Royal Bank as Jekyll and Hyde

your last paragraph is interesting....at what stage would we sell? if it does recover then surely it would be better to keep it to ensure that the "greed" of salaries never returns and to make even more profit for the forced taxpayer investment...why sell a profit making investment?

As I understand it the investment banking "profits" at RBS have been "engineered" by buying back [with borrowed money?] their own risk devalued bonds at half the price they were issued at and recording this as a profit! A bit like buying back your own re-possessed house at half price using your credit card.

RBS will only recover under a regime of common sense.
But what irks me, and almost everyone else, is why the executives and fat-cats of this bank should recieve any pension at all.
They're already multi-millionaires.
Their pensions should be taxed at 100%.
They MUST CONTRIBUTE to the recovery of the almighty losses they have created.
Everyone else in the country is contributing...losses to pensioners, losses to savers, losses to shareholders, losses to newly-unemployed, losses to businesses.
But RBS fat-cats can spend the rest of their days sipping champagne on some Carribean beach, or in their mansions....all paid for by the suffering masses. No contribution whatsoever.
Tax rules can be changed in 5 minutes.....no voting required....no laws need changing.

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

Sounds like another bit of fairly positive news that we're moving in the right direction.

What I'm not clear on is the taxes, I though corporate taxes were paid on profits but they made a loss and appear to then have paid taxes 18 times the loss. I'm not certainly not complaining, just curious as I thought a big factor in the drying up of government income was reduced taxes from bank profits

Robert,
INVESTIGATE. IT'S YOUR JOB. Could it be the banks have any off-balance sheet toxic assets? Shouldn't you find out? Is your job to find the truth or print the lies from the government and banks. Lies because they have not told us their exposure to toxic assets even after nearly 2 years. If it smells like a rat, it probably is.
Krugman in the US was invited to the White House to discuss his criticism of the administration and hasn't wrote anything since. Are you all being pressurised by the politicans? I am honestly concerned.
DO YOUR JOB. WHAT DO THE BANKS HAVE OFF-BALANCE SHEET AND HOW MUCH TOXIC DEBT ON BALANCE SHEET? It's not difficult to make a profit in this market but how much will the write downs be? $3T like the IMF say? Investigate.

What price do the shares have to reach before the taxpayer is theoretically in the black ?

At what level (share price) did we buy in to RBS?

Hmm, more Accountants fiddling !

The sad fact is that unemployment is still rising,wages are still falling in real value, overall consumer spending is falling, and Companies will have to continue cutting prices (and profit margins in order to make sales), an ongoing downward spiral !

One building company has just gone cap in hand to its shareholders for a bailout (along with one of the historically best private equity firms).

Shareholder bailouts all round !

stevewo: you cannot possibly think that it is fair to confiscate everything that one person has been diligently saving up for decades. Should we also find his bank accounts and tell him that any withdrawals are 100% taxable? It's his money, and he earned it because he was good at his job.

The last couple of days have been generally positive! Things are slowly looking up... You make the point well, Robert, but you make it sound like we have some modicum of control over our shares in RBS, which we never will. Our shares are the country's, we just live in it.

Beware the figures on an increase in current and savings accounts openings.
NatWest insist on you opening a second "overflow" account when opening an ISA. I tried to open an ISA without doing that and they refused.
They probably have tens of thousands of effectively empty accounts which have contributed to the metrics that they published today.

#1 jolo13 says:
'to ensure that the "greed" of salaries never returns'

The task of any business is to do the best it can for its investors and its customers. To do that you need to attract and retain staff, which means you need to offer competitive salary packages. If the nationalised banks permanently offer low salaries relative to market, they will end up with a workforce of non-dynamic, disgruntled workers, who will never offer the 110% a top level bank needs from their staff, and will spend more time moaning to each other about the low pay and bad management than doing any work, or indeed looking for better employment. That is when they are not striking to improve pay.

No private sector investor would ever buy such a bank, and indeed you could easily end up with the worst of both worlds - a public sector organisation in terms of working practices, with none of the advantages in terms of having a monopoly or providing a necessary public service. It will be a millstone around the government's neck *unless* it offers better than average salary packages and attracts the best staff.

