a truly ugly and awful car of 1958.

  • Comment number 45.

    And on the day Sir Tom apologises for this fiasco the company he was CEO at last, AstraZeneca is getting rid of 250jobs at its Macclesfield site...bit of a common thread running here isn't there.

    Lucky he is retiring next year with full pension etc I am sure.

  • Comment number 46.

    How these people have the FACE i do not


    I know i keep banging on & on.

    Surely there must be prosecutions, SORRY?

    If i had done all this stuff i would be on trial

    by now.

  • Comment number 47.

    For those in need of a giggle please read the following from the RBS 2007 annual report. It details the directors share options as at the end of 2007.

    They will all be worthless by now!

    Whilst the following with only depress you. Sir Fred doesn't have to worry about saying sorry with his and the other directors pension pots they will be alright which is more than can be said for the staff

  • Comment number 48.

    Not only is Stirling a town in Scotland, but it also has the village of Dollar on its outskirts, just across the causeway.

    The English norm for such an apology, Sir Tom, is a confession, a resignation and an assignation - with a revolver. But then, English you're not.

  • Comment number 49.

    Oh, and in passing, perhaps Robert's Moderators will now explain why they blocked my report a couple of weeks backabout the RBS Stock Exchange prospectus of 2nd September, which painted a picture of rosy perfection when this situation was already as plain as a pikestaff?

  • Comment number 50.

    "tote that bale you get a little drunk and you land in jail" some words of an old song sung by Paul Robeson.
    Bail-out is the correct usage in a financial context.

  • Comment number 51.

    Having returned from my choir rehearsal a couple of sheets to the wind, I notice that dear old Pesto has changed the title of this blog.

    Was the previous one ruled to have broken the house rules? If so, I fear that the title may need to be changed again as there is a very definite misinterpretation possible involving Cockney rhyming slang.

  • Comment number 52.

    #20 "Sir Fred's leaving email to staff said no more than he'd done nothing wrong and he was planning to leave anyway!"

    #46 alexander: "Surely there must be prosecutions"

    #47 "Sir Fred doesn't have to worry about saying sorry with his and the other directors pension pots"

    Extraordinary times require extraordinary measures. Time for some Bills of Attainder Winston Churchill proposed using these at the end of WWII. Nothing uncivilised - no executions, but all ill-gotten gains should be confiscated, and the guilty made to live on the dole in B&Bs (nothing to do with the bowler hat.

    Let's face it, this will be the fate of many of the innocent. Make the guilty socialise with the victims and share their fate.

  • Comment number 53.

    #50 Thank you Billie - I stand corrected :-)

  • Comment number 54.


    Have you claimed your special roll of

    Fiscal Prudence Lavatory Paper.

    I am asking Sugars mob to DOLE it out.

  • Comment number 55.

    To put this in a wider context (the NR/Granite bit I mean, not the guy saying sorry), just take a look at what's happening to Citigroup.

    Their shares have fallen 25% on successive days (so 56% all together). The reason is that they've decided to close 7 SIVs holding mortgage backed bonds, pretty similar to NR. Citi provided USD 3.5 billion to support these vehicles in February, and a further USD 1.0 billion in October. Losses over that period are USD 3.3 billion (ie about 75% of the capital injected over the 9 months). Losses arise from loan defaults, again like the NR disclosure.

    This is why there's no wholesale lending to banks to fund new mortgages: too many of the old ones are worthless. It will take 5-7 years for all the ABS to work themselves out of the system and mature, so assume that's how long mortgage funding via retail deposits alone is going to be the standard.

    This might seem like a great way of avoiding more dubious lending, such as 100%+ mortgages, extended terms etc. It will do that, but it will also cut off all the good lending financed via MBS issuance, which is actually the bulk of the loans. As someone has pointed out above, 98% of NR's loans in Granite are performing, but in future a large proprotion of such loans would not get funded in the first place.

    What's the impact? Lower house prices is the obvious one, as fewer buyers chase the same number of houses. The bigger problem is that fewer people obtaining mortgages implies a lower home ownership ratio than we've got now. That raises the question of how we replace home ownership with the provision of rented property. Private landlords will also be squeezed by the reduction in mortgage lending (ie but-to-let mortgages will be fewer). That only leaves local authorities and housing associations to pick up the slack, effectively buying up currently owner-occupied homes as they become available (death, reposession). I can't see this being attractive to either main political party (for different reasons), but probably gives Cameron a bigger headache than Brown.

