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Collapse of confidence in banks

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Robert Peston | 13:46 UK time, Monday, 19 January 2009

As I said this morning, this is not a bank rescue plan. But if it had been, it would have failed miserably.

Barclays' share price has fallen again today. At the current price of 90p, this bank's entire market value is £7.5bn. And remember, this is a bank that said on Friday night that its profits for 2008 were considerably more than £5.3bn.

In other words, investors currently value this giant international bank at a little over one year's profits. Which is little short of extraordinary.

And let's not even mention that Royal Bank of Scotland's shares are down by more than 50%, on the supposedly reassuring news that taxpayers will be sharing in its future pain.

Confidence has drained from the banking system. And to state the obvious, today's myriad announcements from the Treasury have not succeeded in rebuilding that confidence, which is so vital to a functioning economy.

UPDATE, 04:20 PM: What's going on? Why have shares in RBS, Lloyds TSB and Barclays all been knocked?

Well investors have been well and truly spooked by the sheer size of losses at Royal Bank - especially since these have been incurred before the recession really starts to bite on the ability of households and companies in the UK to pay their debts.

But the other concern is that the banks are - in a way - in the process of being nationalised, without the bother of the government taking control of the shares.

The fear of investors is that with taxpayers providing so much support to the banks, any spoils would go to the state in the form of fees, and to UK households and companies in the form of lending mandated by the Treasury at uncommercial interest rates

As for shareholders they would receive the slimmest possible returns for years to come.

Comments

Page 1 of 5

  • Comment number 1.

    The Scrooges in Hard Times

    It is the banks
    That are the scrooges
    This Christmas past
    Tightening the screws
    On credit fast
    Customers squeezed
    Businesses strangled and seized
    Starved of credit, entangled
    In this credit crunch pain and unease
    Homeowners who face repossession
    Retail chains facing a tough recession
    Yet these Hard Times are the hauntings
    From the Spirit of Greed Past
    Billions of pounds in bonuses vast
    And short-term profit nets recklessly cast
    Unregulated, unchecked
    Bouncing to a taxpayer bail-out cheque
    And now it’s all hands on deck
    As the shrinking sinking ship of the economy
    Bound, anchored and drowning in debt
    Is fast in danger of becoming
    A wreck

  • Comment number 2.

    Are we sure that this has nothing to do with short selling?
    I have yet to hear any rational explanation of how this practice can be of any value to anybody but the sharks who fill their boots.
    Why was it allowed to happen again?
    Can someone please explain?

  • Comment number 3.

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

  • Comment number 4.

    I get the impression that many folks - not least our 'prudent' government - are surprised by this seeming endless sequence of bad news. (The ones who are not completely punchdrunk already)

    They shouldn't be. The dominos fall slowly in these circumstances.

  • Comment number 5.

    Confidence, Banks in the same sentence?

    Robert,

    Labour have thrown their last dice, and already we can see the effects of their 'policy'.

    My god, someone pull gordo aside and tell him to call an emergence election - We are in DEEP trouble!

  • Comment number 6.

    RBS, make that over 62%

  • Comment number 7.

    So what you are saying is snapshot share prices no way reflect the true market value and the market's perception always exaggerate reality and emotional identification is a mild form of hallucination.

  • Comment number 8.

    The trouble is that UK plc's credit rating is probably falling almost as fast as a bank's share price.
    When people wake up and smell Flash's hypocrisy, "I am really cross with RBS!", what will happen?
    How does he think we feel with him in control of the national piggy bank?
    One word, Incandescent!

  • Comment number 9.

    Investors paving the way for a run on the banks?

    Time for plan C from Brown and Darling, here's hoping it's also "little short of extraordinary"

  • Comment number 10.

    COLLAPSE OF CONFIDENCE IN THE

    BANKS??

    IVE HAD NO CONFIDENCE IN THE UK

    SYSTEM FOR FOUR YEARS.


    THERE IS STILL NO GUARANTEE ON

    DEPOSITS OVER 50K SO WHATS THE

    POINT OF BOTHERING WITH ANY OF

    THEM??

    WE EVEN PULLED OUT IF THE IRISH

    SYSTEM BEFORE CHRISTMAS ....

  • Comment number 11.

    Tell me Robert! What am I missing here. Three questions. 1 If the banks are to lend more money where is it come from - UK deposits? If so then spending must fall thereby extending the recession or is it to come from abroad - but why should it?
    2 Or is it to come from Monopoly money spilling off the government's printing presses? Then can we stand by for rip roaring inflation?
    3 If the problem is too much lending then how does more help? Or is it that some people should reduce their borrowing so others can increase it.

