Will RBS sell Coutts?

 
The RBS office in the City of London. Sir Mervyn King has suggested splitting RBS in two.

Mervyn King's remarks that he wants to see RBS's poisonous and low quality assets hived off into a new so-called bad bank matter - but probably not in the way that seems most obvious.

Because that's not going to happen. My sources at the Treasury tell me that they are happy with RBS's current proposals to mend itself, which involve shrinking its investment bank and floating a share of its US retail bank, Citizens, on the stock market.

However within a matter of days, Sir Mervyn and his colleagues on the Bank of England's Financial Policy Committee, or FPC, will determine how much additional capital all Britain's banks have to find, to protect themselves against future losses on loans to business and to personal customers who are only just keeping their heads above water (and see one I prepared earlier).

What the governor signalled is his concern that RBS remains too weak to provide the credit needed for economic recovery. So it seems highly plausible that he will instruct RBS to raise more capital than it is currently planning to do.

Since George Osborne has set up the FPC with independent authority to minimise the risks in the financial system, he would not find it easy to over-rule or ignore it on the first occasion it makes a big decision.

The words "back" and "rod" are probably on Mr Osborne's mind a good deal, in these Sir Mervyn's last weeks in the job.

That said, the idea that taxpayers will end up putting more money into RBS is for the birds. Such would be a short cut to political ruin for Mr Osborne, since Tory MPs would not tolerate even an extra penny of our money going into RBS.

The far more plausible alternative is that RBS will end up having to sell even more assets than it currently plans, including - perhaps - the Queen's bank, Coutts.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

How Labour pays for student fee cut

Labour would reduce tax relief for those earning £150,000 or more a year, shrink maximum pension pots to £1m and cut maximum annual pension contributions to £30,000 to pay for a cut to £6,000 in student fees.

Read full article

More on This Story

More from Robert

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    0

    Comment number 95.

    @81. rememberdurruti - what has been stolen? Do you mean cuts in benefits? Aha - the "bedroom tax" perhaps, which is not actually a tax as you don't pay tax on money you don't earn (catchy name, though).

    @88.Stevie - RBS made £3.5bn operating profit. Why not pay bonuses? And don't forget bonuses include staff you really ought not to have a gripe against - counter staff, mortgage advisors, etc.

  • rate this
    0

    Comment number 94.

    Those on here commenting about the continuing drain of losses by RBS - I think many of you need to understand the figures more. £3bn+ operating profits. £4.5bn of the loss was down to an accounting rule where liabilities go up when the creditworthiness of a bank improves. Yes, still losses coming through on LIBOR and PPI but basic, day to day banking - £3bn+ profit. That's good.

  • rate this
    0

    Comment number 93.

    But doesn't Coutts have a toxic number of VERY wealthy clients suing them over a reccomendation to invest with the Madoff gang?

  • Comment number 92.

    All this user's posts have been removed.Why?

  • rate this
    0

    Comment number 91.

    Royal Bank of Canada will buy some overseas divisions of Coutts from RBS, giving RBC access to high-net-worth individuals (That may be you, but it's not me!). Coutts clients have included the Queen + sports & pop stars. In Nov. 2011, Britain’s financial watchdog fined Coutts £6.3-million for failings related to sale of FUND PRODUCT. Personally, I dislike this RBC investment. It bears watching.

  • Comment number 90.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 89.

    Royal
    Blooming
    Shambles

    should have been split up years ago.
    it did not happen, which suggests the balance sheet was even worse than presented.
    creative accounting still liveson at RBS
    why on earth have they been rewarded with bonuses.
    Hope queen has some money stashed with the Bank of Canada.....oh her face is on CanDollars so she's ok!

  • rate this
    0

    Comment number 88.

    Half a billion of RBS latest losses were down to wages (bonus) any other business would be getting rid of this cost but not the bank, why is their cost saving dynamic so different, do the look at cash differently? Surely any sell off of RBS assets today would be a fire sale and not repay the investment the taxpayer has made.

  • rate this
    0

    Comment number 87.

    82 Oakwood bank. Banks have always borrowed money commercially, but yes, to a bank money is their product.
    They borrow in bulk (i.e. wholesale) and lend it out in smaller amounts just like Tesco's & Beans. The only difference is that once you have bought your beans Tesco are finished. A bank has to worry about getting the money back. That's the real skill (sadly lacking recently) of banking

  • rate this
    0

    Comment number 86.

    Why don't they sell off NatWest, at least its not a damaged brand unlike RBS and Coutts.

  • rate this
    +1

    Comment number 85.

    5 years on from the 2008 crash here we are still waiting for the banks to disclose their full position on how much of a mess they have caused. With hindsight we would have been better off doing what Iceland did and let the lot of them go to hell. We could have started again from scratch and been on the mend by now instead of which we are still in a stagnant economy with a useless chancellor.

  • rate this
    +2

    Comment number 84.

    I hope our Scottish neignbours have plenty of readies to buy this bank from the British Taxpayer should they vote for Independence!

  • rate this
    0

    Comment number 83.

    I think they tried yesterday evening....but someone pressed the wrong button!

  • rate this
    0

    Comment number 82.

    Shouldn't high street banks get back to basics and only lend from what is on depeosit?

    Is borrowing money to lend it out at a higher rate a fair business practice?

    That is treating money as if it were a product like oil.

  • rate this
    +2

    Comment number 81.

    "My motives for sticking to the plan are exactly about doing the right thing to help families and business up and down the country" (Cameron)

    So feeding banks cheap money stolen from families leads to the banks hoarding the money instead of lending it to business. That's a plan?

  • rate this
    0

    Comment number 80.

    79

    Merv hints at a bad bank for toxic stuff. That does not suggest a golden dawn is coming to RBS shortly

    In fact RBS appears to be so heavily damaged that it cannot function properly in its role in lubricating the UK economy

    The banks blame a lack of demand but borrowing remains a problem generally

    In particular mortgage lending isnt buoyant which hints at housing prices having to drop

  • rate this
    +2

    Comment number 79.

    Every year the public have owned 81% of RBS they have posted massive losses, but still paid millions in bonuses. They expect to put it back into private ownership as soon as it becomes profitable.

    Why ?

    We should hold onto it for enough years to claw back every penny of the bailout and then some. Why walk away from all the profit so the parasites that caused the mess can dive into the trough

  • rate this
    0

    Comment number 78.

    There was l believe an interesting response by US banks to their woes past and continuing. They did not by and large, flog off foreign assets and looked to the flow of income to tide over domestic turmoil. That at the end of the day, week, month or decade, was the point of diversiying abroad. Time will tell, but l think our banks got it far more wrong than is yet understood for the longer term.

  • rate this
    -1

    Comment number 77.

    The day RBS goes back into private ownership is the day I close my account.

  • rate this
    0

    Comment number 76.

    75

    Indeed, UK policy is to keep kicking the can down the road, make the prudent pay for the feckless and hope that the magicians can come up with another LIBOR fixing, PPI selling, BoE funded funny money scheme that will help us bumble along for another few years.

    Build your house on sand and it will eventually sink.


    As Ben Graham (Buffets mentor) said investors are a fickle bunch.

 

Page 1 of 5

 

Features

Copyright © 2015 BBC. 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.