    To finish, a bit of conspiracy theorising or something. One reason given for not joining the Euro was the big difference in the UK and European housing markets, eg German owner-occupancy is about 50% versus 70%+ in the UK. If the UK trends towards Germany, this gets rid of one of the biggest of (allegedly) GB's objections to Euro membership. What odds on a Euro referendum in the unlikely event Labour wins in 2009/2010?

  • Comment number 56.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 57.

    G B missed the competition for


    I wonder why.

    Suggestions to Mr R Peston pl.ease

  • Comment number 58.

    For all those asking when Sir Tom will return his previously earned bonuses, the answer is - when the RBS shareholders return their previous years' divis !! It's all one and the same, you know !!

  • Comment number 59.

    # 54 Alexander "Have you claimed your special roll of

    Fiscal Prudence Lavatory Paper.

    I am asking Sugars mob to DOLE it out."

    Ho Ho :-) - but - you might make a bit of dosh here - if the paper is absorbent enough.

    Humour is the great saving grace of the British - all of us that is -Scots, Welsh, English - even half Yorkshire half Russian mutts like me.

    Anyway - off to the land of nod - may tomorrow bring some good news, or at least some good jokes!

  • Comment number 60.

    fingers crossed your posts get through Alexander!

    Has anyone noticed all the small detail trickling through in all the news reports? Things more like the truth, but all wrapped up in lots of woffle -guess they hope we won't notice if they make the reports so dull of flannel we won't read them enough!

    The truth will out-the more these bankers and politicians try to run damage limitation and interference the more social unrest they create! People know when they are being deceived and lied to-how stupid are they if they can't see it!

    Even more downright daft is that they don't realise we all knew these details AGES ago!

    Sasha-love the winston Churchill idea btw. But my question remains the same as Alexander's

    Where are the fraud investigations and prosecutions? Can someone also confirm the treason law as well? I'm pretty sure this is what's happening-can I report it to the police?

    Saying sorry is good if you mean it-sorry means you won't do it again-can't see that happening either!

    Come on guys, how can we stop this mess from it's current path of headlong over the edge into the abyss.

    And where the heck is the sense of responsibility from the perpetrators of these crimes? Oh yes, I forgot, it's all the American's fault! Anyone fancy being their enemy? I hope Obama kicks Gordy's proverbial when he's inaugurated!

    I just hate being bullied-right now, the sight of Gorty and Ally make me feel physically sick. Their continued patronising of the victims of their chaos is unaccountably disgusting. Maybe they need to watch re-runs of the poll tax riots and petrol vetoes-similar public outcry is just around the corner!

  • Comment number 61.

    alexander -I see another one bites the dust!

    Any news on your blog site yet? It's fast becoming a necessity!

  • Comment number 62.

    #27 "I get the feeling we may be dismissing the apparent end of Granite's relationship with Northern Rock a little too lightly. It may be more than simply ?700 million worth of underperforming mortgages that we should be worrying about."

    You hit it right on the head !!

    Firstly, the 2% are not "underperforming" mortgages, they are non-performing mortgages. The underperforming ones are yet to come. They are the ones where the borrower is still struggling and fighting a losing battle to keep up the payments on his excessive borrowing. There have been no announcements on just how much are currently underperforming and may soon slip over the edge into non-performing !!

    Secondly, Gormless Gordon is shown to be the gormless character he is are far as finance is concerned. If he forces banks to keep lending at 2007 levels, NR, and its toxic assets in Granite, will collapse *AGAIN* !!

    If he does *NOT* force the banks to lend at that level especially after he had the cheek to ask the world's leaders to follow *his* example, then he is shown for the blusterer he is on the world stage !!

    Thirdly, if he allows Granite to go belly up with all those toxic debts after nationalising NR, he will prove to the world that he is willing to take them for suckers by passing off dodgy assets on them !! That will bring all his plans of borrowing to spend to a screeching halt since no one will lend to him. And by destroying trust in Britain's integrity, he will sink the sterling !!

    He is running out of options, fast !!

  • Comment number 63.

