BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Poor RBS, poor Britain

Robert Peston | 13:01 UK time, Thursday, 25 February 2010

The latest results from Royal Bank of Scotland show - perhaps even more than its calamitous 2008 figures - quite what a disaster this bank has been for Britain.

The operating loss of £6.2bn for last year was only a marginal improvement from the £6.9bn loss of the previous period.

RBS logo

But perhaps the most chilling numbers are these: we as taxpayers put in £25.5bn of new equity into this bank last autumn, the second instalment of the £45.5bn we have invested in total; but over the past year, the equity of this bank has increased by less than £16bn to £80bn.

So almost £10bn of the £25.5bn we've only just put into RBS has already been wiped out by losses.

Which, I think, is probably the best measure of the degree to which RBS is still haemorrhaging.

Where is the locus of the disease?

It's RBS's hundreds of billions of pounds of poor loans and investments - as shown by a loss of almost £14bn for so-called impairments (loans that the bank can't get back, or investments that have gone wrong).

This is hair-raising stuff. It speaks to a recklessness or incompetence of the banks' previous management that can make hardened hacks like myself almost weep.

So what are we as taxpayers getting for the fortune we've put into RBS?

What we're not getting is oodles of credit funnelled to businesses vital to the UK's economic recovery.

By its own admission, Royal Bank has flunked the government-set target of providing £16bn of additional loans to "credit-worthy" businesses.

It insists that's not as a result of bad faith on its part.

Royal Bank says the money is there to be lent, but that bankable businesses don't want to borrow - or, at least they don't want to borrow enough.

In fact, there has been a £12.2bn reduction to £151bn during the course of the year in the total volume of loans provided by Royal Bank to companies.

These are disturbing figures - not least in the context of the shocking official statistics released this morning on investment by British business, which showed that in the last three months of 2009 business investment fell almost 6 per cent to a level not seen since 1992.

It looks as though - as per Japan in the 1990s - unconfident British companies are choosing to pay down their debts rather than invest for the future.

But even if companies are horses brought to Royal Bank's water, choosing not to drink, there is still a question about whether Royal Bank could be doing more to encourage them to drink.

Managers at Royal Bank know that it's a board imperative to shrink a bloated balance sheet. So it's highly plausible that they're not doing enough - for the health of the British economy - to seek out viable businesses wishing to borrow.

Which goes to the nub of what the rescue of Royal Bank should have been about.

The private view of Mervyn King and those running the Bank of England has been that Royal Bank should have been turned into an instrument of economic policy, compelled to provide specific quantities of loans to industry and households.

The Treasury, however, decided the imperative was to rebuild Royal Bank as a commercial entity as quickly as possible, in the hope that this would allow taxpayers to get their money back from privatisation.

So it has allowed Royal Bank to operate as a more-or-less autonomous entity - as opposed to a potentially useful arm of the state - even though the state owns 84% of it.

So will the Treasury's strategy succeed in getting us our money back?

Investors in general remain unpersuaded.

Royal Bank's share price rose 6% today, because there is at last a declining trend to the rate at which loans are going bad and there's progress in reconfiguring the bank around a profitable core.

But at 38p, the share price is still well below the 50p price at which taxpayers' stake was acquired - so there's a steep hill to climb before this bank can be privatised to get us back our £45.5bn.

That hill could be even steeper if Mervyn King has his way.

The governor has today told the Future of Banking Commission that it is simply not sustainable for banks like Royal Bank - and Barclays - to run highly profitable investment banking operations on the back of tax-payer protected retail and money-transmission operations.

Which is an argument about how to make the financial system more robust and prevent a recurrence of the 2007/8 all-time worst banking crisis.

But if RBS were bifurcated, arguably the parts would be worth less than the whole - and taxpayers would end up deeply and permanently out of pocket.

Now, that might be a price worth paying for financial stability. But it would be a hefty price.

Comments

Page 1 of 2

  • Comment number 1.

    Liberal democracy = free-market anarchy

    A system that guarantees the oligarch's ability to take from the poor.

    Don'tcha just luvit!

  • Comment number 2.

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

  • Comment number 3.

    The governor has today told the Future of Banking Commission that it is simply not sustainable for banks like Royal Bank - and Barclays - to run highly profitable investment banking operations on the back of tax-payer protected retail and money-transmission operations.

    Still knocking Barclays, they didn't take the governments money, they stood up for theirselves and are now the most profitable bank, so how can King say they are making profits off the back of the taxpayer when the taxpayer is not lending them money.
    RBS and Lloyds are "The Toxic Twins" who did and are still being rewarded by excess bonus rewards and will take years to pay what they owe the taxpayer, so put the blame where it is due.

  • Comment number 4.

    Allow me to modify what Mervyn King said

    "it is simply not sustainable for banks like Royal Bank - and Barclays - to run highly profitable investment banking operations on the back of tax-payer protected retail and money-transmission operations whilst they are doing so little to help rebalance the economy"..

    In other words the Govt should but probably won't issue the banks if not the entire sector with an ultimatum......."reconnect with the needs of the real economy or you will risk your very existence"

  • Comment number 5.

    RBS bankers are still living in a fantasy land. I simply do NOT buy the arguments for huge bonuses in a loss making, publicly owned, bank.

    More and more the seeds of social revolution and unrest are growing. Capitalism, as we have known it, is in its dying years and its death will be hastened by the idiots in the city who still think the world owes THEM a living and a huge bonus just for gambling.

    A "third way" is urgently needed: not capitalism, not socialism, but a society whose values are built around shared aims for a prosperous world built on fairness and not greed.

  • Comment number 6.

    RBS thanks to the arrogance of Fred Goodwin has been destroyed, but I expect what we are seeing with these results is Hester washing every single possible bit of dirty laundry and if there is even a faint suspicion that a loan is "bad" it will be written off. What will then happen next year is miraculously these loans will not be as bad as expected, and RBS will write them back into the P & L and declare huge profits credited to the "genius" of the current management (and no doubt triggering more huge bonuses!)

  • Comment number 7.

    RBS is an investment. It's OUR investment. RBS is listed on the New York and London stock exchanges and we can sell off our shares for their best price as the bank recovers.
    Pension funds and investment trusts of every kind like to hold shares in large banks. They should be able to bid for their shares alongside other investors so that we EACH of US get our full value back and in the large profit that's in prospect.
    Our people deserve to recover some profit from the worldwide bank calamity. Which means that RBS (and Lloyds & Northern Rock) should be managed as proper businesses in recovery. That way we get our money back and more to pay-back for our support when it was needed.
    Of course banking's going to be a much more carefully regulated international business. And we'll need others - especially the USA to be doing the same - to put similar regulations to ours in place. But industry regulation and oversight is a separate topic. Isn't it?