Unfortunately, there is a widespread misconception, aided in part sadly by journalists, and even I have to say Robert Peston himself, that high salaries are bad, and the banks caused the recession through being greedy.

Never forget - the banks are no different to other businesses. They aim to make money and remunerate their staff accordingly. If the management make poor decisions, that is tough on the shareholders - this is the reason we have things like AGMs and non-executive directors. But it doesn't make them responsible for anything other than their own bank's losses.

Banks, like any other business, absolutely *do not* have a *social* duty to provide anything at all, be it products to customers, or a more secure banking framework, particularly so when that would be at a cost to their customers or investors.

If a social function is to be performed by banks - if they must behave in a certain way, retain certain capital levels etc, to meet the requirements of society at a cost to themselves - this function must be imposed on them by government through regulation.

It is the failure of this regulation which has caused the social function to fail, and the banking crisis to occur. In other words, it is solely the fault and failure of the regulations banks operate within, that we have a banking crisis - the banks were merely the instruments of that failure. After all, it's not as if they broke any rules, they were merely doing what any business would be expected to do - try and make as much money as possible and meet the needs of their customers, within the regulations they operate under. It's just that the regulations were inadequate for their purpose.

So who sets the regulations? Now we see where the blame lies.

Don't let anyone, be they journalists or national leaders, fool you into thinking the rule-setters have no duty to safeguard our critically important fiancial system, and that that is the job of banks. Of course that is the duty of the rule-setters - namely our government. Safeguarding critical elements of our society is exactly their purpose. Mr Peston please take note!

#1 Jojo asks why sell the state's stake in RBS....?

Further to that I wonder which foreign bank the Govt is planning to sell RBS off?

Yesterday you were stating it could be the beginning of the banking recovery.

A loss of GBP 857 million for RBS and ten US banks failing stress tests doesn't sound like a recovery to me.

Two issues here
1 the investment banking arm made profits was that real profit or are they trading some new instrument between the bad debts they have so it looks like a profit?
2 The recovery will not be lead by the banks but by the consumer. having walked round an empty market town yesterday then went to a pub last night and was the only customer at 8 pm (this time last year it had every table in use) we are a long way off.

#10 philipmaton wrote:

stevewo: you cannot possibly think that it is fair to confiscate everything that one person has been diligently saving up for decades. Should we also find his bank accounts and tell him that any withdrawals are 100% taxable? It's his money, and he earned it because he was good at his job.

Good at his job! Really?

The mind boggles at what you think a bad job at running a bank would look like.

The RBS figures are a "Jekyll-and-Hyde tale"?

Robert, are you implying that this is another impressive work of fiction from Edinburgh?

Are we saved? Yes or No?

OT,

Nice to see that after helping the hard pressed bankers, the uk gov are now helping hard pressed politicians (sorry families)

"though that probably represents pain delayed rather than avoided altogether."

more smoke and mirror's just like the budget, saving all the pain until
after the next election. HMG are in control of RBS, so its in there interest to provide a rosy picture and that there policy of throwing our money into the champagne glasses etc is working.

I'm going to ask Mr brown for a contract for cleaning his flat. At £6000 it seems easy money.

Althuogh Mr Straw stated he was not good at accounts, he is in the cabinet, Is Alistar Darling any good at accounts ?

If anyone took my advice and bought RBS at 10p their shares would now be worth 4 1/2 times what they cost......which is a remarkable turnaround ....and the share price is everything and the only thing that matters.....watch this space ....100p by xmas 2009 and 200p by xmas 2010.
And as for the property crash, a local home has been put up for sale at 1.3m and sold in a day for well in excess of this, not even enough time to put it up on the web.
I have just been given a green light for a 2.5m project and my business has expanded by 20% in 6 months and we plan to double in size 2009-10.
So I hate the tax rises, but I have to hand it to Gordon Brown, he has done incredibly well extricating UK from this slump.
So how do you like your green shoots, Robert....with humble pie?
Suddenly it is looking better to be British.
Onward-march!

The pre-tax loss of just GBP44m is a massive shift back in the right direction by RBS and all the doomsayers and bitter twisted petty minded vengence seekers comments cannot hide that.

The UK stake in RBS at last offering was picked up at the offer price in the 31.75p and shares now trading above 46p so a paper profit has already been made. Signs are that the share price will continue to climb over and pass the previous issue prices.