    I think the bale out of the banks and all that surrounds it is wrong. They have created the housing boom through cheap credit, allowing people to over extend on mortgages, remortgages etc. etc. They created a dreamland.

    Two Scottish banks are apparently bust. The (now) Royal Bank of England and (now) Halifax Bank of England.

    I am Scottish. I would let the banks fall as all bad business's should fall and let the people that run them fall. They have been doing bad business.

    Nobody would care or help if it was one of our traditional industries.

  • Comment number 64.

    #33 "Surely banks can raise money for mortgages by offering high interest rates for savers to attract funds?"

    So simple, isn't it. Then those same banks will have to raise the lending rate to match those rates to the savers in order not to go bust big time !!

    At that point, the great unwashed will be howling for their heads and calling them greedy, crooks, etc. Especially when their feelings have been fanned up by unscrupulous politicians using their unjustified anger as a diversion from their own failings !!

  • Comment number 65.

    What have bankers to be sorry about, is it the fact that they together with the mperrors have been cought with their trousers down by the bob a job buoys

    who realise that asset inflation is no more than a fig leaf to cover unrecoverable debts ,by cooking the books with the help of PRoxymoron home oweners with 125%mortgages [effectively recipients of 25% kickback]

    yeeeass...t, cooking aaat gaaas mark 3 to the appearance of debt solvency that levers huge bonuses to the Tailerrs who created the latest fasion statement for the fat cat walk

    Newd labour, the latest fasion statement

    Now that Blair is a banker will he say he,s sorry aaaswell,or simply refinance the credit bubble to infinity and beyond on the basis of" in for a penny in for a quadrillion pounds "doubleing up each time until he wins ,what geniass.

  • Comment number 66.

    #37 "So as someone whose influence is a factor in our financial services industry I would suggest that rather than looking for problems he should suggest solutions and drop his vendetta against RBS."

    Come, come now !! This is so refreshing !!

    Especially after the last few blogs which sounded suspiciously like regurgitations of the government's vendetta against Barclays for daring to get a better deal from the Arabs than the government can !!

  • Comment number 67.

    #48 "The English norm for such an apology..."

    On the other hand, the Japanese.....

  • Comment number 68.

    Tony Blair and Gorden Brown were to banking and pollytricks what Laurel and Hardy were to the French foreign legion IN "BEAU HUNKS"

    Stan suposedly [ leading a column of legionaires each holding onto the coat tails of the one in front whilst blinded and lost in a sand storm] decided to hold onto the tail er and they marched arround in circles until the sandstorm abated at which point they all realised the folly, as they saw their virtuaaas circle, causing Hardy to say to Laurel "thats another fine mess youve gotten me into"

    Which just about sums the credit cycle described as an economic cyle by the one that should have known better .

    Even sancho pansa had better sence when facing a windmill

    Does Gordon have to say "thats another fine mess youve got me into"for banker Blair to say i'm sorry

    particularly when the FSA tried to warn him from catching the bankers by the coat tails

  • Comment number 69.

    A new expession for "the age of delusion "[the culmination of the enlightenment]

    "As thick as two short banks "

    What do bankerrs mean by sorry?

    Were sorry---

    self pitty !

    caveat emptor,repossession is nine tenths of the law !

    We are not paying back our bonuses !

    but The value of your investment can go up up and away as well as down !

    we had no idea about banking ,were only in it for the money !

    The Free Masons have been renationaliesed !

    We thought things could only get better !

    Gorden mislead us with amazing uninteruptable grace on his bagpipes

    The ghost of christmas past took us to the tailerrs so we gave all our clothes away

    We thought saaantaaa clothes had come to town and decided to cover up for christmas

  • Comment number 70.

    Well, friends, at least you have the advantage of a few words of contrition from the PeopleInChargeOfSuchThings who led your fair nation over the cliff.

    Here in the US, we're still waiting.

    Although, yesterday we were treated to the comic relief of the heads of Ford, GM, and Chrysler, along with the head of the United Auto Workers Union, appearing before Congress asking for $25 billion to 'tide them over'.

    They couldn't exactly say what they planned to do with the money, or that they wouldn't be back for more in a few months--just that if Congress didn't cough it up forthwith, TheEndOfTheWorldAsWeKnowIt would be upon us, and it would be the fault of all those silly taxpayers who dare to be indignant about the situation.