  • Comment number 8.

    The one topic that seems not to be discussed in the media and its implications for RBS, the British economy and the taxpayer is the true valuation in RBS's books of the commercial properties investments and until that is done the true figure of the debt that RBS holds will not be shown. This applies also to pension funds, insurance companies and share portfolios. No wonder the Bank of England is keeping the interest rate low. Imagine the result if high interest rates applied to loans on Commercial property investments taken out at values in the boom years. I can understand why Gordon Brown and his friend the Chancellor wants to keep it quiet but why do the Conservative Party not speak out? Perhaps its because some of their influencial supporters would be badly effected.

  • Comment number 9.

    At least the staff there will all be happy with the £1.3 bn of bonus payments. If they think £6+ bn loss is doing well enough to pay out such massive bonus amounts then I guess I'm not living in the same reality. And how come UKFI (the government) approved such bonus payments.

    Doing a bit of maths £6.2 bn loss but there is £1.3bn bonus payments so remove the bonus payments (because they are doing so badly) and you cur your loss by 20% (reducing the loss to £4.9 bn - still bad bit nothing like as bad).

  • Comment number 10.

    Even if RBS was a "arm of the state" you can't force business to borrow. If they choose to delever by paying down their debts then that is their perogative.

    Another point, you ask what we as taxpayers got out of the cash provided to prop up RBS. If you consider the alternative (let it fail) then I guess it still seems the cheaper option. What 'price' would be right for avoiding the meltdown that RBS and Lloyds demise would have caused? That is what we got.

    Although really the point is that we should never have found ourselves making that choice.

  • Comment number 11.

    RBS are pulling the wool over both the government's and the public's eyes with regards to loans to business. Without fail, all local business owners have been told when they're asked for assistance that they are nonviable. The fact that they are still trading would suggest otherwise. I know of at least one RBS business manager that has quit recently because they(the managers) simply had no say in providing finance anymore. They would make recommendations to head office to approve the loan but the computer would always come back saying "NO".

    To cap it all, Natwest was visiting businesses in the local high street recently touting for new accounts, But... They were only interested in those that had cash in the bank. Not good for a a business wanting to grow.

  • Comment number 12.

    ..and of course the 50p per share that we paid for our stake in RBS was more than it was worth, especially as we'd already supported the share price by providing other support.

    So we've borrowed to buy into RBS, at a cost, and its still worth less than we paid.
    Not a great investment decision (regardless of future movements, given that, even with continuing govt support, RBS could even now be bought for less than we paid for it).

    Of course given the continuing high rate of "impairments", how much more of RBS's asset base is vulnerable and how much more can we expect it to cost us?

  • Comment number 13.

    'So almost £10bn of the £25.5bn we've only just put into RBS has already been wiped out by losses.'

    Does the missing £10 Billion include the £1.3 Billion about to be given out in bonuses?

    This will not be forgotten when the pain of reversing a £200 Billion deficit is eventually tackled!

  • Comment number 14.

    Viable sound businesses do not want to borrow this is the claptrap you will hear from all these banks it's not that the banks don't get it it;s the goverment that does'nt get it all our rantings are here purely to let off steam and are about as useful

  • Comment number 15.

    So it cost £45.5 billion at 50p/share.

    In grand scheme of things £45,500,000,000 isn't that much.

    Its only 25% of our annual deficit of about £180,000,000,000.

    If we apply company logic to our country I would be prepared to take a strategic decision that might cost us 25% of our annual loss if I felt it would make a long term improvement.

    And if the shares remained worth something then that 'write off' would reduce.

    I say pass a law to split the banks, all banks, get Obama and other key countries to do at same time. Lets have G20 work together for good of the world like they are supposed to.

    As I have said previously once the investment banks can be allowed to go bust then the risks will stop and the bonuses will massively reduce because they can't afford to fail because the safety net will have gone.

    SPLIT THEM. DIVIDE AND CONQUER. THEY HAVE HELD THE WORLD TO RANSOM FOR TOO LONG AND IT IS TIME WE FOUGHT BACK.

  • Comment number 16.

    Yes indeed Robert. Scary stuff.

    And they want to pay over a billion in staff bonuses?

  • Comment number 17.

    I wonder whether the figures are truly as bad as you make it seem. My understanding is that under mark to market accounting a bank is required to make provisions in circumstances where there is no real need to do so - the borrower is in fact meeting his payments currently.

    Also, in previous recessions, banks often significantly over-provided against bad loans only to have to write back the provisions later. Now obviously no bank would ever manipulate accounting rules to get too much bad news out when everyone was up a gumtree so as to later flatter results as the economy turned - or would they?

  • Comment number 18.

    If the bankers can be so highly rewarded for bad decisions, loses and unethical behaviors just wait until things start to turn around. They seem to operate on a set of rules based on: You win: they win, You lose: they win, they lose: they win.
    I would recommend a relegation system as in football and the underperforming banks would be in a lower league until their books improved based on being better banks for the customers.

  • Comment number 19.


    Am I alone in thinking that the payment of £1bn in staff bonuses by RBS is immoral?

    I run a small business and, like RBS, we made a loss last year. Consequently all my staff have had to forego bonuses and even pay rises. For me, as the boss, it was worse; I had to put a significant lump of personal savings into the company just to keep it afloat. The current financial situation is really hurting everyone but the bankers.

    I know RBS justify bonuses by saying that some of their staff have 'special skills' that they don't want to lose. Well, so has my company. The difference is I can't dip into the taxpayer's pocket for a sub. What's more our payments to the bank in account and interest fees has been substantially higher this year.

    The bankers really don't get it -- and the government don't get it either. They're taking us all for a ride trying to prop up the status quo. The time has come for a complete overhaul of the money supply system worldwide.

  • Comment number 20.

    The Bank states that companies do not want to borrow. This is not always true. Over the last few months I have seen many examples where the Bank have tried to rearrange existing deals at vastly increased margins plus enormous fees. They are simply trying to recoup their losses by ripping off existing customers who in many instances decide to lay off staff & downsize instead. There is very little encouragement for small & medium size businesses to expand.

  • Comment number 21.

    I realise the figures will be available on internet but it seems in reporting these results the 'reporters' should do a better job of informing us of the figures. The below are all various information that has appeared in the last couple of RP articles on RBS.

    RBS has made a £3.6 billion loss which is much better than £24 billion it made last year.
    RBS has made a £6.2 billion operating loss.
    RBS has made a loss of £14 billion for so called impairments.
    RBS has made such a huge profit in its investment arm that it is okay for it to pay £1 billion in bonuses.
    RBS equity has increased by less than £16bn to £80bn.
    Almost £10bn of the £25.5bn we've only just put into RBS has already been wiped out by losses.