The UK is, going to get its money back with a tidy profit on both RBS and Lloyds. best investment they will ever have made.

Glass half full not half empty!

I have just read 3 interesting articles from the US. All three say that Citi turned a $2.8billion loss into a $1.6billion profit by using 3 accounting tricks:
1. book a profit by saying they could reduce their debt by buying back their poorly performing bonds, but not actually doing so
2 change in mark to market rules though nothing real has actually happened
3 making lower provisions for bad dets, while these are actually rising.
This seems rather like the sort of financial alchemy that got us into this mess inthe first place. Most people didn't see this crisis coming because they didn't want to. Has anyone learnt anything from it or are we condemmed to limp from one statistically induced blunder to another?

Something smells over familiar. Ah, yes, they've tweaked the old sin! Recycling their own toxic liabilities and guess what, they're assets all over again, and the losses aren't half so bad. Do these cheating swine not learn? This would, of course, explain to lack of disclosure by the banks of their toxic liabilities. Abhorrent in a public company, but how can they get way with when the state owns 70%???? More political complicity, that's how.

#17. shoot2score wrote:

#10 philipmaton wrote:

>stevewo: you cannot possibly think that it is fair to confiscate >everything that one person has been diligently saving up for decades. >Should we also find his bank accounts and tell him that any withdrawals >are 100% taxable? It's his money, and he earned it because he was good >at his job.

Good at his job! Really?

The mind boggles at what you think a bad job at running a bank would look like.


But it IS just sour grapes. No-one complained while they were also on the make. People had new TVs, made handsome profit by slapping down some laminate and magnolia, used their equity as a cashpoint; everyone was complicit. The fact is the system was crap. If he's done something illegal, throw him in jail, but to remove all his assets because he was better at milking a system - when we were all at the teat tugging with all our might - is just jealousy.

As we own this bank I think we should be given a detailed breakdown to explain these profits.

Otherwise I will assume the Bankers have found a new way to massage the figures for personal rather than corporate gain.

#13. chrisworriedvoter

"Banks, like any other business, absolutely *do not* have a *social* duty to provide anything at all"

They bl**dy well do when they rip off the tax payers to pay for their losses/bonuses on false profits.

END OF.

"Banks, like any other business, absolutely *do not* have a *social* duty to provide anything at all, be it products to customers, or a more secure banking framework, particularly so when that would be at a cost to their customers or investors."

No social duty at all? So if I was a pharma company I could happily push unproven drugs out there, or dump my waste disposal in the river outside my house, or send the 'boys' round to torture someone behind on their payments, or happily use slaves from the next street to produce my stuff.

Basically unless the govt has told me something is not right then its ok. Surely we have to expect that executives of any organisation that does business in our society have at least a minimal understanding of, and regard for, the shared values that have evolved to enable us to live in some sort of secure and prosperous social system. Or is it case of 'get away with anything' within the rules which we aim to stretch as much as possible. The only reaction to that kind of infantile behaviour is likely to be extreme regulation.

RP the phrase "though that probably represents pain delayed rather than avoided altogether" is the one that bothers me.

Do you have any reason, other than general market speculation, to imply that recording of losses are being defered i.e. the first three months accounts do not correctly account for all loses. If so i think you should report these details

To state the obvious, any rises in Sales in Retail have been achieved by deep discounts.

Profit margins are shrinking.

The Consumer market is shrinking.

Eventually this will affect every Company involved in the process of producing Consumer goods (for the UK).

The only even remotely good news is the fall in Gas prices, but this is only a marginal thing, as growing unemployment is going to suck away even more consumer demand.

Is this Gordon B's card up his sleeve/rabbit out of a hat? He could start paying of the public debt by reducing the UK's interest in the Bank. This would start a rush for shares as the Govt's influence(if any) declines. The price goes up even more and the UK debt reduces as he sells more tranches.

It could come together nicely in time for the election - if the Gurkhas/Expenses/ID cards don't get him first.