    All presided over by the most unapologetic Barney Frank, the Honorable Member from Boston who was one of the chief architects of the ballooning of Fannie and Freddie, which set this whole fiasco in motion.

    Not a moment's sheepishness from any of them...and defiance emanating from every pore of the UAW's man.

    At least, you got an apology!

  • Comment number 71.

    Dear Robert
    Lets now look at the increasing disaster second only to the Banking Disaster, and the Economy, that's the Human Public Cost.
    British people are now loosing their Homes faster than ever, millions are on the bread line, in poverty even, and do any of you BBC correspondants make an issue of that NO YOU DONT, because it is not politically correct and NOT in the public interest to say what these greedy Banks and Estate agents, created There is a real public cost unravelling in this country, Housing a major issue, and thousands of Homeless people many on the streets, especially ex forces, with nowhere to go.It alright for Brown and co travelling the world at public expense, its about time Labour got to grips with the issues affecting the British people instead of all the wrafs from Europe,
    Great Britain is dissappearing under the weight og Immigration, and YET, these peole get HOMES on the tax payer can you believe that,
    It is totally beieveable that having a Scot as Primeminister and Scots in major positions in Governemnt, that they are NOT working as they should for Briatin but are being discriminatory and favouring other parts of the country. No Britain is falling apart at the seems, under issues we now have to deal with, and not once has anybody said, anything to the People, who matter the Britsih Public,

  • Comment number 72.

    #70 Well, we do have a bit of a historic advantage over you people. The last time some one tried to ride roughshod over the people, they took him out and chopped off his head. Of course, that was after a bit of a tussle between the Cavaliers and the Roundheads.

    And when the peasants were revolting, we had She-of-the-Heat-seeking-Handbag to deal with that rabble.

    So, a dose of "Mea Culpa" is the least a gentleman should do !! At least if he is a *real* gentleman. There are so many fakes these days, you know !!

  • Comment number 73.

    Didnt SIR Fred get his title for "Services to Banking" ?

  • Comment number 74.

    Is this what was meant by "Tings can only get better"?

    This will be true if things get a little worse because then the only way will be up.

    GM, Ford and Chrysler for Chapter 11 then. It looks like they are not getting a handout in the short term.

    This will be good because it will sort out the management who clearly cannot think about anything other than Chrome Barges

  • Comment number 75.


    well said indeed. The human cost is being ignored ON ALL FRONTS.

    This is an indictment of our so-called democracy.

    I am seeing an increasing number of letters of reply (to very concerned members of the public) from CONSERVATIVE MPs who are washing their hands of any concern or interest in their financial worries - foreclosure, repossession etc.

    The matter is a PRESSING SOCIAL ISSUE but these well-placed individuals seem to think that it is the job of the volunteers of the Citizens to do something about the mess. No way! It is Parliament's job to stand for the people in this situation. I can only assume that they either think it is right for peoples' lives to be ground to pieces or that they have been gagged or that they are simply too lazy or well-off to care.

    Never mind Labour - Her Majesty's Opposition - you should be ashamed of yourselves.


  • Comment number 76.

    # 70

    You left out the best bit about the auto makers' CEOs' appearance before Congress. That's the fact that they all travelled to Washington in their private jets! You just can't make this stuff up!!! The Chair of the Committee to which they were testifying politely asked the three CEOs if they couldn't have at least downgraded to First Class.

    I'd be interested on your view on how the auto bailout is going to play out. I suspect Bush and the Republican Congressional leadership will spin things out. They'll agree to the minimum necessary to stave off bankruptcy on Bush's watch, thereby leaving Obama with the headache. If he bails out the auto firms, I think he's already toast in 2012. There's no way on this Earth that the Big Three and the UAW will ever reform. Bailing them out will only delay the pain and cause another crisis closer to the next Presidential election. As an FYI, GM alone has net liabilities of about USD 60 billion, so giving just them the USD 25 billion under discussion still leaves them insolvent.

    Oh, and just so everyone knows how contrite the auto makers' CEOs were yesterday, none of them said sorry for anything, nor has it dawned on them that they're in trouble because they're making the wrong products and nobody wants to buy them. It has nothing to do with a lack of short term credit to finance working capital. It appears there really are dumber people running businesses than bank Directors here.

