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View Full Version : RBS (The Royal Bank of Scotland) Posts Record $34 billion Loss


Shaun.P
Feb 26, 2009, 04:22 AM
Royal Bank of Scotland (RBS) has just announced the largest annual loss in UK history - £24.1bn / $34.2bn.

BBC News Link (http://news.bbc.co.uk/2/hi/business/7911722.stm)

CNN Link (http://edition.cnn.com/2009/BUSINESS/02/26/uk.rbs.recordloss/index.html)

I just don't see how it is possible to lose this much money :confused:.

mcnicks
Feb 26, 2009, 04:39 AM
I just don't see how it is possible to lose this much money :confused:.

Its easy: just spend money you do not have buying assets that do not exist.

garybUK
Feb 26, 2009, 04:40 AM
I was listening to BBC Radio 5 Live this morning about this, ouch!!! and the old chief exec walked away with a £650k p/a pension!!! And could lead to job losses of 20,000.

Not good at all.

Have you noticed though, in the UK, it seems to be the scottish banks (apart from Northern Rock) but you don't see Barclays posting monumental losses.

edesignuk
Feb 26, 2009, 05:03 AM
Barclay's would be just/almost as deeply in the ******* had they won the race to buy the pending disaster that is/was ABN Amro.

From my little understanding RBS were already exposed in their own right, but buying ABN for the insane amount hat they did, only then to also take on the masses of bad debt that ABN turned out to have only put the nail further in the coffin.

gnasher729
Feb 26, 2009, 10:35 AM
Barclay's would be just/almost as deeply in the ******* had they won the race to buy the pending disaster that is/was ABN Amro.

I could imagine that someone at Barclay's said "wouldn't it be funny if RBS bought ABN? With their boss concentrating in being the biggest boss around instead of running a proper business, if we spread some rumor that we want to by ABN Amro for lots of money, then he won't be able to resist and spend an _insane_ amount on it".

arkitect
Feb 26, 2009, 10:38 AM
I could imagine that someone at Barclay's said "wouldn't it be funny if RBS bought ABN? With their boss concentrating in being the biggest boss around instead of running a proper business, if we spread some rumor that we want to by ABN Amro for lots of money, then he won't be able to resist and spend an _insane_ amount on it".

You are probably not very far off the truth with that…

:o:(

oscillatewildly
Feb 26, 2009, 11:05 AM
ABN - The RBS Shareholders voted for it, couldn't get enough of conquering the World.

UK Taxpayer screwed again re risk and reward.

arkitect
Feb 26, 2009, 11:19 AM
The government could have stopped ex-RBS bank chief Sir Fred Goodwin getting his £650,000-a-year pension, Chancellor Alistair Darling has admitted.

Mr Darling has made a personal plea to Sir Fred to give up his pension - but also admitted that it was now clear ministers could have blocked it.

Shadow chancellor George Osborne called Mr Darling's position "pathetic".
Link… (http://news.bbc.co.uk/1/hi/uk_politics/7912651.stm)
£650,000 a year… after saddling the UK tax payer with £325bn of "toxic" assets.

bartelby
Feb 26, 2009, 11:22 AM
It could get a lot worse for the banks soon. Their Bank Charges case appeal got thrown out.
They've gone to the House Of Lords. If that fails they have to pay hundreds of millions back to customers.

barkmonster
Feb 26, 2009, 11:39 AM
I'm out over £1,000 in extortionate bank charges and flawed payment protection down to RBS/Natwest!

In 2006, I used my overdraft for the first time ever from summer onwards having moved out at very short notice earlier in the year and exhausted my savings on deposits, furniture etc... then in January 2007, my employer screwed up the payroll run and I only cleared about £700 for a 5 week month!

Natwest chose that exact time, literally on payday to demand the overdraft back in full, suggesting I take a loan with a 19% interest rate to cover it because the overdraft was 29.6% apr. I felt I had no choice or they'd swipe all my wages and leave no money for rent or anything that month so I agreed to it.

Things went wrong at work in late August 2008, costing me a small fortune in bank charges + interest because of the notice period needed to cancel direct debits.

Their call centre drones wouldn't even let me change my rent standing order to weekly over the phone or inform me I had the option of out right cancelling them over the phone instead, causing more charges after I'd got a weekly paid agency job within a fortnight.

The agency job ended in late November and at that point I put in a claim for payment protection because I hadn't being unemployed for long enough to be covered in summer.

It was at this point that Natwest/RBS refused to cover the loan payments after I'd shelling out almost £500 in insurance payments by then and all they agreed to do was knock it off future loan payments after cancelling the payment protection. It's only going to save me £10pm on future payments because I'm tied to a 5 year insurance contract that was linked to the original loan.

