How much could we make out of RBS?
Discussion
DonkeyApple said:
Beardy10 said:
It is the Irish exposure that forces the price down.
The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY s
t asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth.
A quick check has confirmed what I guessed. Mkt cap of £24B and liabilities in excess of £50B to Ireland. In other words, RBS is gone if Irish banks default.The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY s
t asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth. They only have to go to 50 p in the pound and RBS is wiped out. I've never seen a default which lead to any more than a few pence on the pound as the debt outcome.
RBS is now a play on the saving and recovery of Ireland.
Greece will be coming back for more cash very soon as they will have pissed the bail out funds up the wall and done nothing to cut spending. The EU is fast running out of time and lacks real leadership, the kind that is strong enough to let the weak die to save the majority.
They need to cut Greece loose and take control of the other Med states and butcher their spending.
ringram said:
DonkeyApple said:
Beardy10 said:
It is the Irish exposure that forces the price down.
The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY st asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth.
A quick check has confirmed what I guessed. Mkt cap of £24B and liabilities in excess of £50B to Ireland. In other words, RBS is gone if Irish banks default.The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY s
t asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth. They only have to go to 50 p in the pound and RBS is wiped out. I've never seen a default which lead to any more than a few pence on the pound as the debt outcome.
RBS is now a play on the saving and recovery of Ireland.
Greece will be coming back for more cash very soon as they will have pissed the bail out funds up the wall and done nothing to cut spending. The EU is fast running out of time and lacks real leadership, the kind that is strong enough to let the weak die to save the majority.
They need to cut Greece loose and take control of the other Med states and butcher their spending.
DonkeyApple said:
ringram said:
DonkeyApple said:
Beardy10 said:
It is the Irish exposure that forces the price down.
The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY st asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth.
A quick check has confirmed what I guessed. Mkt cap of £24B and liabilities in excess of £50B to Ireland. In other words, RBS is gone if Irish banks default.The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY s
t asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth. They only have to go to 50 p in the pound and RBS is wiped out. I've never seen a default which lead to any more than a few pence on the pound as the debt outcome.
RBS is now a play on the saving and recovery of Ireland.
Greece will be coming back for more cash very soon as they will have pissed the bail out funds up the wall and done nothing to cut spending. The EU is fast running out of time and lacks real leadership, the kind that is strong enough to let the weak die to save the majority.
They need to cut Greece loose and take control of the other Med states and butcher their spending.
s2t said:
DonkeyApple said:
ringram said:
DonkeyApple said:
Beardy10 said:
It is the Irish exposure that forces the price down.
The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY st asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth.
A quick check has confirmed what I guessed. Mkt cap of £24B and liabilities in excess of £50B to Ireland. In other words, RBS is gone if Irish banks default.The problem for the UK Govt in owning RBS is that the only time RBS will be worth anything profitable is when the economy is on the way to recovery, at which stage tax revenues etc will be on the way up anyway. So whilst it is potentially going to be a good asset to own for HM Govt it's only going to be worth anything when it is doing much better anyway.....it's actually a REALLY s
t asset to own on that basis! It would be much better if it's fortunes weren't as closely linked to the economy. In the meantime they have to go through all the crap about how much they have to pay the staff to retain them etc. More trouble than it's worth. They only have to go to 50 p in the pound and RBS is wiped out. I've never seen a default which lead to any more than a few pence on the pound as the debt outcome.
RBS is now a play on the saving and recovery of Ireland.
Greece will be coming back for more cash very soon as they will have pissed the bail out funds up the wall and done nothing to cut spending. The EU is fast running out of time and lacks real leadership, the kind that is strong enough to let the weak die to save the majority.
They need to cut Greece loose and take control of the other Med states and butcher their spending.
DonkeyApple]/quote said:
No it was bailed out as the repurcussions of failure were likely to be even more catastrophic
There are many ways to 'bail out' an entity. Some would say the best way would be one that ended liability rather than continued it. Depositers would have only got 'x' pence in the £. Inter bank lending what have had a knock on effect onto other institutions.
So net effect many businesses would fail as their financing had been pulled, people loose jobs and those with savings see their savings depleted.
As it is the government INVEST in the bank and will at some point make a profit on their INVESTMENT, there have been several times this year when shares could have been sold at a profit albeit small one. So once hester has finished his task RBS are on the right track, confidence returns and hey there will be a profit into the government coffers.
To my mind much as I hate to say it it was a good decision by Darling.
s2t said:
DonkeyApple]/quote said:
No it was bailed out as the repurcussions of failure were likely to be even more catastrophic
There are many ways to 'bail out' an entity. Some would say the best way would be one that ended liability rather than continued it. Depositers would have only got 'x' pence in the £. Inter bank lending what have had a knock on effect onto other institutions.