    As an accountant I understand the difference in terms and where they fit in a set of accounts but the gaps betwen the figures is unexplained.

    How much did retail banking make?
    How much did investment banking make?
    Where were the write offs allocated to - investment or retail?
    What about Government charges for various support arrangements - which side of the banks figures were these allocated to?
    Is operating loss before or after loan write offs?
    What were these in the two comparative years?
    If operating losses are virtually the same where does the difference between the two sets of figures come in?

    I could go on but what's the point?

  • Comment number 22.

    7. At 1:36pm on 25 Feb 2010, leftie

    You can't use sarcasm like that here - I've actually seen people on here write that who genuinely believe it!

  • Comment number 23.

    Just remember folks:

    Government 'break even' price on RBS = 50p (approx)

    Share price today - 37.87p

    Where are all those mugs who came on here when we took our stake in RBS talking about 'future profits when all this is over'

    Were you talking about in our lifetime????

  • Comment number 24.

    I failed maths at school, sad but true. Is there a job going for me at RBS?
    If a small company had these figures not the amounts but the percentages, then the uproar that would go on and it would be closed down with the directors being disqualified from having another business........

    Is there a light for all of the taxpayers cash?

  • Comment number 25.

    11. At 1:42pm on 25 Feb 2010, Nik Middleton

    This is true - and also the experience others are having.

    ..I know someone who is now into legal proceedings after one of our nationalised banks 'changed their mind' about financing a project - because it was agreed before the collapse, but cash wasn't needed until afterwards.

  • Comment number 26.

    13. At 1:46pm on 25 Feb 2010, newblogger wrote:

    "This will not be forgotten when the pain of reversing a £200 Billion deficit is eventually tackled!"

    ...and let that be set in stone outside the RBS headquarters...

  • Comment number 27.

    Robert: Now you've hit the nail on the head. Yes, these dodgy publicly owned banks should have been used as an 'instrument of the state' to divert resources into the real economy. Allowing them to source cheap government money and sell it back to us for a higher return (as in the US)to enhance their books is not any where near a responsible approach to handling this crisis.

  • Comment number 28.

    It's funny how the West laughed at Russia for being run by the oligarchs. Looked what happened here now? At least the Russians have gas to keep themselves warm in the winter. What would we do?

    Why is all this happening here? Who and why allowed for the financial oligarchs to slowly but surely take over? Has anyone ever asked themselves that question or is everyone afraid not to look like a believer of conspiracy theories.

    I'm afraid we're all doped by consumerism.

    Until people start asking the REAL questions, I'm afraid the poor will be getting poorer and the rich will be getting richer, more arrogant and more powerful. WELCOME TO NEW WORLD ORDER! ENJOY!

  • Comment number 29.

    We need to beware what the establishment are publicising as fact.
    Indeed RBS is a mess and should have been allowed to fail.
    Barclays should not be mentioned in the same sentence as the "toxics".
    Remember who was in charge of UK Ltd when times were good, and still maxed out the credit, leaving no woll on our backs for a rainy day. Now we have national debt & personal debt unlike anything since the end of WW2 when personal debt was unheard of. The "same whacky" racers are still in charge, terrified joe public will realise their complicity and incompetance.

  • Comment number 30.

    Let me try to put an argument out of its misery:

    You know the one: Banks are too big to fail... but only international action can fix the problem...but...

    Let us agree that banks are too big to fail. So someone has to rescue them. However, as there will never be an international agreement on anything as there is absolutely no prospect of international government to make and enforce such an agreement - what this argument means is that whilst something must be done nothing can be done. This is not acceptable.

    So the thing that has to be done is to make and enforce national laws. But will banks not just move overseas and circumvent all legislative controls. Well yes - here is the important bit - IF WE LET THEM!

    If banks are too big to fail and no international agreement is possible then it must follow that we must localise banks to a nation where it can be controlled. To do this we will need exchange control (again!). Therefore any discussion with the banks that does not include the threat of exchange control is an empty discussion.

  • Comment number 31.

    17. At 1:53pm on 25 Feb 2010, Justin150 wrote:

    "I wonder whether the figures are truly as bad as you make it seem. My understanding is that under mark to market accounting a bank is required to make provisions in circumstances where there is no real need to do so - the borrower is in fact meeting his payments currently."

    ...but they're not - they're using 'mark to fantasy'!
    When you want to re-mortgage, do you get your property valued - or do you simply 'tell the bank what it's worth because you're making your payments on time"

    The reason the mark to market is required - is so that if or when the institutions goes pop - the bank knows what it's assets and liabilities are. Otherwise they go pop and when the administrators look under the hood - they see huge liabilities and assets which could never make a small dent.
    Don't forget it's not assets > liabilities that end's businesses - it's cashflow - so all businesses are at risk.

    "Also, in previous recessions, banks often significantly over-provided against bad loans only to have to write back the provisions later. Now obviously no bank would ever manipulate accounting rules to get too much bad news out when everyone was up a gumtree so as to later flatter results as the economy turned - or would they?"


    ...that is just too unbelievable - so we make the picture look bad, reducing our share price, market cap and ability to raise funds - so later we can surprise the market by announcing "we were only joking".

  • Comment number 32.

    RBS dispite all their false words at not lending to small businesses and it sickens me that they are going to get out of what was meant to be a legally binding agreement to lend more and will still get away with paying out bonuses.

    As far I can see nothing has changed, bankers end up getting rich while small business owners are losing everything. One person has just had their house taken by the bank because their business failed and they had put it up as security. Their own fault, you may say but the reason why their business went under was because THE SAME BANK pulled their overdraft in Nov so they were unable to buy the stock they needed for Christmas - their biggest turnover period and so they couldn't generate income.

    It is disgusting and no-one appears to be fighting for the ordinary person any more - We are not Happy - please see facebook page and help

  • Comment number 33.

    19. At 1:57pm on 25 Feb 2010, JRWoodman

    The difference you'll find is you, your staff and your business live in the real world

    ...but banks live in a QE fantasy land where the paper keeps on coming out of the walls and nobody can explain why.....they're all too busy helping themselves...

  • Comment number 34.

    8. At 1:37pm on 25 Feb 2010, Grace Sommerville wrote:
    'The one topic that seems not to be discussed in the media and its implications for RBS, the British economy and the taxpayer is the true valuation in RBS's books of the commercial properties investments and until that is done the true figure of the debt that RBS holds will not be shown'

    Very true, capital values of commercial property overall is down around 40% - 50% from boom time values. As long as it doesn't get repossesed and re-sold it won't show up though.

  • Comment number 35.