There's a lot of hope and a lot of optimism, most of it sadly misplaced. Many people seem to be confusing the banking market with the wider economy as a whole.
Traditional boring banking will make a comeback, after all it is a vital function of the economy. In this day and age, everyone needs a bank. Some will go under, but the remaining ones with a significant high street presence are perfectly safe for the simple reason that the government cannot allow them to fail. Now that this point has begun to sink in to the minds of investors, the banks have little to worry about and can concentrate on making money - but how much profit is politically viable without exposing politicians to more anger?
The wider economy though is another question entirely, and I think that we are all in for bleak times ahead. The banking sector will be fairly stong though, and that will allow politicians and bankers to claim that they have solved the problem.

PS I saw an ad online the other day for a fairly well known US Bank best known for providing credit cards. The strapline read 'The best card for rebuilding your credit rating' whilst cheerfully advertising two rates, a whopping 34.9% APR and a simply mindbending 39.9% APR. So there's no need to guess how the banks will be making their money then....

21, LOL GORDON!

I've got a fab wheeze.

If we keep buying shares in RBS & Lloyds then the price will go up.

As the price goes up we show a profit and the shareholders (i.e. HM government i.e. the taxpayer i.e. you and me) show a profit too.

Then one day we (you, me and the government) suddenly sell them, when no-one is expecting it. We retire on the gains and the government gets to carry on spending like there's no tomorrow.

What could possibly go wrong?

Sounds like a win-win to me.

Actually the Stock markets around the world at the minute are quite overpriced.

To use City speak the price earnings multiples are now getting historically high (bearing in mind many Companies have seen their profits halve or worse!)

And then there are all the Oil speculators !
Wheres the sense in buying Shares in unknown Oil fields! More people hoping for another Cairn Energy

I remember when RBS Shares were priced at over six pounds each.

They are now at forty pence because their business model was fatally flawed.

Until their business model is corrected, ie no more Mortgage backed securities and Investment Banking fiddling, they remain a danger to Investors.

I would say that applies to any of the old model Banks.

13 said ""Banks, like any other business, absolutely *do not* have a *social* duty to provide anything at all, be it products to customers, or a more secure banking framework, particularly so when that would be at a cost to their customers or investors."

Too right - caveat emptor. In fact, let's do what the Libertarians have been saying all along and get rid of government (laws, taxes and services) completely. Each street can set up its own vigilante force, though there won't be any laws to enforce once we've got rid of them...

We are the Freedom-loving people, are you with us or against us?

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

# 25 Dirty_Idea wrote:

#17. shoot2score wrote:

#10 philipmaton wrote:

>stevewo: you cannot possibly think that it is fair to confiscate >everything that one person has been diligently saving up for decades. >Should we also find his bank accounts and tell him that any withdrawals >are 100% taxable? It's his money, and he earned it because he was good >at his job.

Good at his job! Really?

The mind boggles at what you think a bad job at running a bank would look like.


But it IS just sour grapes. No-one complained while they were also on the make. People had new TVs, made handsome profit by slapping down some laminate and magnolia, used their equity as a cashpoint; everyone was complicit. The fact is the system was crap. If he's done something illegal, throw him in jail, but to remove all his assets because he was better at milking a system - when we were all at the teat tugging with all our might - is just jealousy.

Actually there were people complaining. The problem is they were largely ignored or dismissed as eccentric merchants of doom.

I guess I may be a touch jealous - if I make a complete failure of running my business I will loose everything and not be bailed out by the taxpayer.

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

@37 ThorntonHeathen

I wasn't saying there should be no rules to protect society. Merely that creating those rules is not the function of the banks, but that of government.

And when those rules are inadequate, it is not the banks' fault, but government's.

Each element of society has a function in society. The function of business is to create wealth, and to create products and services for customers. The function of government is to create rules which safegaurd that society and to utilise its assets wisely and for the benefit of society.

Banks are not expected to fulfil government's role and when they fail to do so, cannot be blamed.

Government on the other hand can be expected to do so. And indeed when they fail: by failing to create adequate rules to safeguard the country against financial crisis, and then by utilising the state's wealth for personal gain, you have to question whether they are any good at their job.