  • Comment number 77.

    15. PetersKitchen

    Saying Granite has AAA+ mortgages is understating things. Granite has the cream of NRs AAA+ mortgages and so a 2% default rate in your top drawer is a disaster because it means all the drawers underneath it are probably worse.

    A 2% default rate has probably destroyed the margins in the collaterisation of the bonds to such an extent that they are probably without profit now and possibly starting to slide into 95p in the pound territory.

    It's amazing what you learn on her.

    Sex munce haygo eye karnt efen spill finashul hexpurt, now I are wun.

  • Comment number 78.

    The calibre of our government never ceases to amaze me;

    Quoted in the telegraph this morning, Mr McFall on ORDERING the banks to restart lending

    "Mr McFall suggested that if the refusal to lend continues, a website should be established where firms can report if they have been refused a loan and record how they were treated."

    So Mr McFall an example would be?

    ABC Ltd asked for a Loan of 30000 at WE_LUV_FRB Banking corp and was refused. ABC said they were treated very badly and are very angry with the bank.

    As a result ABC tries to take its business to another bank and gets refused because of concerns in its prospects and ABC's customer run a mile after reading the website and realising the company desperately needs funds.

    What a clown!

  • Comment number 79.

    The US "big 3" (actually they're the only 3 carmakers in the US so why are they still called the big 3?) have been a disaster waiting to happen for about 25 years:

    1. They make much of their home market profit from large off-roaders and pick-ups that were always going to be vunerable when the fuel price went up

    2. They used to offer very generous pension and healthcare to their staff but didn't put away enough money to cover these liabilities in the future. I beleive that GM is paying for healthcare for twice as many staff as they employ!

    3. For years they sold their cars at cost in the US and made their money on the finance - they were called "credit houses that gave away cars with loans"!

    In my opinion, without the credit crunch one of them (Chrysler) would of been in Chapter 11 by the end of next year anyway and GM would have had to probably merge or file for protection itself. I'm afraid they all need radical restructuring.

    Oddly, in the case of Ford and GM, their non-US divisions mainly do quite well and turn profits so maybe we'll see Vauxhall, Volvo, Ford of Europe, Daewooo (Chevrolet outside of US) end up owned by other manufacturers and the "rump" US operations gradually wound down over the next few years

  • Comment number 80.


    On your blog yesterday, you said that the Government's intention with the bail-out wasn't to increase lending.

    Yet there's a story on the BBC website today saying that it was

    "Part of the conditions of the government recapitalisation was that money be made available for lending but Mr McFall said that "pessimism" meant this was not happening."

    Robert, you might want to have a word with your colleagues and let them know that Alistair Darling told you this wasn't the case.

    Or was your blog yesterday a lie?

  • Comment number 81.

    "Banks must put an immediate end to the dispossession of firms and people who have, thru no fault of their own, cannot service their liabilities - or face being named and shamed, according to the Treasury Select Committee chairman"

    Oops, I've misquoted the article.

    Ooooh - we mustn't distinguish between the deserving and undeserving poor, must we. Heck, Douglas Hogg did tell me that...


  • Comment number 82.

    my post 75

    Typo - I meant the job of the 'Citizens' Advice Bureau'..


  • Comment number 83.

    #77 Red Lenin

    "AAA+ Mortgages"

    The cause of this whole thing has been the entirely inaccurate rating of securities.

    We need to take the Credit Rating Agencies to task.

    How do they arrive at these ratings? What is the scientific formula?

    -Or do they go outside and consult the entrails of a chicken?

    The CRA's screwed up bigtime! They got it wrong and so did the Auditors.

    I notice they are all keeping their heads down now.

    We cannot trust any ratings.

  • Comment number 84.

    More problems at Northern Rock?
    Bank of China sniffing around HBOS?
    Why not sell Northern Rock to the Bank of China, and pay the poor shareholders some compo, through HBOS in and let the Bank of China re finance both, 'Halifax Rock', now that is an idea!!

  • Comment number 85.

    Most peolple seem to be missing the point here.

    The vast majority of the money the banks made has NOT gone to to the executives BUT TO the shareholders and the Government.

    Currently it is both these parties that are effectively having to play for the excesses and risks that investor pressure induced in the banking business model.