    Looks like part of the problem has been the prudence of businesses , and the reluctance to take on new debts. http://www.bbc.co.uk/blogs/thereporters/douglasfraser/2010/02/back_to_the_piggy_bank.html
    However the markets back my hunch that RBS are a good bet....the share price at 38p is up 9p in 6 weeks, and is 3.8 times what it was at the start of 2009.
    And the 1.3 bln bonus will attract 650m in bank bonus tax and 520mln in income tax ie 1170mln will go to HMRC which in the presence of a 3.6bln loss would have resulted in zero profit tax.

  • Comment number 36.

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

  • Comment number 37.

    23. At 2:22pm on 25 Feb 2010, writingsonthewall wrote:
    Just remember folks:

    Government 'break even' price on RBS = 50p (approx)

    Share price today - 37.87p

    Where are all those mugs who came on here when we took our stake in RBS talking about 'future profits when all this is over'

    Were you talking about in our lifetime????

    >>>>>>

    WOTW - just remember, investments can go down as well as up.

    BUY RBS now!

  • Comment number 38.

    24. At 2:23pm on 25 Feb 2010, barry white wrote:

    "If a small company had these figures not the amounts but the percentages, then the uproar that would go on and it would be closed down with the directors being disqualified from having another business........"

    ...and the chairman of HBOS - now runs Boots!

    It's time to throw out the rule book - it's not there for our protection - but to protect them from us

  • Comment number 39.

    28. At 2:29pm on 25 Feb 2010, plamski wrote:

    "It's funny how the West laughed at Russia for being run by the oligarchs. Looked what happened here now? At least the Russians have gas to keep themselves warm in the winter. What would we do?"

    Oh it's better than that - the reason the Russian people 'survived' the 1998 default is because they were much more used to bartering, they had a lot more 'traditional roots' in farming and industry.

    If you watched that Evan Davies programme on immigrants last night - you'll know why the public in this country have had it. Although there are exceptions, there are too many people who will struggle to live without hair dye - let alone without a viable and exchangeable currency.

    The wood shall be seperated from the chaff.

  • Comment number 40.

    It looks as though - as per Japan in the 1990s - unconfident British companies are choosing to pay down their debts rather than invest for the future.

    But even if companies are horses brought to Royal Bank's water, choosing not to drink, there is still a question about whether Royal Bank could be doing more to encourage them to drink.

    This, Robert, sounds a bit like those "unconfident companies" would just have to lend a Pound note, put it into a slot machine and that Pound note plus a decent profit would be automatically returned.

    Any business is part of its immediate economy which has been close to knocked out by those that preferred to gamble; "some" now want it to look like that vicious circle where the bankster are now blaming the others for not taking any risks. Wonder who is "some"?

    Who, by the way, defines "credit-worthy"-ness in "crunches-all-over-the-place" times?

    No need to answer; we all know it: those and these "some" are the same good old banksters again, as described by James K. Galbraith in March of 2009 already!

  • Comment number 41.

    Reply to #15

    The notion that integrated banks should be split is totally flawed. Three of the largest catalysts for the financial crisis (not the credit crunch but the collapse in confidence) were the demise/shot-gun weddings of Lehman, Bear Stearns and Merrill Lynch. They ALL were investment banks that DID/ALMOST DID go bust. RBS's, Lloyds' and other commercial banks' problems run a lot deeper than a debate about splitting the banks up. Whilst such a course of action, some may argue, has some merit in terms of de-risking the system, it will not guarantee anything, because as we have seen, the failure of pure investment banks did happen and did cause systemic risks to crystallise. The answer to avoiding this whole mess again is somewhat unpalatable to politicians and Joe Public: reduce borrowings across the board and get back to a sensible way of living / operating. This is true for companies and for individuals. There is also a need for more intelligent regulation (ie primarily counter-cyclical measures). But rather than bang on about bonuses, pay, etc (which Robert Peston loves doing for his self-serving journalistic ego), the public would do well to take a step back from the banks and look at the whole picture. Splitting banks isn't the magic solution.

  • Comment number 42.

    29. At 2:30pm on 25 Feb 2010, justanenglishman wrote:

    "Barclays should not be mentioned in the same sentence as the "toxics"."

    ...but of course not - their exposure to the middle east, Greece and AIG (who thankfully got bailed out by the US Gov.) means that they are cleary 'very wise'.

    Unfortunately the fact that they have not been a 'toxic' yet - does not mean they will not be 'toxic' in the near future.

    Don't forget the world was applauding Lehmans up until it went boom - you don't get any warning of crisis related failure.

  • Comment number 43.

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

  • Comment number 44.

    Am I correct in thinking that RBS insured a large quantity of loans with the government. IIRC they are liable for the first 25BN. Could this be the first step towards starting to claim on the insurance?

  • Comment number 45.

    35. At 2:36pm on 25 Feb 2010, onward-ho wrote:

    "However the markets back my hunch that RBS are a good bet....the share price at 38p is up 9p in 6 weeks, and is 3.8 times what it was at the start of 2009."

    Didn't you say this about Lloyds last year? Why did you pick the start of 2009 as your comparison point - it wasn't because it was the lowest price for RBS ever
    Much better to pick the August price when it was 58p - so you would be sitting on a 40% loss per share.

    "And the 1.3 bln bonus will attract 650m in bank bonus tax and 520mln in income tax ie 1170mln will go to HMRC which in the presence of a 3.6bln loss would have resulted in zero profit tax."

    ....but they're our losses

    I sincerely hope you don't actually gamble on the stock markets - you are going to lose your shirt, and I certainly hope nobody takes your advice as you are putting 'hope' before 'sense'.

  • Comment number 46.

    Re the new site - why is there no "see your comments" and why is there no "recommend" feature?

  • Comment number 47.

    `The governor has today told the Future of Banking Commission that it is simply not sustainable for banks like Royal Bank - and Barclays - to run highly profitable investment banking operations on the back of tax-payer protected retail and money-transmission operations'

    Slowly but surely the light is beginning to dawn. It is an inexorable process...............

  • Comment number 48.

    37. At 2:42pm on 25 Feb 2010, EmKay wrote:

    "BUY RBS now!"

    You buy - I'll laugh.

    Buying RBS is a lunatics game - because it's now very likely the bank will be fully nationalised before the end of 2011 - in which case (as Northern Crock shareholders will tell you) - you will get nothing.

  • Comment number 49.

    Only 50p a share! If the government would just keep it's nose out of things and stop making threatening noises RBS would return it a profit within 18 months. What is it with goverment these days, they can't do what they are elected to do, manage the day to day running of country, yet they think they should be interfering in everybodies lives on a daily basis - leave us alone , please!!