#21 onward-ho that's nothing matey; I did buy RBS shares at 14p 'coz I knew that the bankers' friends in London and Washington will never, ever nationalise a bank if they can avoid it and can keep shovelling tax money to them

sold them earlier this week and am using the proceeds to build a barracks in my back yard for 200 newly arrived Ghurka; Ms Lumley will be guest of honour at the ribbon-cutting ceremony

'sell in May and go away'

only 10 of the 19 largest US banks failing Geithner's pretend stress-test is a sure sign that everything is hunky-dory; hehe only 55% insolvency rate and only two-thirds of car companies bust

but I'm pleased for YOU that everything YOU have has doubled in size; don't forget to keep telling us how BIG it is

#27 FreeSpeech2

you said: "They bl**dy well do when they rip off the tax payers to pay for their losses/bonuses on false profits"

Once again, banks' task is to look after their investors and customers. They are not in any way duty bound to look after society at all. If they choose to make profits which later turn out to be overinflated, and are about to go bust without government intervention, then too bad. That kind of thing happens all the time in the business world - businesses make bad decisions, they turn out to be very costly, and the business goes under.

If government, as a matter of policy, decides or realises that that industry is needed for the good of society, it can't just sit back and say, oh well, if they fail, we'll blame them. That would be like me watching my baby girl crawl along the kitchen worktop, and thinking 'oh well, it'll be bad if she falls but it'll be her own fault'. A responsible parent thinks ahead, and takes elementary precautions. So too, a responsible government.

Government is supposed to exercise stewardship over society. That's why we elect them! That means creating rules to safeguard critical elements of society, not frittering away taxpayer money picking up the pieces afterwards, then trying to blame someone else for their own failure to regulate effectively.

Answer to the financial crisis?


It is January. In a small town in the Central West Victoria, holiday season is in full swing, but it is raining so there is not too much business happening.
Everyone is heavily in debt.
Luckily, a rich foreign tourist arrives in the bar of the small local hotel.
He asks for a room and puts a $100 note on the bar, takes a key and goes to inspect the room located up the stairs on the first floor.
The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes $100.
The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay $100 for pigs he purchased some time ago.
The farmer triumphantly gives the $100 note to a local prostitute who gave him her services on credit.
The prostitute goes quickly to the hotel, and pays the hotel owner $100 as she was owing the hotel for her hourly room use to entertain clients.
At that moment, the rich foreign tourist is coming down to the bar and informs the hotel owner that the proposed room is unsatisfactory and takes his $100 back and departs.
There was no profit or income.
But everyone no longer has any debt and the small townspeople look optimistically towards their future.
Could this be the solution to the global financial crisis?

The results are pretty much break even (£44m in near enough a rounding error). Given that this is after write offs of £5.7m does that mean the underlying business is generating £4bn profits on £9.7bn T/O - effectively a pretax net of 41%? How does this compare to previous results? Seems very high? Is there a significant write back of previously under valued assets that isn't netted off against the £5.7bn write off?

Somali post 42. Those Gurkhas would come in very handy should you need to use violence to encourage people to hand over their ships or goods.

RBS Another Jockill and hide fiction by the freebeemaaasons that are trying to out manouver their Mathatcher golders green counterparts.

MORE GOOD NEWS

Corus have just announced they are closing their big steelworks on Tees-side with the loss of 2,000 jobs ....... any connection with Mandelson's attempt at hardball with Tata over Jaguar the other day??

Anyway, whilst a lot of people might assume this suggests that all is not well with the UK and global economy, and that it is VERY BAD news for Teesiders, I'm sure that onward-ho and Lord Greenshoots will agree with me that it is in fact GOOD NEWS; clearly good for the environment and the additional LEISURE TIME that will become available will allow people to follow their excellent local football teams in the Northeast's annual 4-way battle for relegation - I mean promotion - from the Premiership to the Championship

The next interesting question is "What price saving the banks?"

Just watch as Gilt/US Treasury yields mosey on upwards. If they ever hit 6% (current 3.3 and rising) the collapse in currencies and stocks will be, well, catastrophic.

They should have let the worse banks go and take all their silly debt with them; the debt has now been pushed up the ladder on to government books and NO-ONE can bail them out. Every single decision made has been a deferment of the problem - all the way back to Bretton Woods in '44.

Eventually the fact that governments have fiddled figures and fixed exchange rates and people/institutions have willingly been deceived will be indisputable. That moment will be when US treasuries hit that 6% mark.

#25. Dirty_Idea

"No-one complained while they were also on the make".

That for me sums up the whole problem with the banking and finance industries. What you really mean is....