    I am not surprised that I am confused but it is plain to me that the titanic brain of Gordon Brown is just as baffled.

  • Comment number 12.

    I don't think it is entirely lack of confidence in the banks, but also a total and absolutely lack of confidence in Gordon Brown and Alistair Darling and the rest of this government to sort out this mess which is largely of their own making. If they hadn't allowed banks to lend in this cavalier fashion; or allow home owners to remortgage just to buy a car or go on holiday; or allow Northern Rock to give out 125% mortgages, which in reality was 100% mortgages and 25% unsecured loan. The list is endless. It was a complete failure of this government banking regulation. From the Treasury to the useless FSA and the Bank of England. We have been living in a false world of debt with a government who just didn't understand how it all worked.

  • Comment number 13.

    I am sick of hearing about it not bieng a rescue plan , from my limited experience you cannot buck the market EVER.
    Pour all the cash you like into and you will never increase confidence one percent .
    They should have been put to the wolves at the startof this , the market would have shaped the outcome and what was left would have been stronger and able to ride it out

  • Comment number 14.

    Confidence in the Banks collapsed a long long time ago. They need nationalising now not later - and the Government needs, as you rightly pointed out on the news last night, to completely overhaul the pay structures for all bankers to fit more in line with general industry and the civili service, health service etc - with immediate effect.

    Then the public will be happy we are NOT HAPPY now (my wife was remonstrating with you on the news about this last night - not that you heard her!).

    For anyone to say we need to continue to pay such high salaries to maintain the calibre blah di blah, is bunkum pay them all less and they will still work there - there are no other jobs..............

  • Comment number 15.

    RBS shares 13p - ACurzon - you could nearly afford to buy now rather than set up your own bank - you could make an offer and then do due diligence then we'd all get to know how easy/hard it is to establish levels of toxic debt etc??

    If its too high you could just withdraw your offer!

  • Comment number 16.

    I would love to know if short selling is involved in these massive falls in banking shares today?

  • Comment number 17.

    Robert,

    Markets are valuing the banks as they see them, which is the banks are not viable business models.

    Wake up please the party is over!

    The City of London as a financial centre is finished.

    In fact so is the rest of the UK, US and virtually all of Europe.

  • Comment number 18.

    Today's wild and dramatic bank share price movements are alarming. I would guess that short selling is the main driver, now that it is allowed once more. It is time for the SFA to ban short-selling on fianncial stocks indefinitely. Otherwise a limited number of greedy funds will bring an industry to its knees.

  • Comment number 19.

    So If I had the money, I could buy Barclays for 7.5 billion- write a letter to all the people who owe me money and say "forget it- your debt is written off"- or put the bebt in a toxic bank-get some nominal return, say 1%- and get a return on my money of 5.3 billion=70%

    Would this work

    This would be Master of the Universe Stuff

  • Comment number 20.

    Owch, my post #66 on Robert's "saving the nation" thread starts coming true quicker than expected!

    Likely next steps:

    - legislative intervention to prevent banks falling into administration

    - coupled with state control over lending amounts

    - coupled ultimately with (full) nationalisation of key lenders

    - and lots and lots of taxpayers' money sunk into the unholy mess

  • Comment number 21.

    Robert

    You must remember Sir Humphrey's first rule of government..

    Don't believe ANYTHING - until it has been officially denied!

    The taxpayers might have insured RBS's debts, but we cannot insure the value-losses on their assets...
    That is what will drive this situation..

  • Comment number 22.

    Can anyone come up with figures as to the maximum loan losses that banks will face under the insurance scheme?

    If it could be said that such and such is just about as bad as things can get and no worse then surely that would put a floor under banks?

    You dont have to agree with the insurance scheme to acknowledge that a major benefit of it will be lost without these figures.

  • Comment number 23.

    Hello Mr Peston

    The RBS share price is 10p right now (19 Jan 2009).

    I have not heard this news broadcast by the BBC.

    Can you please explain why?

    The bank that owns NatWest is broke. Is this not newsworthy?

  • Comment number 24.

    I know I'm just repeating what everyone posts here every day, which means the situation remains unchanged.

    In short-

    No-one knows the value of future bad debts at each UK and US bank.