  • Comment number 50.

    What makes me "weep" is that one of the banks who lent Kraft 100% of the money to buy Cadbury's was RBS. The irony would be amusing if it wasn't quite so frightening. All it takes is one look at Kraft's balance sheet to see the lunacy of the whole thing.

  • Comment number 51.

    #41

    'Splitting banks isn't the magic solution'

    It is not about preventing bankruptcy or recessions, but preventing the tax-payer being dragged to the rescue!

  • Comment number 52.

    I disagree with what you have said.

    The underlying "core" business is good and making money (read the numbers). The "legacy" of ABN is what makes the loss and the effect of the longest and hardest recession in the UK in living memory. It would be naive to blame that solely on RBS.

    With regard to lending and "bad debts":
    - A business can approach the bank for £1m (or any other sum) of lending. It may not have the security required to support the lend, hence it gets declined. EFG could be an answer (the Government Guarantee Scheme) but if the business can not generate sufficeicent cash flow to pay interest and/or capital then it will get declined. Lending money to those that can't afford it is casino banking of the highest order.
    - We are in a recession. This means turnover is down, profits are down and in some cases losses are being made. Invariably, falling turnover and losses mean that cash leaks out of a business. It can't pay its commitments (loans, creditors and the tax man). The business fails and the loan becomes bad.
    - We are in a recession. As turnovers fall, businesses cut jobs (a cost to it) to save money. Unemployment rises and some people can't pay their mortgage. They can't pay and the house is reposessed and the loan is deemed as bad.

    There is so much mock rage and apoplexy from people over bonuses, driven by the press write. Right or wrong the Government has said they can be paid. RBS will come back to strength. It takes years, even decades, to build a strong company before rewards can be reaped. Barclays made £10bn last year, even if RBS could it would still take the best part of 10 years to repay HMRC. The recovery will not come over night.

    What is true is that those who remain in RBS are working to make the bank good again despite the vitriol and abuse hurled by those who believe that the Bank shouldn't have been saved. The truth is the country couldn't work withour RBS as 40p in every £1 in this country goes through this Bank.

  • Comment number 53.

    Another banking story.

    How novel.

    GC

  • Comment number 54.

    This is hair-raising stuff. It speaks to a recklessness or incompetence of the banks' previous management that can make hardened hacks like myself almost weep.
    I think it is calledlaissez faire. And when they got it, are we really surprised that they ran amok? Well, anyone with a picogramme of common sense isn't surprised.
    We don't take away speed limit laws or murder laws because people are going to behave themselves. Business is not different. For 20 years or more our politicians sold us utter nonsense, sheer utter nonsense.

    What dole office are all of these people signing on at? Oh, you mean most of them are still running the finance show? Well that can be sorted easily enough.

    I'm off to the library to swot up on Guy Fawkes after I've been to they TheyWorkForYou event tonight; they are happening across the UK.

  • Comment number 55.

    7. At 1:36pm on 25 Feb 2010, leftie wrote:
    RBS is an investment. It's OUR investment.


    And it is a really bad investment

  • Comment number 56.

    39. At 2:45pm on 25 Feb 2010, writingsonthewall wrote:
    If you watched that Evan Davies programme on immigrants last night - you'll know why the public in this country have had it. Although there are exceptions, there are too many people who will struggle to live without hair dye - let alone without a viable and exchangeable currency.
    ---------------

    WOWT, guess what - I'm an immigrant myself and I have stayed, opened a business and created jobs.

    And I bet you that without the immigrants this country's economy will collapse completely within three months! There are whole generations now that would never do certain jobs that immigrant fill at the moment.

  • Comment number 57.

    One other point. Robert P clearly does not understand finance, business nor accounting. Whilst the Govt pumped GBP 25bn in equity into RBS, for Robert to believe that the equity of the bank would increase by more than that is utterly naive. RBS is a business recovering from heavy losses. In such a situation, the equity base will always take time to recover. To do so in 1 year is simply day-dreaming. The government knows very well that recovery of the GBP 25bn will take years to come through. Unfortunately piper Peston misleads the mice again.

  • Comment number 58.

    24. At 2:23pm on 25 Feb 2010, barry white

    Shouldn't be a problem. David Cameron was bottom of the class.
    From todays' Mail rag

    He managed to come bottom in Latin and Maths, and second-to-last in French and Geography, according to the grading papers.

    The putative Tory leader's best subject was English, but even then he was almost 100 points off the boy with the top grade.
    Read more: http://www.dailymail.co.uk/news/article-1253749/Camerons-prep-school-report-reveals-class.html


    And they say money doesn't give you an advantage in life....

  • Comment number 59.

    It's disgusting that RBS are awarding £1.3bn worth of bonuses to their investment bankers whilst posting a 3.6 billion loss.

    The investment bankers at RBS are the highest paid public servants in the country.The Labour government have warned us to prepare for the toughest public spending cuts for 20 years.Before handing out the punishment to those already struggling to make ends meet in this difficult economic climate,this Labour government should first make the public spending cuts with those high-risk speculators of RBS, who have yet to be held accountable for the dire financial crisis into which their irresponsible actions have plunged us.

    This time last year Gordon Brown said that he was angry with RBS and Sir Fred Goodwin.The RBS bonus announcement comes on the back of Gordon Browns 'future fair for all' policy announcement at the weekend.Can he not see that the Labour party is a party of double standards and hypocrisy?

    I've have a petition against this RBS bonus posted at n10:

    http://petitions.number10.gov.uk/stopRBSbonuses/

  • Comment number 60.

    48 - WOTW

    "Buying RBS is a lunatics game - because it's now very likely the bank will be fully nationalised before the end of 2011 - in which case (as Northern Crock shareholders will tell you) - you will get nothing."


    On what basis? If you read the reports that have been published, RBS has exceeded the strategic plan it set for 2009 and has no need for more capital to prop it up. It expected to lose £5bn but lost £3.9bn and the core business (not the legacy problems) are good and making money. It will not be fully nationalised.

  • Comment number 61.

    38. At 2:42pm on 25 Feb 2010, writingsonthewall wrote:
    24. At 2:23pm on 25 Feb 2010, barry white wrote:

    "If a small company had these figures not the amounts but the percentages, then the uproar that would go on and it would be closed down with the directors being disqualified from having another business........"

    ...and the chairman of HBOS - now runs Boots!


    And he had one of his top men, Paul Bennett sit in a Parliamentary Select Committee admiting they sold remedies they know don't work! see http://www.parliamentlive.tv/Main/Player.aspx?meetingId=5221

  • Comment number 62.