Although people did complain, their complaints were ignored or if listened to were brushed aside by notions of 'so what realy - he makes lots of money for the company'.

Despite Gordon Brown, the FSA and God alone knows who else declaring how desperately the banks need reforming, what I suspect now will happen is that it will all soon disappear under the smoke-screen of 'yeah, but they're doing o.k. now' and their sins be swept under the carpet ... until the next time.

And let's face it that is pretty much what happened back in the 1930's - we did not truly learn from the mistakes and put in place mechanisms to prevent it reoccurring..

So all the people who have been made unemployed, lost their homes, etc., etc. can live in the uncomfortable knowledge that their suffering has been in vein. All in all - nothing changed.

Lets' face it, nothing can change it.

That's because Chancellors and Prime Ministers come and go and have this political agendaat one point in time and some other at another point, but the City Grandees remain (in one form or another) and they have only one agenda - getting rich and staying rich.

#36. supercalmdown wrote:

"I remember when RBS Shares were priced at over six pounds each.

They are now at forty pence because their business model was fatally flawed."

Quite.

But those of us who gambled on the government not letting RBS go under, and who bought in at 11p, are now enjoying a 300% return on our savings in four months and looking forward to a mortgage-free future. Every cloud, eh?

44. Marshallaw,

I like it ...which Enid Blyton book did you adapt that one from?

Let's hope Gordo can make it work. For rich foreign tourist read IMF?

#41. chrisworriedvoter

I think your comments are a little ecomonmical with the truth.

I mean, notwithstanding whatever Government gets around to legislating or regulating about, are not individuals and companies and industries/professions reasonably expected by others to behave responsibly and with regard to how their actions might impinge upon others in society?

If the answer to that is no, then can someone explain why we our courts give out to adolescents ASBO's as a punishment for behaving in ways that are anti-social.

What is so wrong with banks acting with a bit of integrity and responsibility on their own count, without it having to be forced upon them as if they were truculent teenagers trying to avoid doing their Latin homework?

Thankfully, there are some banks who do believe in trading ethically and acting like grown adults - because they recognise that their customers want to interact with banks they can trust rather than a bunch of spivs - and who therefore would certainly NOT agree with your statements in #13:

"Banks, like any other business, absolutely *do not* have a *social* duty to provide anything at all".

and

"If a social function is to be performed by banks - if they must behave in a certain way, retain certain capital levels etc, to meet the requirements of society at a cost to themselves - this function must be imposed on them by government through regulation."

What a socially immature attitude! It seems like you're saying basically that the main role of banks is to be self-perpetuating. They exist to keep a pile of financial whizz-kids in the money.

Post 3 Stevewo said that Freds pension should be taxed at 100%

Problem is that for all of his working life Fred has been buiding up his pension pot. Since he is now unemployed and unlikely to find work he is taking his pension

I go to work every day and earn an average wage. Like millions of us I put as much in to savings and my pension pot as I can afford. If all goes to plan I will do this for another 20 years or so and then retire with a nest egg big enough to see me in to my old age.

Are you honestly suggesting that if i make a couple of bad decisions in my last couple of years of employment that someone should have the right to take my life savings away from me? Should Fred be stripped of everything and left in a cardboard box in the doorway of RBS head office?

For years the Banks have made huge profits and the "fat cats" have benefited. Let's not forget that all of the share holders have also benefited and that includes anyone who had an endowment or an ISA or a pension plan that invests in stocks and shares. Who was looking for a reduction in executive salaries and bonus then?

The banks and bankers helped get us in this mess but they were only playing by the rules. The rules were not robust enough.

In post 28 captainsimplemind wrote

"if I was a pharma company I could happily push unproven drugs out there, or dump my waste disposal in the river outside my house"

Well, yes, unless there were some rules set by government to stop you pushing unproven drugs or dumping waste....

The companies know the rules and stick to them but do they go further than the rules require? I doubt it.

51: Ah, but the losers out number the speculators and profiteers.

All those poor Pension Funds and Pensioners who were invested BEFORE RBS Shares CRASHED thro the floor !

And of course you could have lost your shirt buying Shares at the last minute in Northern Rock or Bradford and Bingley !

SHares are far too dangerous for ordinary folk to bet their life savings on.