So net effect many businesses would fail as their financing had been pulled, people loose jobs and those with savings see their savings depleted.
As it is the government INVEST in the bank and will at some point make a profit on their INVESTMENT, there have been several times this year when shares could have been sold at a profit albeit small one. So once hester has finished his task RBS are on the right track, confidence returns and hey there will be a profit into the government coffers.
To my mind much as I hate to say it it was a good decision by Darling.
I suspect you are confusing a share price with reality.
At no point this year or next could RBS be sold at all, whether at a loss of a profit. They are a toxic basket case that will take a decade to unwind. The Tories will be hoping to offload a chunk ahead of the next election if the Govt runs its course.
Let me just remind you that they have a mkt cap of £23B. Their liabilities in Ireland alone, is double that. And that is before we look at their liabilities to the other PIIGS and also the UK.
They are still a massive toxic risk to the UK taxpayer. If it had been dissmantled and core parts still underwritten but disposed of to suitable sources under a suitable structure we would have the same upside potential as a taxpayer but substantially reduced downside.
Did Darling do the right thing? No. He and GB panicked and were spending more time trying to look for a scapegoat then a solution.
Why should depositors lose? Deposits were/are guaranteed. Sell them off.
Loans, sell them off.
Bond/Debt Liabilities... write them off. Systemic... maybe, but then those that took the risks take the pain. Thats life.
Short sharp shock, then build up. Current situation is prolonging and continuing the policies of failure and transferring the responsibility onto the tax payer instead of the losers who have been handed loads of nice government money.
What happened is not capitalism. Its pure and simple a totally immoral wk policy of weakness and failure.
Loans, sell them off.
Bond/Debt Liabilities... write them off. Systemic... maybe, but then those that took the risks take the pain. Thats life.
Short sharp shock, then build up. Current situation is prolonging and continuing the policies of failure and transferring the responsibility onto the tax payer instead of the losers who have been handed loads of nice government money.
What happened is not capitalism. Its pure and simple a totally immoral w
k policy of weakness and failure.Edited by ringram on Wednesday 24th November 10:29
ringram said:
Short sharp shock, then build up. Current situation is prolonging and continuing the policies of failure and transferring the responsibility onto the tax payer instead of the losers who have been handed loads of nice government money.
To clarify, are we talking about Joe Public that has been bailed out with ludicrous interest rates, or the nasty bankers?The issue with RBS was that they had to draw a line...if RBS had gone bust Barclays would unquestionably have followed. There was NO choice. Discussing whether it was the right thing to do or not is a nonsense, believe me if they could have got away with not doing it they would have.
The economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
The economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
NoelWatson said:
ringram said:
Short sharp shock, then build up. Current situation is prolonging and continuing the policies of failure and transferring the responsibility onto the tax payer instead of the losers who have been handed loads of nice government money.
To clarify, are we talking about Joe Public that has been bailed out with ludicrous interest rates, or the nasty bankers?Beardy10 said:
The issue with RBS was that they had to draw a line...if RBS had gone bust Barclays would unquestionably have followed. There was NO choice. Discussing whether it was the right thing to do or not is a nonsense, believe me if they could have got away with not doing it they would have.
The economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
Nationalisation and orderly breakup. Sell assets off to new banks or foreign banks. Job done. Lesson learnt. Dont fThe economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
k up.Problem solved.
ringram said:
NoelWatson said:
ringram said:
Short sharp shock, then build up. Current situation is prolonging and continuing the policies of failure and transferring the responsibility onto the tax payer instead of the losers who have been handed loads of nice government money.
To clarify, are we talking about Joe Public that has been bailed out with ludicrous interest rates, or the nasty bankers?Beardy10 said:
The issue with RBS was that they had to draw a line...if RBS had gone bust Barclays would unquestionably have followed. There was NO choice. Discussing whether it was the right thing to do or not is a nonsense, believe me if they could have got away with not doing it they would have.
The economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
I'm not sure that we are discussing whether it should have been bailed out or not, at least, I am not.The economic impact of having one of the major clearing banks going bust don't bear thinking about. Just think about all those business accounts that suddenly don't have banking facility and all all their working cash goes up in smoke? God knows how many firms would have gone bust. People lock on to this fact that the first £30k of deposits was guaranteed, do they think that would get paid out straight away ? It would takes weeks if not months to get the money.
I'm argueing that there are several ways to do a bail out and the one we ultimately chose has left us with large continuing liabilities.
I agree we had no choice but to bail out and I don't think, like you, there is any logical discussion to have there, but I feel we chose the wrong mechanism.
NoelWatson said:
re banks, low interest rates or liquidity provision?