    Until we know, the uncertainty will cause investors to press the "sell" button.

    The government tries to overcome this by promising "insurance" of potential bad debts.

    So far government action hasn't calmed investors' nerves.

    The government buying new shares in each bank just dilutes the value of existing shares further.

    Then there's the severe recession to worry about, and the currency collapse, and the coming inflation, and the falling housing market, and whether China can uncouple itself from the USA.....

  • Comment number 25.

    Those in the know are not saying, and those doing the saying dont know.

  • Comment number 26.

    You may be right Robert, it's not a bank rescue scheme, it's a " try to rescue a few Labour seats in the house of commons at the coming election scheme ". Not even a help the economy scheme. A cynical attempt by incompetents to con the electorate.

  • Comment number 27.

    If Banks can turn our homes and equity into financial products to trade and sell on the markets, why can't we? If peoples equity in their principal residence property was realisable they would not be insolvent, and debtors would not be able to force them into bankruptcy, and insolvency practitioners would not be able manipulate the problematic situation to the max by stealing all their equity.

  • Comment number 28.

    Robert,

    So will you take responsibilty for not questioning or repudiating the Government since last Summer/Autumn 08, when they undertook their disasterous banking plans ?

    You did not question their plans which took Billions of Pounds of worthless UK bank debt off the hands of foreigners and brought it onto the UK Government's shoulders (ie onto the shoulders of our children, in the form of slavery-level future debt to overseas interests). And for no reason and no good, except to earn an extra few months of political rule at terrible, terrible cost.

    Someone this morning commented that 'Robert Peston' is an anagram of 'Rotten Probes'. Does your name give you away ? (sorry for feeling so strongly, but in my opinion (my opinion only) you have not served the public interest in your BBC role).



  • Comment number 29.

    As Pres Bush would say. You can fool me once but then you cant fool...but dont fool me...If you fool me once er dont trick me twice.. er.. Dose anyone know what the hell is going on, as under normal trading conditions I would be up to my armpits in bank shares right now.

  • Comment number 30.

    Well, Mr Peston, would you buy shares in a bank knowing the next and final option is nationalisation and Gordon the Golem trashing your investment, like he trashed the investors in Northern Rock? What about those who coughed over £12 billion to RBS only to find the government now owns 70% of it?

  • Comment number 31.

    Gordon Brown says the government will do 'everything it takes' to support the economy


    RESIGN, YOU FOOLS!

    GC

  • Comment number 32.

    There is no technical 'fix' for sentiment.

  • Comment number 33.

    I think you will find RBS are now down nearly 2/3 on the day.


    Must be down to the fact that Crash has boosted our shareholding to 70%.

    Is this a sign of lack of confidence in the bank or the UK government?

  • Comment number 34.

    I am increasingly alarmed at the state of our Banks. I worked for one for 40plus years and have seen on the inside some of the pressure tactics to achieve targets including mis selling products to 'protect the loans'.
    However the bosses must now learn old Banking practices and for once put the customer first!
    Irresponsible lending has taken its toll for 'market share'.
    The value of Banks shares have been damaged beyond belief and I am sure that the method of 'short selling' is nothing but spivs making profit out of someones misery and should not be allowed.They also affect the share price irresponsibly.

  • Comment number 35.

    I fearthat the total nationalisation of RBS is but a breathe away...well done short sellers, you must be pleased.

  • Comment number 36.

    Dear Mr Peston

    The RBS share price is currently 10p.

    I have listened to BBC news reports and there is no mention of this stark yet easily understood fact.

    Why is this the case?

    The owner of NatWest is broke and will need to be nationalised. Yet this does not merit a mention on the BBC.

  • Comment number 37.

    Tweleve months ago RBS shares were worth 350 pence each, as I look they are now trading at 11 pence each, some 3% of their former value. Can't be much longer before we see the end of RBS and the start of HMG-RBS.

  • Comment number 38.

    Theft Of Property is the Name of the Game
    Ask the Divorce and Bankruptcy Courts how to lose yours
    at www.gov.uk

  • Comment number 39.

    If you had the available capital now....what would you do with it? Invest it in the British economy by means of an ISA designed to invest "safely" in the Footsie? Or put it in some dodgy foreign bank offering over-the-top interest rates on savings which are greater than those envisaged as a rate of return on stock market investments????

    What this government has done in the recent past is to let those who have invested over years and years in an ISA lose money on their investments.

    At the same time they have ensured that those investing in foreign banks, have lost nothing...including the returns they were promised!!!!!