    It is a double blow for the shareholders who have seen the capital value of their investment in RBS reduced by over 80% and now effectivey more than halved by this share issue.

    The only winner here is the taxpayer, who has reaped the benefits of tax on bank profits, shareholder dividends and employee bonuses and who now also stand to up to 60% of a valuable part of the UK economy.

  • Comment number 86.

    At least he has said sorry when hundreds have not? it's a start . . .

    Whilst venting the spleen claiming fraudulent lending may help the soul, how much fraudulent borrowing was going on with self-cert mortgages and "borrow to let" mortgages.

    We can't have it all ways. Payback the bonusses yes, but pay back the dividends and share sale profits of shareholders - you voted him and the bonusses through.

    The most galling thing to me about having cake and eating attitude is Gordon BRuin. He seems to get away with claiming this mess is a "global issue that started with . . ", and yet claim personal credit for the preceding boom. The boom and bust were either BOTH global issues, or BOTH of his own making - he cannot pick, and choose. Wake up electorate.

  • Comment number 87.

    About 3 years ago i applied for a job at a very large Ford Dealership in Bolton. I was astonished to find it was owned and run by the RBS. I felt an uneasy feeling that this was'nt what a bank is about.
    When bankers start running other businesses and flying about in Private Jets money has gone to their heads!

    My first bank was the Natwest (then National Provincial)in Warrington in 1962. It needed a Solicitor's good name for whom i worked to get me an account! It was all pen and ink then and NO computers or credit cards! The really GOOD OLD DAYS!

  • Comment number 88.

    "Honda has announced plans to cut production at its plant in Swindon, which will close for 50 (FIFTY) days next year"

    Anyone doubting the chaos coming and reassured by M&S one-off 20%-off sale, think again.

    Fit the Keynesian model, Brown, does it?


  • Comment number 89.

    The apology is both pathetic and irrelevant. The damage has been done and it needs repair and good long term maintenance.

    What this mess has shown is that the great and good know little to nothing of running banks save ripping them off for their own personal gain even though they are servants of their shareholders.

    Nothing will be solved whilst the same managemet who generated the mess continue in office.

    It is also teh natural obligation fo eth bank to find savers and supply money to lend and if they can't find it here then they should be looking overseas locking in the currency premium and them offering fresh funds.

    If they can't do that why are they getting paid any salary at all.

    As for Legal and General backing down over Barclays, this just shows how weak our leading investment institutions have become and the management there needs to seriously look at what they are duty bound to secure for their investors.

    We have a total mess of regulation with thise prepared to throw legal fees to defend themsleves stopping investigations that need to happen.

    The sooner the FSA clears out those who have no idea of what is really going on and adopts the SEC platform opf regulation where no fish is too big the better for UK investors and teh public in general.

  • Comment number 90.

    83. Quite agree matey and the knock-on is that noone trusts any of the ratings anymore which is just compounding an ever-worsening situation

  • Comment number 91.

    hang on, Bit of perspective here.

    £700M of mortgage debt could be as little as 1500 housholds given the value of homes before the crisis, even less if there are any multimillion pound homes down south included.

    Robert, please, as the most listened to voice in the crisis, try and quantify these figures a bit more in the future as big numbers tend to be meaningless

  • Comment number 92.


    Leader of Somali pirates named!

    Later in the programme:

    Doncaster woman has twins and -
    property repossessions up by 12%


  • Comment number 93.

    The way to sort out negative equity is a good dose of inflation. At the same time it wipes out the savings of the prudent middle classes.
    So that's the reason for the current government policy.

  • Comment number 94.

    Post 88 I saw that as well.

    If Honda re going to stop making the Civic for 50 days then we really are in deep trouble.

  • Comment number 95.

    selling their private jets would surely cover £25 billion? I'm probably wrong, cos I've never owned one myself. I'm a bit of a hoarder-one of those strange folk that keeps thing for a long time-preferring to make good and mend rather than buy new on credit!

    The cost to the working people is massive. I watched a very close friend's business go to the wall this year. It was a small business whose employees all came from the local rural area. It was returning a modest profit, and the directors often went without remuneration preferring to plough profits into the company and paying their hard working staff. They had to borrow from their bank when they were burgled while waiting for their insurance claim to come through. After 5 months, insurers refused so they took advice, appointed legals, and asked the bank for a small increase in their overdraft to cover themselves. Their balance sheet was good, but the bank refused. 2 weeks later the bank then withdrew their overdraft facility. The company went down. This happened months before the crunch. Their bank was RBS.