I can fully understand why farmer, David Cannon (http://news.bbc.co.uk/1/hi/uk/975012.stm) sprayed his local branch with manure.

I'd prefer napalm myself or flood them with gallons of Marmite so they have to eat their way out :mad:

Shaun.P
Feb 26, 2009, 12:05 PM
Have you noticed though, in the UK, it seems to be the scottish banks (apart from Northern Rock) but you don't see Barclays posting monumental losses.


Not quite. If you click the link below (and look at my attachment [from the BBC]) You can see that Lloyds TSB, Northern Rock and Bradford & Bingley collectively owe more than the Scottish banks. However, this illustration has not been updated for todays new bail out for RBS.

I agree - you don't see Barclays posting huge losses, but their recent profits of roughly £6bn were due to acquisitions from the takeover of Lehman Brothers in the US. It does look like Barclays would have posted profits anyway, but they would not have been as high if they did not acquire Lehman Brothers.

BBC Link to this image and explanation.

oblomow
Feb 27, 2009, 01:02 AM
Barclay's would be just/almost as deeply in the ******* had they won the race to buy the pending disaster that is/was ABN Amro.

From my little understanding RBS were already exposed in their own right, but buying ABN for the insane amount hat they did, only then to also take on the masses of bad debt that ABN turned out to have only put the nail further in the coffin.

True on both sides of the North Sea. ABN/AMRO was a profitable bank in its own right, but management/shareholders wanted to cash in and fell for the offer of Fortis, RBS and Santander. Result: RBS in big debt, Fortis had to be saved by the Belgian and Dutch governments. And Santander is also not doing fine. This happens when greed and big ego's take over common sense.

oscillatewildly
Feb 27, 2009, 04:24 AM
It could get a lot worse for the banks soon. Their Bank Charges case appeal got thrown out.
They've gone to the House Of Lords. If that fails they have to pay hundreds of millions back to customers.


Goodbye to 'Free' banking.

arkitect
Feb 27, 2009, 04:32 AM
Goodbye to 'Free' banking.

What is this "Free Banking" whereof you speak?
Never been "free" for me. Monthly fees, outrageous costs on international banking…
:( :o

*********

Stand-off over Sir Fred's pension
Link… (http://news.bbc.co.uk/1/hi/uk_politics/7912651.stm)

So should he give up his honeypot of solid gold? Voluntarily or forcibly?
Ex-banker Sir Fred Goodwin's refusal to hand back his £16m pension has been condemned by the Treasury as "unfortunate and unacceptable".

Sir Fred says ministers knew about the £693,000 a year deal for months and that it was approved by Lord Myners.

Lord Myners denies this and has said such a "huge reward" cannot be justified given the bank's losses.

RBS announced a record corporate loss of £24.1bn on Thursday and received a second taxpayer bail-out of £13bn.

Sir Fred's pension pot doubled to £16m last October when the 50-year-old agreed to take early retirement.

The Treasury, which pumped £20bn into the crippled bank, was anxious to get new management in place.

edesignuk
Feb 27, 2009, 04:47 AM
So should he give up his honeypot of solid gold? Voluntarily or forcibly?I'd consider his testicles in part payment for him keeping some of his pension.

Beyond that I don't think anyone is feeling very generous.

Wiska
Feb 27, 2009, 05:30 AM
I just don't see how it is possible to lose this much money :confused:.

http://crisisofcredit.com/

arkitect
Feb 27, 2009, 05:34 AM
I'd consider his testicles in part payment…

Wonder what the price of brass is these days?

'Cause he's certainly got a pair made of that if he manages to brazen this out.
:p

This is just mind blowing:
Sir Fred's pension pot doubled to £16m last October when the 50-year-old agreed to take early retirement.
So he gets kicked out early but as a sweetener his pension gets increased by around £8m…

xUKHCx
Feb 27, 2009, 05:44 AM
From Sir Fred's position if he can keep on the low for a month or so then this will all blow over in terms of the media hype and he will be able to keep all that money to himself.

I think when the tresaury deem this incident as "unfortunate and unacceptable" they mean the fact that these details have been made public. I am sure they knew about it and perhaps even had a part in it. I expect they were hoping to sweep this under the carpet. I am sure Sir Fred is not the only one walking away with pots of money that the treasury knows about.

Shaun.P
Feb 27, 2009, 05:51 AM
http://crisisofcredit.com/

What a fantastic video!