    What could Gordon Brown call this policy....what soundbyte could he choose.."British Compensation for Foreign Investments"?

    No wonder he's left us in such a mess.

  • Comment number 40.

    RBS shares are plummeting - will they be nationalised by the end of today?

  • Comment number 41.

    How much has the British taxpayer now lost on RBS and HBOS shares? Must be a pretty penny.

  • Comment number 42.

    The man in the street will not regain confidence in the system until "those responsible" for the fiasco are brought to book in an Enron-esque manner.

    For years the banks have been practising profligacy and had almost entirely given up preaching prudence to customers.

    This profligacy was driven from the top by a desire for enormous salaries and even more enormous bonuses. BUT, few fully understood the value of the investments they were making and the exposure they were creating.

    "If we say we've made a big profit - we'll get a big bonus" - I'm sure was the mantra.

    At best the management has been negligent in the matter, at worst it has been complicit in hiding losses.

    Salaries must be cut across the board to the same levels of "mere mortals", recover bonuses when there is evidence of complicity - or even sterner sanctions.

    If the staff don't like it then natural wastage is the way forward, as they are not to be trusted in Nu Labour's Nu Banks!

    Only when these obscene practices of linking non-existent profits to pay are outlawed will confidence return.

  • Comment number 43.

    Confidence comes from a leader at the top who shows courage honesty and knows for sure where they are going and can take the people with them.

    The every day bumblings of our present leader just ooze uncertainty and so many U turns and reversals he is quite obviously disappearing up his you know what.

    No one can ever have confidence in anything until this man steps down

    The leader of the CBI should join him for I cannot believe that this man is truly speaking for business.

    Seems more like he's joined at the hip with Brown.

  • Comment number 44.

    "Confidence has drained from the banking system. And to state the obvious, today's myriad announcements from the Treasury have not succeeded in rebuilding that th a functioning economy."

    This has nothing to do with confidence and everything to do with the FSA Failing in its job once again by allowing the ban on short selling to lapse.

    IF you continue in this vein you should probably consider a diferent career as business editor is clearly not your forte

  • Comment number 45.

    It strikes me that a very simple solution would be to get the banks to mortgage their bad debts over say 25 years. This way they would repay the taxpayer from future profits. The normal person has a debt in the money borrowed to buy a house. We would force the banks to come claen on their requirements. OK it will be a big number, but then it is going to be big anyway and we have have no idea right now just how big! The taxpayer will pay out on the insurance policy - bankers are probably a tad more intelligent than the politicians when it comes to negotiating a deal.

  • Comment number 46.

    Exactly. The government's actions are destroying confidence in even the sound banks (like Barclays). Brown and Darling don't talk about rescuing particular bad banks. They just talk about rescuing "the banks". We really need to start discriminating - either someone is insider trading on a big scale at Barclays, or the current market valuation bears no relation to the real state of that company.

  • Comment number 47.

    Nobody knows anything, or if they do, they are careful to hide the fact.

  • Comment number 48.

    Possibly the biggest buying opportunity in out lifetime.

    This has now got DOWN to the levels where the headless chickens are running wild fill your boots boys and girls this is where we start to make the money!

    Barclays 90p


    OMG


    It’a NO Brainer



  • Comment number 49.

    Gordon Brown spoke this morning of 'Irresponsible financial risk taking of the past'.
    Maybe he needs reminding of his Mansion House speech in June 2004, an extract below.
    How times change.


    'Let me thank you first for the scale of the contribution you make to the British economy - the £50 billion of income, 4 per cent of national output, and the 1 million jobs that arise. And let me thank you also for the resilience, the innovative flair and the courage to change with which you have responded to not just the world economic downturn but to the greatest economic challenge of our times - the challenge of global competition. When last year, as we made our euro assessment, we conducted a detailed and in depth review of the British economy, we were able to conclude that because you, here in the City, had been prepared to change and adapt, to innovate and invest in the future, to embrace technological change like automated trading not as a threat but as an opportunity, and to acquire – from all over the world - the skills financial services need, London’s already considerable and historic advantages and assets - our stability, our global reach, our reputation for integrity, our willingness to be flexible - had been so enhanced for the new global era that, even in the face of a pre-eminent American economy and an integrated euro area, London has today '

  • Comment number 50.

    Chaps, its no coincidence that short selling was re-enabled last week, scare mongering went ten-fold and bank shares took a historical dive.