    Having seen this at close quarters, I am extremely reluctant to ask any bank for a loan if I needed one. You may be lucky enough to get one, but they have a small print sentence giving them the right to foreclose at any time. I have a nasty feeling that mortgages are the same. I also suspect that this same clause is what credit card companies were using last year to withdraw their facilities (remember Egg).

    Companies will make people redundant in anticipation of hard times, rather than wait as banks cannot be relied upon to lend via overdraft. Nor can they be trusted not to foreclose at any time.

    The CBI is right, give SME's help now. People can cut their costs and live more frugally, but only if they still have a job!

  • Comment number 96.

    What is Bank supposed to provide? It's like asking what HR is supposed to provide in a Company.
    A Bank deposits and lends to its customers. HR supplies the workforce to its employer.
    But it is not enough as they don't like being just an ordinary, reliable servant. The big image is always needed and to get it needs the complexities within services today. No wonder it's all a mess. We need an army of specialists just to understand what we have produced.
    When we finally go back to the fundamentals of trade, manufacturing and finance and stop being clouded by the 'academics' we might just return to a World we'll be able to handle and better undertstand.
    (note that I left out politics - another 'contrived' science)

  • Comment number 97.

    in 6 months credit ratings will be rubbish for thousands of people-it will take years for them to be able to get a mortgage! No good plugging all details into a computer, it will always say no!
    The electronic world has no room for personal circumstances!

    Let's just ditch LIBOR, credit reference agencies, and the FSA. Come to think of it, let's bin the lot, banks and government, and start again. There has got to be a better way-this system is so broken, no amount of money or apologies will fix it.

  • Comment number 98.

    I feel a bit sorry for Sir Tom.

    One minute all's going well, and you're coining in massive profits whose origin you scarcely understand, and all those share options you've built up over the years are well in the money. You're going to retire in the next few years. Knighthood's already in the bag. You then get offered the chance to out-bid your peers and hoover up a tasty Dutch morsel at what seems like a bargain price. Today RBS, tomorrow Europe and well on the way to World Domination.

    Then reality bites, and you're done up like a kipper.

    Luckily, Sir Tom you've still got, I dare say, millions (billions in Yen, perhaps) stashed away, so although you missed the jackpot it won't be penury for you in your retirement.

    In response to NR's tiny problems, and the much bigger ones of Citibank, etc., the Governments of the developed world are sure as hell going to go on a money-printing mission very soon. This was inevitable once they realised that it was impossible to allow major banks to fail, since the public don't like being penniless.

    Look out for zero official interest rates throughout the G7, and unfunded tax-cuts. This has to happen, but...

    The really tricky bit will be to slam the brakes back on before the 'recovery' goes way too far.

    That means interest rates back up, and taxes even higher than now, once any green shoots emerge. If they leave it even a month too late, we'll get well and truly forked by massive inflation.

    Hard hats on.

  • Comment number 99.

    Ratings Agencies sure got it wrong.

    But what about today?? Their prices are sky high, if you can get cover on many private equity backed businesses.

    12 months ago, many were A+ rated, now we cannot even get ANY cover on SEVERAL household names.

    The working capital squeeze on SME's is unbearable - overdrafts reducing, no credit insurance on our bigger customers, and those we can get taking longer to pay (over 4 months oin ocne case).

    Good (still profitable) businesses who were prudent in the past are being cash squeezed to death through no fault of their own. Running a reasonably sized SME employing 50 - 80 people it feels like you are at the bottom of the food chain - squeezed both ends by custoemrs and bankers.

  • Comment number 100.

    # 83 # 90

    Something amusing on ratings and rating agencies.

    GE in the US is rated AAA by S&P and Moody's. Its financing arm, GE Capital has applied to become a bank holding company (I think) so that it can gain access to the TARP funding. It's being kept afloat at present with a USD 100 billion plus guarantee from the US Treasury Department. Care to guess GE Capital's credit rating. I'm sure you guessed right - yes it's rated AAA.

    Credit ratings are a bit like aircraft seats: the more you pay for it, the better it is.


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