    #41 Namuncura - have you learnt something in the last few days you didn't know before - I quote a recent post from you (I looked at your recent posts to see if you looked like you were a banker - quite possibly you are). This is what you said recently

    'I agree, from within, with the need for less reliance on investment banking. In my view that would take its natural course if (a) the banks were broken up along the lines of Glass Steagall (as investment banking risk-taking would become more transparent again), (b) the authorities capped the proportion of funding that any institution can rely on the wholesale markets for (thereby curbing the degree of leverage any institution can build without using traditional long-term sources of funding) and if one wants to be even more radical (c) introduce growing restrictions on the amount of proprietary trading of derivatives and credit on the overall system to stem the speculative element. Taxing of bonuses is pure political PR with no consequence for the system other than the short-term loss of tax revenue we are both agreed on.'

    However now today you say that splitting the banks would not work and is not the solution?

    Surely if your point b) was also in place then this would provide the additional protection for the retail banking sector?

  • Comment number 63.

    #48 WOTW wrote:

    "Buying RBS is a lunatics game - because it's now very likely the bank will be fully nationalised before the end of 2011 - in which case (as Northern Crock shareholders will tell you) - you will get nothing."

    You really think so?

    I assume you think the profits from investment banking will disappear this year due to no more stimulas from the government and with a flat retail banking and insurance business the government will have to step in to rescue them (again!) after another wave of bad debts?

    Don't think it's quite as bad as that - RBS expect to be profitable from next year.

  • Comment number 64.

    #47 Stanilic:

    Halleluiah someone's finally listening!

    It'll never happen though - the masters of the universe will find ways round this if anyone tries to legislate.

    Back to contemplating my navel.



  • Comment number 65.

    As a business man who has been burnt by the lack of offered borrowing from RBS I would be interested to know what portion of their loss is government backed in terms of toxic loans, i.e if the government is insuring 90% of the bad debts is the real loss to us the taxpayers nearer to £63b?

  • Comment number 66.

    Two Banks phoned me to push a loan onto my small business . I declined both . Reason - I have shed staff and do not see any reason why I should put my business at risk by taking on debt ( knowing full well the implications of future rate rises and the Bank's fees and costs ).

    I guess that other's are doing the same.

  • Comment number 67.

    > It speaks to a recklessness or incompetence of the banks' previous
    > management that can make hardened hacks like myself almost weep.

    You can't trust bank clerks to handle money properly, because they can only count it. Even then, they fill their pockets at the same time.

    Only when we remove the super-greed motive can we rebuild trust in this bloated, busted and broke institution. Forget getting any money back - banks have no assets of their own. They even rent their premises. Anybody can set up a computer and start a bank in 5 minutes, so we've bought nothing but vapour with our taxes.

    So, let it go. You'll never make a silk purse out of a sow's ear, so give it to charity and write it off to experience. It's too painful to see these gambling losers stuffing their pockets with newly printed banknotes, as the value plummets almost as quickly.

  • Comment number 68.

    52. At 3:14pm on 25 Feb 2010, pointlesspeston wrote:
    There is so much mock rage and apoplexy from people over bonuses, driven by the press write.


    Not been down to see the lengthening dole queue then?
    Not been chatting to the folks so broke they are turning to credit cards to pay the mortgage then?
    Not seen any old dears struggling down the flea market 'cos the banks have wiped out their life-savings then?
    I've a cousin who works in the JobCentre. He told me of the day a grown man who'd worked hard to build a life for himself and his family, sat in the office, signing on and cried like a baby; he fell apart in that office. He was having his home repo'd in a couple of days. He had no idea where he, the wife and kids would be living. And no one could help him. A young man in his 30s falling apart.

    Mock rage. You need to get out more.

  • Comment number 69.

    Great article. In order to pay a bonus you need to make a profit. RBS shows the truer value of a big bank finances. So are the so called "profits" of many other super banks real. Only if you need a profit to get your bonus. I believe this whole credit crisis is due to moving money round the world till finding somewhere to park it for profit, that OTHERS perceive as profit, which propably isn,t profit( e.g. Dubai?). Look at the Goldman Sachs banks debt swap in 2001 to hide Greek Debt. Will Goldman ever be repayed? Yet that deal probably bought many a luxury property or luxury yacht. Without government debt, super banks are much smaller and yet if anybody correctly accounted for these loans which are treated as accountable "profit", they would see its highly unlikey to be ever repaid. The bankers would have to repay the greater share of their bonuses heavily invested in assets such as property, if found out not to be profit earned . Quite simply the bulk of money is no longer going round and round and reaching the people Money just keeps going into bigger and better property and expensive items and restaurants for FEWER and FEWER People. We are slowly sinking back into the early 18th century society imbalance due to this reckless system. Aided and abettede by governments failing to alter their accounting system for the valuation of loans and REAL asset values , hidden around the world, then moved for convenience. Read history, We are doomed to repeat it. Phew. Got it out there!

  • Comment number 70.

    I think you're missing the bigger story here which is mentioned in your post - the drop in business investment.

    look back to the first estimates of Q4 GDP 'growth' of 0.1%. The ONS stated that business services and finance growth was flat - but the latest figures show a drop of 5.8%.

    The ONS said the growth was driven by the services sector particularly hotels and restaurants. Well I had no problems late booking into restaurants last Christmas and the craze since the millennium of charging entrance to pubs for New Years Eve came to an end, some pubs and clubs around here were even offering free snacks to attract customers. the latest ONS figures for international visitors also showed a drop of spending by tourist and business travelers of 3% on the previous quarter.

    The other area of 'flat' growth the provisional GDP figures highlighted was construction but the latest final figures of completed builds showed a drop of 3% on the previous quarter.

    Our exit from recession certainly seems very fragile at the moment. Oh well the second estimates are due out tomorrow and it will be interesting to see if that growth has remained or if the second estimates put us back in continued recession. At the moment the latest figures seem to indicate that the ONS may have been overoptimistic in some of the presumptions.

  • Comment number 71.

    #52

    'The underlying "core" business is good and making money (read the numbers).'

    Yes, because anything that was 'loss-making' was suddenly deemed 'non-core'!


  • Comment number 72.

    Two questions that I hope someone can answer. The first is I have seen the figure of £80bn on here as the worth of RBS, yet the Times share value page shows the value as £20.36bn (based on 56bn shares in issue). I assume the Times figure is correct?

    The second question is about the Asset Protection Scheme (APS). Lloyds went through all sort of gyrations to avoid it, at a cost of paying a penalty to the Treasury and of raising over £20bn, including £13.5bn from shareholders in a rights issue at 37p (three months ago). Since Lloyds went to such trouble on the grounds that the APS was too expensive but RBS was not allowed to get out of it what is the cost to RBS now and in the future of staying within the APS? Should it be taken into account in working out the break even point of 50p?