    Fund managers/traders have been sharpening thier knives for weeks and friday was time to carve the turkey.
    Shorting is killing the markets right know and not giving a true value of companies.
    Like Robert said how the hell can Barclays be valued at only 7bln ?

  • Comment number 51.

    So on to plans I, M & F then.

  • Comment number 52.

    Robert.

    Time to get really worried!
    How are the guarantees given on loans going to be priced?
    Or, if the loans are going to be used to back bonds or other securities, how are the bonds going to be priced? Maybe a market will develop in these loan-backed securities which is how we came into this mess in the first place as pointed out by Stephanie Flanders before she went on maternity leave over fifteen months ago. Where is she now? We need her!
    She may say that the game is up and that it time to create a new banking system based on the nationalised parts of the existing system whilst letting the non-publicly owned banking sectors go to the wall.

  • Comment number 53.

    Confidence is built and destroyed by all manner of things - some rational some not. How much of this is present mess down to the media not just reporting the news but making it by spreading doom, gloom and pessimism?

    Perhaps its not just bankers but journalists who should take some responsibility for the wreck!

  • Comment number 54.

    If you held RBS shares today at 25 and thought they would be nationalised at 0, I suspect you would sell even at 1 if you could

    That is what appears to be happening

  • Comment number 55.

    RBS is now surely heading for 100% nationalisation. I hope the Government look after the poor RBS long standing employees who have been religiously topping up their personal share bonus schemes over recent years. Retirements ruined.

  • Comment number 56.

    The problem is that until the housing market hits bottom the "assets" held by the banks are continually dropping in value making there position even worse.

    As for confidence the whole system needs swept clean from the chancellor down....continually seeing the perpetrators of the crime telling us they know what they are doing instils no one with confidence.

    We need an election and the boardrooms of the banks cleared.

  • Comment number 57.

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

  • Comment number 58.

    If we do nationalise all the banks what would make us different, economically speaking, from Cuba?

  • Comment number 59.

    The share prices of the banks continue to collapse, despite the Barclays and HSBC annoucements.

    The senior managers FSA who advised/decided upon lifting the short selling ban should be sacked, as they are costing the taxpayers about as much as the former managers of RBS.

    What madness to lift the ban at a time like this.

  • Comment number 60.

    Re RBS. How can a bank worth 12.5P per share pay out a dividend over 23.1 p per share in May?

    For those of a weak disposition don't read this

    http://www.investors.rbs.com/investor_relations/share_data/dividend.cfm

  • Comment number 61.

    "Confidence has drained from the banking system" surprise surprise.

    maybe it has something to do with:

    bankers paying themselves obsecene bonuses

    putting a short term buck ahead of long term viability

    still being completly evasive on the level of toxic debt they hold

    still hardly anybody has been charged and held to account for wrong doing

    expoiting the credit cruch they caused by increasing their interest charges to small businesses

    no solid proposals on what they are going to do to reverse the harm they have done

    Only a fool could have confidence in the banks to show responsiblity and self restraint

  • Comment number 62.

    This truly is the darkest of days for RBS, in the office today there was a quiet resignation we were going the way of Northern Rock.

    How such a once great company and being great to work for it ended will take time to digest and understand, it seems to have been a drip drip effect that is now cascading. Also can't quite believe the short selling ban was lifted on Friday (the business day before this plans were revealed by HMG) Who on earth made that terrible decision?

    Sad gee

  • Comment number 63.

    #33 Ian_the_chopper:

    "I think you will find RBS are now down nearly 2/3 on the day.

    Must be down to the fact that Crash has boosted our shareholding to 70%. "

    +

    Do we have the appropriate representaion on the Board(s) now?

  • Comment number 64.

    And the Shortsellers have been allowed to sell down the Banks again!

  • Comment number 65.

    #31 Guy Croft

    I totally agree.

    "Gordon Brown says the government will do 'everything it takes' to support the economy:

    RESIGN, YOU FOOLS!"

  • Comment number 66.

    39:

    He gave B and B to Santander for a song.

    He allowed A and L to be bought up cheap.....

    But what of the Spanish property crisis ?

    They like our Housebuilders are suffering from a collapse in demand for new builds.

    Ask any expat trying to sell in Spain !

    Thinking of Housebuilders when does the Gov't plan to launch operation Nationalize on them ?

  • Comment number 67.

    All this seems to be like 'shuffling deckchairs on the Titanic'.