Shaun.P
Feb 27, 2009, 06:00 AM
Lloyds sees HBOS loss of £10.8bn. (http://news.bbc.co.uk/2/hi/business/7914013.stm)

A big loss for Halifax Bank of Scotland (HBOS). And a small profit for Lloyds (£807m).

Why did Lloyds buy HBOS? Was it to try and fortify the banking system as a whole, or was it because HBOS was very cheap at the time and they wanted to buy over one of their competitors?

Something that confuses me is that HBOS, for example, has made billions of profits in the last few years (I think yearly profits of roughly £6bn). Do banks not have cash reserves? Why is a loss of £10.8bn so bad if they've been making profits of over £6bn for so long? Why is it these banks have to borrow from the government? Are the profits they do make just reinvested?

gnasher729
Feb 27, 2009, 06:57 AM
Something that confuses me is that HBOS, for example, has made billions of profits in the last few years (I think yearly profits of roughly £6bn). Do banks not have cash reserves? Why is a loss of £10.8bn so bad if they've been making profits of over £6bn for so long? Why is it these banks have to borrow from the government? Are the profits they do make just reinvested?

Most of the profits came from investments where the risks where calculated wrongly. Let's say you go to a game casino. They have a new game: You bet on a number. If the number doesn't come up, the casino gives _you_ £1000. If the number does come up (chances 1 in 36) you pay the casino £100,000.

And you tell all your friends that every time you go to the casino, they give you £1000. So all your friends go as well. And one day, your number is up. And your friends can't help you, because they all picked the same number. That is roughly what the banks have been doing: Investments that were highly likely to give a small profit, and much less likely to cost you everything. Somehow they calculated that the risk was zero, when it wasn't.

oscillatewildly
Feb 27, 2009, 11:39 AM
arkitect,

Fred's Pension - He should keep it. Would you give it up? He was allowed to play the system, the issue is redesigning the system.

oscillatewildly
Feb 27, 2009, 11:44 AM
What is this "Free Banking" whereof you speak?
Never been "free" for me. Monthly fees, outrageous costs on international banking

Yeah, I know. It's more everyone/every account will get charged a fee.

BoyBach
Feb 27, 2009, 12:07 PM
I think when the tresaury deem this incident as "unfortunate and unacceptable" they mean the fact that these details have been made public.

I would say that the Treasury and The Great Leader™ are very happy that Goodwin's pension details are public knowledge. It means that he continues being a lightening rod for public anger, and the day's press / news cycles barely mentioned the extra £325 billion that was added to our debt yesterday.

It's not such good news for Lord Myners, though!


Why did Lloyds buy HBOS?

HBOS was days away from collapse and the government panicked, waived the Competition Laws and effectively told Lloyds TSB they had to merge with HBOS.

arkitect
Feb 27, 2009, 12:12 PM
I would say that the Treasury and The Great Leader™ are very happy that Goodwin's pension details are public knowledge. It means that he continues being a lightening rod for public anger, and the day's press / news cycles barely mentioned the extra £325 billion that was added to our debt yesterday.

It's not such good news for Lord Myners, though!

You're spot on!
A few months ago the Labour govt was bending over backwards to banks and city — now they can't throw them to the wolves fast enough to keep their re-election prospects alive…

oscillatewildly
Feb 27, 2009, 12:32 PM
BoyBach,

Don't forget the mantra - global, do nothing, global, do nothing ...

BoyBach
Feb 27, 2009, 05:55 PM
BoyBach,

Don't forget the mantra - global, do nothing, global, do nothing ...


That reminds me of the joke I heard on the radio during the snowfall of a few weeks back. It went something like: "Today, Gordon Brown was at pains to point out that the snow actually originated in Russia and was therefore definitely not his fault!"

:D

Willis
Mar 4, 2009, 01:20 AM
http://crisisofcredit.com/

excellent link!

BertyBoy
Mar 4, 2009, 03:40 AM
[QUOTE=ShaunPriest;7177501Why did Lloyds buy HBOS?[/QUOTE]

For a 30% share of the UK mortgage market. It'll still come good for Lloyds if they get rid of the HBOS staff.

You do the sums yourself, 14 million mortgages at an average £100,000, with an average 2% mark-up over the rate the money was borrowed. There's £28bn revenue each year for doing nothing more than collecting the mortgage payments. If customers want any sort of communication with the bank over their mortgage, or to make endorsements (changes) there's an additional fee, like it is now.

So now ask, just how can HBOS lose so much money ?

Well, I used to contract to RBS and HBOS since then. Never did I see stupidity, laziness and office politics in a management hierarchy. HBOS worse than RBS, rife with out-dated working practices and tiers of management that did (absolutely) nothing to justify any salary, let alone their comfortable salaries and bonuses. 70,000 work for HBOS, starting at the board and coming down through management, Lloyds could make 50,000 redundant and not notice the difference.