Both. Spreads are at an all time high. Though perhaps priced more appropriately for those who like to speculate in house prices. Though the Special Liquidity scheme starts winding down shortly. I dont see the liquidity scheme as being such as negative for most people as the theft of savings through zero interest rates and positive inflation is.
Deposit rates should start heading higher if they haven't already done so.
Banks have a lot of capital to raise over the next few years by all accounts.
ringram said:
NoelWatson said:
re banks, low interest rates or liquidity provision?
Both. Spreads are at an all time high. Though perhaps priced more appropriately for those who like to speculate in house prices. Though the Special Liquidity scheme starts winding down shortly. I dont see the liquidity scheme as being such as negative for most people as the theft of savings through zero interest rates and positive inflation is.
Deposit rates should start heading higher if they haven't already done so.
Banks have a lot of capital to raise over the next few years by all accounts.
ringram said:
Spreads are at an all time high.
From where are you sourcing this data? And this is my point, where LIBOR/Swap rates are is more relevant than base, although agreed there is some correlation with base, and if they go higher, banks will charge more - no skin off their nose. Liquidity another matter.ringram said:
dont see the liquidity scheme as being such as negative for most people as the theft of savings through zero interest rates and positive inflation is.
You think most people have net savings?ringram said:
Deposit rates should start heading higher if they haven't already done so.
Why?NoelWatson said:
From where are you sourcing this data? And this is my point, where LIBOR/Swap rates are is more relevant than base, although agreed there is some correlation with base, and if they go higher, banks will charge more - no skin off their nose. Liquidity another matter.
Where? Moneyfacts had an article in Aug10.ringram said:
dont see the liquidity scheme as being such as negative for most people as the theft of savings through zero interest rates and positive inflation is.
You think most people have net savings?ringram said:
Deposit rates should start heading higher if they haven't already done so.
Why?As for who has net savings, sensible people, which I grant are probably few in number! Doesn't change the fact though.
Why? Because banks need to meet Basel 3 as well as the BOE liquidity scheme ramping out the £120Bn or so currently sloshing around there. Also likely higher wholesale funding costs etc. I cant think RBS's exposure to Ireland makes it cheaper for it to borrow..!? Plus the general trend for less leverage and more capital for times of stress. Bonds/Coco's etc so they will have to pay more for this. Raising their cost of capital and depressing return on equity.
ringram said:
NoelWatson said:
From where are you sourcing this data? And this is my point, where LIBOR/Swap rates are is more relevant than base, although agreed there is some correlation with base, and if they go higher, banks will charge more - no skin off their nose. Liquidity another matter.
Where? Moneyfacts had an article in Aug10.ringram said:
dont see the liquidity scheme as being such as negative for most people as the theft of savings through zero interest rates and positive inflation is.
You think most people have net savings?ringram said:
Deposit rates should start heading higher if they haven't already done so.
Why?As for who has net savings, sensible people, which I grant are probably few in number! Doesn't change the fact though.
Why? Because banks need to meet Basel 3 as well as the BOE liquidity scheme ramping out the £120Bn or so currently sloshing around there. Also likely higher wholesale funding costs etc. I cant think RBS's exposure to Ireland makes it cheaper for it to borrow..!? Plus the general trend for less leverage and more capital for times of stress. Bonds/Coco's etc so they will have to pay more for this. Raising their cost of capital and depressing return on equity.
Interesting point
Some have suffered more than others however and some are less blameless than others. So there is some disequilibrium here.
But seeing as in theory all debts sum to zero globally, you are right
For each winner there is a loser.
I cant say that the welfare state was/is sustainable. Arguably that's the biggest realisation out of all of this. You cant borrow to fund waste indefinitely. Especially when the waste is growing disproportionately greater each year. The welfare state is a big loser.
In one way its a good thing for the recession to hit as its brought unsustainable government spending to the fore as well. Pensions etc.
Anyway, topic digression!
RBS is sick and will be for a long time IMO. Lets hope we dont need to chuck any more money at it. To me its another welfare state waste. Tax cuts are where its at!
Some have suffered more than others however and some are less blameless than others. So there is some disequilibrium here.
But seeing as in theory all debts sum to zero globally, you are right
For each winner there is a loser.
I cant say that the welfare state was/is sustainable. Arguably that's the biggest realisation out of all of this. You cant borrow to fund waste indefinitely. Especially when the waste is growing disproportionately greater each year. The welfare state is a big loser.
In one way its a good thing for the recession to hit as its brought unsustainable government spending to the fore as well. Pensions etc.
Anyway, topic digression!
RBS is sick and will be for a long time IMO. Lets hope we dont need to chuck any more money at it. To me its another welfare state waste. Tax cuts are where its at!
Edited by ringram on Wednesday 24th November 15:07
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