    We are sinking no matter what. This current waving of the arms won't help in the long term. The status quo cannot be maintained.

    Please, however scary, would someone tell it like it really is.

    Maybe it's not as bad as we all think but I fear it is. I suppose if the men or women in the street really knew there would be mass panic as all we have believed in for all these years is coming crashing down around our ears.

    Monumental changes need to be made and I'm afraid changing political parties won't help either because both operate on now out of date economic systems.

    I read somewhere recently that many of those who have gone into economics etc were often those who were considered thick at school and studied such things as commerce and economics 'cos there wasn't much else they could do. There may well be some truth in that with the way our current crop of bankers and politicians carry on. A sad lack of real intelligence and imagination.

    What does give me hope is reading what many ordinary people are saying. We can't all be stupid can we Darling Brown?

    Is there an alternative system out there.

  • Comment number 68.

    Oh dear Gordon,

    Your grubby little politiking has been shown up immediately for what it really is.
    The vast majority of this country must be scowling at their telescreens when your frowning face is presented to them.

    RESIGN YOU INCOMPETENT JOBSWORTH

    YOU ARE KILLING THIS COUNTRY

    WE WON`T FORGET YOUR CENTRAL ROLE IN THIS COMING TRAGEDY

    YOU WILL BE PROSECUTED!

  • Comment number 69.

    I hope the Pension Funds will have the strength of character to refuse to buy back the Banks when the Gov't tries to sell them back to them.

    The Shortsellers are making money today.
    Presumably they pay tax on that ?

    Or does it count as Gambling income ?

  • Comment number 70.

    Please may we have
    ...a well balanced detailed documentary on the Swedish experience in the early 1990s
    ....Vince Cable presenting Desert Island Discs since he's not allowed to take over
    and...
    nationalisation of the banks. You don't have to be old labour to do things like that (though they - and the Civil Service - might accomplish it with 100% ineptitude).

    Suspend shares now, and carefully monitor how the Irish government deals with Anglo-Irish (including its now defunct and allegedly crooked CEO).

  • Comment number 71.

    If Shortselling is a legitimate 'TRADING' strategy then any net profits should be subject to INCOME tax, (or corporation tax).

    If Shortselling is just Gambling then it should be outlawed.

    Taxed or Outlawed.

  • Comment number 72.

    Erm I think someone has just put too many nought on their price, RBS shares are now being shown as

    510p thats UP 1470%

    Today has been another bonkers day!

  • Comment number 73.

    RP Was quite correct to state this morning this recent attempt to inject capital into the banking system was about saving the wider economy and not the banks.
    We are all in danger of exasperating this crisis for that is what we are in just as great as any in living memory bar possible invasion in 1940.
    It appalls me that the majority of contributors on here still seem to think it is clever to make political points and promote their own self interest
    We all have too pull together if we are to avoid a 1930's slump, it is worth remembering that unemployment peaked in the US at 30%
    It is surely the duty of a government to avoid this at almost any cost.
    If not, many taxpayers who throw their hands up in horror at liquidity currently being injected into the economy will find themselves out of work for years, it took 10 years and a world war to rebuild from the 30's slump is that what we really want.

  • Comment number 74.

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

  • Comment number 75.

    #50

    "Shorting is killing the markets right know and not giving a true value of companies.
    Like Robert said how the hell can Barclays be valued at only 7bln ?"

    To me I think that we're approaching the bottom of the market - someone could make some serious cash by piling into these shares soon.

  • Comment number 76.

    Stop blaming the short sellers, you have as much right to bet on a price falling as rising.

    I am also sick of Brown and Darling blaming the banks for all this mess - like there mightier than thou.

    Blame the government for this mess, it will be game over by February for the UK.

    Get you money out of sterling before the quantitive easing starts......





  • Comment number 77.

    We cant fix something if we don't know all of the facts. The Banks have been evasive and duplicitous in the information they have (so far) given.

    If the Government (and therefore the Tax Payer) is to help them out, then all of the banks need to "come clean". It is the only way.
    If you have an illness, a doctor will try and find where and what the problem is and what has caused it and try to find a appropriate remedy.

    The banks will try the "commercial confidentiality" wheeze to try and keep it all hushed up - the Government should call there bluff and use any existing law (or even pass a new law) to force the banks to tell all. It's very high risk, but the levee is nearly breaking.

  • Comment number 78.

    bank and other market shares were overpriced yonks ago with stock splits and more stock splits etc

  • Comment number 79.