Unfortunately, I'm cursed being a contract IT specialist in financial services based in Edinburgh. I may have to go back to London.

BoyBach
Mar 22, 2009, 08:14 AM
In today's Observer: (http://www.guardian.co.uk/business/2009/mar/22/rbs-threats-directors-lord-foulkes)

RBS faces probe over 'threats' to directors

The scandal engulfing the Royal Bank of Scotland reaches new heights today with serious allegations from a senior Labour politician that at least three of its former non-executive directors may have been intimidated and threatened with the sack for asking searching questions about its financial affairs.

The Observer can reveal that a former government minister, Lord Foulkes of Cumnock, who has been extensively briefed by former bank insiders, has written to the Financial Services Authority, the City watchdog, asking it to pursue the claims which, if true, could trigger a criminal investigation.

The intervention by Foulkes, who is also a member of the Scottish parliament and sits on the Commons security and intelligence committee, comes amid fears that the bank will be exposed as the UK's equivalent of Enron - the US trader that collapsed amid systemic fraud.

Last night Foulkes said there was "widespread public anger among the public and Parliament that bankers in the midst of this financial crisis appear to be profiting and no action is being taken in relation to action which could constitute criminal offences".

In relation to claims of intimidation, Foulkes said: "If it were to transpire that executives were pressured in such a way, then that is a most serious matter indeed that needs urgent action."

He is also understood to have been disturbed by claims that the bank misled investors over its exposure to bad debts. Yesterday it was reported that more than £30bn of "toxic" sub-prime mortgages were bought for RBS by traders in 2007 without the board being informed - a claim denied by the bank.

Foulkes's letter to the FSA chairman, Lord Turner, states: "You will be aware that there is widespread disquiet that, unlike in the USA, there appears to be no action being taken against any of the UK bankers who may have been culpable of one or more offences in their dealings."

He asks Turner to address "whether any knowingly false statements were made or prospectuses issued that could have led potential investors or depositors to believe the position was more favourable than the board knew it to be and whether there was any intimidation of non-executive directors who had been asking probing questions which led them to believe they would not be reappointed if they continued to pursue such searching questions". Matthew Oakeshott, the Liberal Democrat treasury spokesman in the Lords, said: "I have never come across such damaging claims of megalomania, cover-up and intimidation ... Never mind Northern Rock. I am really afraid that RBS will turn out to have been another Enron."

...


Meanwhile, over at The Sunday Times: (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5950461.ece)

Revealed – King Fred’s taste for the high life

EXTRAORDINARY new details of the extravagance of Sir Fred Goodwin’s reign at the Royal Bank of Scotland have been revealed by a whistleblower.

An RBS insider claims the disgraced former chief executive squandered vast sums empire-building and indulging his personal tastes as the bank ran up huge losses.

The well-placed source has told how the bank allegedly:

- Redecorated the lobby outside Goodwin’s office with wallpaper costing £1,000 a roll because someone had made a tiny stain on one surface.
- Spent £5.3m lavishly refurbishing a grade A listed building – styled “Sir Fred’s Pleasure Dome” by staff – that was barely used.
- Paid out £100,000 a month on part-time chauffeurs.
- Flew fruit in daily from Paris and upbraided staff about “rogue biscuits” when pink wafers were included with other boardroom snacks.
- Twice changed £100-a-square yard carpeting in two vast boardrooms because Goodwin “didn’t like the shade of amber”.

...

And: (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5950498.ece)

Minister in charge of offshore clampdown ran tax haven firm

THE government minister in charge of stamping out corporate tax avoidance has himself set up a business in the tax haven of Bermuda. Lord Myners, already under fire for approving Sir Fred Goodwin’s massive pension from Royal Bank of Scotland (RBS), was part-time chairman of an offshore company which avoided more than £100m a year in taxes.

Details of Myners’s involvement in Aspen Insurance Holdings (AIH) have emerged as Gordon Brown seeks to win the backing of heads of government to prise open tax havens at a meeting of the G20 in London on April 2.

...


Can't we just shot the bastards?

jrichie
Mar 22, 2009, 06:02 PM
no matter how many you shoot, the people at the top will always rape the system.

it does not matter what side of politics you are on, how you were brought up .... once the temptation is there most people will grab it.

we are all selfish no matter what we say - it is all about self preservation.

iJohnHenry
Mar 22, 2009, 06:13 PM
we are all selfish no matter what we say - it is all about self preservation.

BS. As individuals, we can make other choices. It's when others pull at us from all sides that we become fodder for "the system".