    MRAA2

  • Comment number 73.

    39. At 2:45pm on 25 Feb 2010, writingsonthewall wrote:

    "The wood shall be seperated from the chaff."

    ROFL, unlike the Russians you clearly don't have a farming background....

  • Comment number 74.

    # 18. At 1:56pm on 25 Feb 2010, ghostofsichuan wrote:

    > I would recommend a relegation system as in football and the
    > underperforming banks would be in a lower league until their books
    > improved based on being better banks for the customers.

    Would RBS make it into the Crawley and District Football League (Division Two)?


  • Comment number 75.

    Having seen at first hand the activities of their Global Restructuring Group (euphemism for dodgy bank), I'm amazed that they are still making operating losses. The penal fees and interest that they charge ordinary struggling corporates would make anyone wince - and this is supposed to be a bank majority owned by the state and therefore acting responsibly.
    I can see only one way for the main RBS business - down! The sooner they get rid of Direct Line and CHurchill to free up some cash, the better for us tax payers.

  • Comment number 76.

    52. At 3:14pm on 25 Feb 2010, U14354610 wrote:

    " The "legacy" of ABN is what makes the loss and the effect of the longest and hardest recession in the UK in living memory. It would be naive to blame that solely on RBS."

    Oh it's all about 'blaming anyone else but us" isn't it?

    Surely as the board sanctioned the takeover of ABN then it couldn't be anyone else's fault except RBS.
    Just because the perpetrators have left now, they current stock should have thought of that before they moved in!

    This is the same "not my fault guv - the last guy" that the Tories will play when they start the cuts. However they have sat there in (non) opposition mode for the last 7 years - so they are culpable.

    I heard no wails of 'the regulation is not up to scratch' until after the first banks failed

    All pathetic excuses from people who shirk their responsibilities - but impress on the rest of us how we must take on ours...

  • Comment number 77.

    56. At 3:19pm on 25 Feb 2010, plamski wrote:

    "And I bet you that without the immigrants this country's economy will collapse completely within three months! There are whole generations now that would never do certain jobs that immigrant fill at the moment."

    Absolutely agree 100%.

  • Comment number 78.

    57. At 3:19pm on 25 Feb 2010, namuncura wrote:

    "One other point. Robert P clearly does not understand finance, business nor accounting. Whilst the Govt pumped GBP 25bn in equity into RBS, for Robert to believe that the equity of the bank would increase by more than that is utterly naive."

    no - you don't understand a BAILOUT

    The Government did not 'choose to invest' like an investor - it was a forced investment. The bank supporters told us at the time we would see our money back soon - and yet it has not even come close.

    You are applying calculated investment principles to a desperate stake taken in order to prevent the industry collapsing.

    You accuse Robert of not understanding finance - I accuse you of not understanding real life.

  • Comment number 79.

    59. At 3:24pm on 25 Feb 2010, fredbloggs25

    Another excellent contradiction spotted.

    "Cut the public sector pay" cry the Capitalists "but not the bankers who work in the public sector"

    No - we must cut the pay of Doctors, nurses, teachers, L.A. workers - for they were clearly not at fault for this crisis.

    If people cannot see this hypocrisy - I would suggest you're simply getting too used to it.

  • Comment number 80.

    60. At 3:27pm on 25 Feb 2010, U14354610 wrote:

    "It will not be fully nationalised."

    Said with such confidence - do you want a wager?

    You have attempted to make a loss look good because it was "not as bad as expected" (where have I heard that one before???)

    Well my friend, you have forgotten to account for the subsidy for the investment side being withdrawn (QE) and the fact that there are 700 businesses a day less to lend to - and before banks started casino gambling - lending was their business. There are also less homebuyers now (since that subsidy was removed) - reducing their scope for revenue even further.

    So tell me - which areas of banking growth are there out in the market? - Maybe you're thinking they will branch out into 'money printing' - which is all the rage these days and apparently is 'very profitable'.

  • Comment number 81.

    "It speaks to a recklessness or incompetence of the banks' previous management that can make hardened hacks like myself almost weep."
    I agree with you there Robert and I feel the same.On notayesmanseconomics web blog today I have seen a list of moral hazards which operate to the disadvantage of the UK taxpayer. The risk/reward structure in our banking sector is virtually unchanged and our politicians do the reverse of "talk softly and carry a big stick". In fact they make all sorts of promises about bankers bonuses and then forget to carry them out.This is all rather shameful in my view.

  • Comment number 82.

    63. At 3:36pm on 25 Feb 2010, Ian

    Yes, and that's exactly the reason why I don't think they will return to profit next year either.

    Want to know where the banks are making their money? they're underwriting the Government bond issues

    This area has grown massively in the last couple of years (surprise, surprise) - and the usual suspects are at the fore again.

  • Comment number 83.

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

  • Comment number 84.

    71. At 3:53pm on 25 Feb 2010, newblogger

    You have to be careful on here - some say that the £3.6 Billion loss was actually a £15 Billion profit.

    I too made at least £14 Billion last night by collecting pennies off the street on my way home. Luckily, like RBS, there's no-one to verfiy my books are genuine.

  • Comment number 85.

    72. At 3:57pm on 25 Feb 2010, majorroadaheadagain2 wrote:

    "Should it be taken into account in working out the break even point of 50p?"

    I would clarify that the 50p 'break even' is merely the entry price. It does not account for additional subsidy paid by the Government (APS) and it also does not account for the effect on the share price when you release 75% of a company's shares into the market.

    I'd say the break even price is more around 70p - but don't expect the Government to admit that.

  • Comment number 86.

    52. At 3:14pm on 25 Feb 2010, U14354610 wrote:

    > There is so much mock rage and apoplexy from people over bonuses, driven by the
    > press write. Right or wrong the Government has said they can be paid.

    There's another sucker born everyday.

    > RBS will come back to strength.

    I suppose you could make a cadaver exhibit some signs of life, but
    can you keep it jerking long enough to pass it off as a miracle
    recovery, like this Hestor guy is trying to do?

    > It takes years, even decades, to build a strong company before rewards
    > can be reaped.

    Yes -- like British Steel!

    > The recovery will not come over night.

    If it comes at all. Look, can't we give it to the third world,
    as "gift-aid"? Actually, let's give it to Argentina!

  • Comment number 87.

    Another sign of unhappy tax-payers...
    270,000 civil servants to strike next month
    http://news.bbc.co.uk/1/hi/uk_politics/8537408.stm

  • Comment number 88.

    See the 5% rise in the RBS share price today?

    That's speculators.

    We'll see how long it lasts for - all gone by the weekend maybe?

  • Comment number 89.