    With the huge bet this Government is taking with our money and the massive debt it is creating, the Country should be demanding an election now.

  • Comment number 80.

    58: Cuba has great Cigars and good Doctors.

  • Comment number 81.

    @50 Bull

    "Chaps, its no coincidence that short selling was re-enabled last week, scare mongering went ten-fold and bank shares took a historical dive.

    Fund managers/traders have been sharpening thier knives for weeks and friday was time to carve the turkey.
    Shorting is killing the markets right know and not giving a true value of companies.
    Like Robert said how the hell can Barclays be valued at only 7bln "

    Its obvious really. The hedge funds were stuck in an uncomfortable position when Brown and Darling ordered the FSA to ban short selling. The FSA have allowed the ban to lapse and the Hedgies are back in with a vengance and are all out to teach Brown a lesson.
    They are going to give him a right old spanking for leaving them high and dry in an exposed position, the only way to have prevented this would have been to keep the ban in place until ALL the hedgies had gone out of business

  • Comment number 82.

    There seems strong concensus that things are likely to continue on a downward slope for the future.?

    That interest rates are likely stay low and go even lower!!..

    The question that i have not heard much of an answer or even attempts to answer is when the 'shoots of recovery' are likely to be!

    When homeowners/business need to prepare for interest rates to rebound and start rising? Is it likely to be in 6 months; 12 months or because the economy is too fragile 2 year/ 3 years time?

    Can UK lenders and savers expect a similar timescale to the zero % rate of interest that Japan experienced less than a decade ago?

    Could that stagflationary period, exemplied by o % interest rates, last the 5 or so years that Japan did?

    Anyonr havr a strong opoinion ...!

  • Comment number 83.

    How does it go? ' The more things change the more things stay the same'.

    Being Australian I think of the lines in an Australian song from the 1880s.

    "The banks are all broken they say and the merchants are all up a tree, when the big wigs are brought to the bankruptcy courts
    what chance for a broken down squatter like me.

    Sort of tells it like it is today.

    I wonder what constitutes a depression, I'm becoming depressed so think I will go and have a nice cuppa tea!

    Oh, 'tis good to be a musician as we can always sing about things!

  • Comment number 84.

    Seems we are in free fall at the moment. Another load of our dosh gone down the drain. At least the public are not so gullible this time round and are starting to question the competency of Brown and Darling.

    Just keep an eagle eye out tomorrow. It will be interesting, with Barack Obama being sworn in, what little nuggets of bad news this Govt will bring out.

    Experience has shown that on days like this all manner of things will be published by Nu Labour in the hope that the electorate will be kept in the dark.

  • Comment number 85.

    I see there is a 'Global Derivatives and Risk Mgt show' coming along.

    Is that like a Petrol Refiners and Pyromaniacs Confederation?

    Am I right in thinking that it is the unfathomable risk these derivates may hold that is really the crisis?

    If nobody can value them, then why did someone buy them?

  • Comment number 86.

    It seems to me that banks can do whatever they think they need to irrespective of the governement requests and the perceived needs of the wider public.

    The banks survival appears to take precedence on anything else. The public is not informed on whether the situation has progressed toward a solution over recent weeks. The government does not seem significantly more informed.... Instead we are continually told that current actions are insufficient and that there is a need for an ellusive world effort.....

    As savers, we are thus expected to be good potential market losers either directly through savings/investment or indirectly through the government numerous reactions with taxpayers' money.

    As long as this situation stays like this, the confidence in the banks valuation will remain abysmal.

    I would be in favour of forcing banks to publish daily reports of their financial situation with the view of monitoring in real time their running cost to society and perhaps proving the situation is improving....

  • Comment number 87.

    We predicted this woudl happen last week. Now the Government will be forced to have another set of emergency measures.

    The handling of all of this alone demands an independent investigation.

  • Comment number 88.

    There once were a couple of carpenters who built 3-legged stools.

    The first one they managed to sell was brought back because it wobbled, so Gordy cut a bit off the leg that was too long and gave it back out to the customer.

    When the customer got home he found it still wobbled, so took it back again. This time the other carpenter, called Ali, cut a bit of the longest leg and stated everything would be fine.

    Unsurprisingly, it still wobbled.

    After many attempts by both carpenters the customer finally had a stool that was stable ......... when he was flat on his @***!

  • Comment number 89.

    Thank you for at last relating profits and share value to turnover.