    RBS isn't a goose that lays golden eggs. It's a crow that lays only rotten eggs. Why should we feed a thing like that?

  • Comment number 90.

    73. At 4:02pm on 25 Feb 2010, injected wrote:

    "ROFL, unlike the Russians you clearly don't have a farming background...."

    True - and yet I know how to rear chickens, lamb ewe's, use a chainsaw and grow vegetables.

    Preparation is the key.

  • Comment number 91.

    79. At 4:21pm on 25 Feb 2010, writingsonthewall wrote:

    > No - we must cut the pay of Doctors,

    Well, I'm all for that. Some of those doctors get as much as bank clerks!

  • Comment number 92.

    The game's up. The Govt. have been fools. I believe you're right Robert:

    The private view of Mervyn King and those running the Bank of England has been that Royal Bank should have been turned into an instrument of economic policy, compelled to provide specific quantities of loans to industry and households.

    The Treasury, however, decided the imperative was to rebuild Royal Bank as a commercial entity as quickly as possible, in the hope that this would allow taxpayers to get their money back from privatisation.

    The Govt could have maintained RBS as treading water until much later when it might be allowed to act as a commercial bank. If acting as a boring bank during the dull years of this the recession payouts and bonus wouldn't exist as a wholly Govt owned bank. It could prop up some failing businesses until this long drawn out saga is finished. Instead they've thrown money into bankers pockets never to be seen again with the naive expectation of getting their money back. The invested in RBS, yes, but in the wrong way - I agree it should have been as an instrument of the state. In the end it would have wasted less tax payers money. Do the sums Robert - am I right?

  • Comment number 93.

    The Govt wanted to wash it's hands of RBS (and the like) - wouldn't manage it through this disaster. It's political cowardice allowing the blame to fall on the bankers while their hold up their hands and say "it wasn't me, it was like that when I found it" Govt - it's not their money after all so why not waste it. Typical!

  • Comment number 94.

    Excellent analysis, yet, I wonder to myself - What is the point?? Nothing changes at all, despite you blatently pointing out we're being ripped off.

    The way I see this, the only solution is to have someone who has their head screwed on and who cares, in charge to make the big sweeping decisions to have these issues sorted out. So, Robert will do - give him a job in the government or Mervyn's job and slap RBS down, hitting them with massive fines. Say "Don't do it again or your management are out" and we all move on, instead of year after year of nothing ever changing. Rinse repeat for many other issues that never get sorted out - we might finally move forward.

  • Comment number 95.

    When I worked in a much larger businesses ( I know own and run a tiny one), bonuses were first and foremost dependent on the company performance, and then tiered down to individual perfomance.

    RBS report the most appalling, if not unexpected, results showing a continuation of their mismanagement of risk in recent years. They are failing to seek new businesses to sell money to, a fundamental part of the committment under which UK Plc underwrote them. They are whinging that if they do not pay their staff huge bonuses, they will lose them.

    Why cannot these people see that they are losing a fortune of UK taxpayers money, and not a single one of them should receive any bonus at all. Apparently morality cannot be discussed, they say business is amoral, I believe them to be immoral.

  • Comment number 96.

    Whichever way you look at it, it is the ordinary joe public that gets shafted again, while the so called elite who have made such a mess can carry on regardless and enjoy their lavish lifestyles etc etc etc. Barricades in the streets, civil unrest, heads rolling into blood soaked gutters, justice for the ordinary Joe - I wish!!!!!

  • Comment number 97.

    "Royal Bank says the money is there to be lent, but that bankable businesses don't want to borrow - or, at least they don't want to borrow enough."

    I am sure that is true, but (per Winston Churchill) it may not be the whole truth. First look at that weasel word 'bankable' - the horizon of the businesses to which loans will be extended by the banks. That horizon has closed in sharply.

    Second, the terms on which loans are being offered probably mean that the businesses which could borrow are less interested; one bank quoted me "only" 12%. Twenty years ago I had to pay the usurious (for the time) rate of 6% over base, but that was only about half of what is being quoted now.

    Thirdly the conditions attached to the loans have become a lot more onerous.

    And finally, a lot of businesses have woken up to to the fact that high gearing is no answer to anything. I lost count of the stories I read from the churnalists condemning businesses for being undergeared, from about 1985 up to the crash. But those well-run businesses haven't recently rediscovered equity: most of them never lost sight of it entirely in the first place.

    In the late nineties I came to the view that we were 'overbanked' - it seemed that about every fifth retail outlet on our high street was a bank - more if you add in the estate agents who were also pimping mortgages. There was not enough business to go round even then - so they made up some new products to increase the size of the market. Forty years in industrial products tells me that only works if the the new product is a better mousetrap; and even then it is more likely to cannibalise the existing market than to expand the total market.

    In different strands of my life I control accounts for three different organisations, each at a different bank. Each of those sits on a cash pile of at least 12 months operating costs. About one in three calls I make to these banks ends up with an enquiry by the bank asking if I want to take out a loan: "you're pre-qualified";" we can credit you within a week"; and such stuff. They are offering me around a month's costs - which is pointless. Are these people just being paid on the volume of offers that they make? The way they are going about it, they must be having a thin time of it if it is only commission on the loans they arrange.

  • Comment number 98.

    When I read such figures and how some £10bn of taxpayers money evaporated in thin air since RBS was bailed out I feel negative about the real state of the economy and fail to understand why a loosing bank giving its staff a bonus! Am also concerned of artificial inflation by BOE in terms of QE and very low interest rates that collectively may be masking an even worse economic state or deferring a second but worse recession or even depression in the future. I no longer know who to believe and feel quite confused about what is going on.

  • Comment number 99.

    RBS will recover -eventually- but not off their own backs.

    The reason why is Mervyn will keep chucking money at them, and they will also keep raising their interest spreads on all loans, steal off the savings interest, and find lots of new ways of charge commission, fees and penalties.

    They will eventually recover because we the taxpayers will be paying (forever) through the nose to bail them out. No-one else will take any of the burden.

    And none of us will complain loud enough.

    Your only hope is to move your business and personal accounts to the new banks that are going to spring up, and to the mutuals/credit unions.

    We actually have to break the fat banks by telling them we won't use them.

    Regards,

  • Comment number 100.

    RBS' Global Banking Division (The one that gets the bonuses) seems to have made a 30% return on investment (around the same as the other investment banks).

    Since the idea is that you can't create money out of nothing (ooh yes you can) someone must lose big, if someone else gets to win big........

    There are two ways of looking at that sort of return.
    1 -what geniuses they must be.
    2 -what a rip-off, why are they suckering their customers so greedily, and/or why are their customers so dumb?

    The whole system sinks. Shut it down.

    Regards,

 

Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.