    Without knowing what percentage of turnover a profit or loss figure is it may impress those who know nothing (remember the Hoohaa a year ago about record profits!!!) but in judging performance it is pretty much worthless.

    I still can't tell whether RBS's performance is better than Citigroups as your esteemed employer has seen fit to throw up the losses, but not put them in perspective. Sloppy and meaningless.

    For Barclays to be only worth a year's turnover must mean it is believed to be sitting on some pretty heavy liabilities. A bit like Woolies - fine performance but not when £300 million in debt.

    What about the real values - what is the asset value of our major banks? They must have property etc. And what about the liabilities - leases on loss-making branches etc.

    I foresee fewer than half the bank branches being open a year from now - with lower turnover they just can't afford it. Prepare for a job bloodbath!

  • Comment number 90.

    #58 dceilar:

    'If we do nationalise all the banks what would make us different, economically speaking, from Cuba?'


    Their currency would be worth more?

  • Comment number 91.

    Paper trail

    Wanless to NW
    NW TO RBS
    Wanless to NR
    RBS to NR

    What goes around comes around

  • Comment number 92.

    Why act surprised? Who on earth would buy a bank share? Little prospect of a dividend for years to come.

  • Comment number 93.

    Serial incompetence from the Great Leader and his sidekick - standing there telling the world that the banking system still hasn't come clean! No surprise that confidence slides further with the share prices!
    Bring on the General Election!

  • Comment number 94.

    In any other field "short-selling" or borrowing (for a fee) some stock to sell would be viewed as the realm of the confidence trickster - somewhat akin to hiring a car from Hertz and selling for cash at the nearest car sales forecourt in the hope that you could buy a replacement car for less next week!

    Confidence tricksters or what?

  • Comment number 95.

    Robert,
    Surely what is needed is some mechanism to force the banks to come clean about the full extent of there exposures
    Until that is done all attemts to restore confidence are surely doomed to fail

  • Comment number 96.

    Do you know what I'd like to see -

    a point by point guide to the banking and finance structure that has allowed this disaster to happen -

    No! Not Robert Peston's guide - Gordon Brown's Guide!

    So come on Gordon, pen a Guide.

    Then we can all discuss it, mark it, and if necessary ask him for clarifications.

  • Comment number 97.

    It is very interesting that Brown is now capitalising on what he claims is reckless lending by the banks for causing the current crisis thereby absolving himself. Yes they have been reckless but not to the extent proclaimed. In general they have maintained the sound principles necessary for good lending decisions but they could not have anticipated the substantial downturn in property values and demand for manufactured goods resulting in many people losing their jobs. It is the mismanagement of the economy by Brown that has created the current situation with many people being unable to meet financial obligations and thus resulting in the creation of so called toxic loans.

  • Comment number 98.

    Update on the crisis straight from the office of the Great Pretender:

    Gifted Gordon: What will we do, Darling?
    Chancellor: We will do whatever it takes.
    (later)
    Gifted Gordon: Yes. As I said before we will do whatever it takes.
    Chancellor: As I said before we will do whatever it takes.
    (pause)
    Gifted Gordon: What exactly is that, Darling?
    Chancellor: Not a clue, sorry. But we will do whatever it takes.
    Gifted Gordon: Yes we must keep saying 'we will do whatever it takes' however irritating it may be.

    (continues..)

    GC

  • Comment number 99.

    Thought for the day

    Politicians wave their arms about talking balls

    They are testiculating

    Come on everyone smile a little on the most depressing day of the year

  • Comment number 100.

    Every single pound that the taxpayers are being asked to provide to the banks must have a reciprocal pound somewhere in the system that has either;

    o been loaned and not paid back – therefore is still owed by someone;

    o been used to purchase an asset whose valuation was not verified at best, or it was fraudulently sold (therefore why is there no redress to the seller, who must still have the difference and should be pursued for fraud)

    o been paid to some broker, dealer, or, hedge fund manager as a commission for transactions that have proven to be duds (therefore fees, bonuses and commissions should be refunded)

    I could go on, but my point is simple, the money hasn’t disappeared, it still exists, therefore use the law to recover it – don’t simply ask taxpayers to compensate for the behaviour of a bunch of overpaid duffers who appear to be above normal fiscal accountability.

    Why is there no criminal action, sackings or redress been taken against the officers of the banks? At least take away their undeserved knighthoods and awards, they clearly are not merited.

 

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