But the Fat Cat city slickers want more Punters to lose their shirts, so there is a little Bear rally, until the next crisis.........

What's all this rubbish about us City big-earners not CONTRIBUTING to the enormous costs of bailing out our banks?
Contributing? We don't do that sort of thing, we leave it to everyone else to do that.
And all this "not wealth-creators" hogwash. We create loads of wealth....for ourselves.
And "we are becoming the enemies of the people"....what idiocy. We like ordinary people (we call them peasants), and besides, we need them to pay for all our losses.
Tax our pensions at 100%? Do you mean to say that we've got to pay our own fares to visit our money in the Cayman Islands?
And we've got to buy our own champagne?
Look, we're City bank staff, and we work under one golden rule.....you only TAKE, TAKE, TAKE.

I see Fred's pension, salary and bonus is still irking people - let me ask this - if a normal, salaried, 'average' wage person is sacked because of incompetence (which I know is pretty difficult to do in this country) should they also be taxed at 100% on earnings they made at the company that they were underperforming at?

'it generated record income for the first three months of the year of £9.7bn - due in large part to astonishingly strong results from investment banking.'

Sorry to bang on about this but if this crisis has taught us anything it's to be suspicious of that which seems too good to be true. If these investment banking profits (like those declared by Barclays yesterday) are truly 'astonishing' we need to know more about exactly how such extraordinary profits are being made.

As for UK plc selling its stakes in banks my big fear is that politicians will do this too soon in the belief that it's what the people want. We need to stay invested for long enough to see some healthy profit. You shouldn't invest at the riskiest moment and be happy walking away simply getting your money back.

# 40 - very good news indeed for the condition of the River Tees, which ahs been poluted by the by-products of the chemical and steel industries for many years. As to the Boro' its not nice kicking someone when they are down!

'Sell in May and go away' - noticed your orignal blog when you bought the RBS shares, but had a wobble a couple of weeks later. So, you hung onto them long enough to make a tidy profit - well-done. Still waiting for my 'Cattles' shares to improve!

#57 Horned_Devil

Fair point, but Sir Fred wasn't sacked, he resigned. However, in an ideal world, had there been an adequate Chairman to bring Fred to account (Instead of Sir Tom McKillop), then Fred would have been sacked or forced out much earlier, i.e. would have been paid less and have a reduced pension pot to survive on.

You can massage the figures anyway you like! The anarchist in me would love to do a what if senario, what if we had just let all these banks fail! Then what? ARMAGEDDON, no probably another bunch of wealthy arms industrialists making loads of do$h. You can just imagine all the paracites that have their wealth hidden / protected watching from the sidelines waiting to pounce on the weak and have endless round of exploitation!

eeeeeer...... didn't i spot another RBS rat leaving the sinking ship with a large sum of money in his ratty little paws on the BBC web site yesterday 7/05/09, that items seems to have been removed fairly fast and a search came up with nothing.

I seem to recall the figure of half a million to be paid out on his pension.

Horned_Devil #57

The difference between Sir Fred and most other people is that he is rich enough already to afford it...duuurrr.

Still, if you believe there is no difference between the effects of 'incompetence' by people in positions of vastly different power, authority and responsibility then your point is valid.

I'd take his pension and fine him into the bargain :)

I would really like some City bank staff or their supporters to come onto this blog and tell us all just exactly what it is that they are doing all day that is worth 10 to 50 times what a top oil-rig worker earns, or 10 to 50 times what a surgeon earns.
Please come on here and tell us.
We know you have a busy day pottering around in your London office, but why is it so staggeringly paid?
Or is it that, because you are handling everyone elses' money all day, you just take as much of it as you feel like?
I appeal to you again......please come onto this blog and put us out of our misery.....why are you worth so much money?

If Gordon Brown cannot manage his "Expenses" without duplicating an item and paying his own Brother £6000 for cleaning his flat, how can he possibly manage the British Economy?

He should go before Joanna Lumley meets him again with her Gurka Blade of Truth. Joanna said that she trusts him, but lets wait another month and see what see is saying...

#53 Sutara

Of course individuals and companies are expected to behave with a view to how their actions might impinge on others in society, where they are directly and solely responsible. So yes, they can't for example put up big adverts outside their buildings blocking the whole road, so nobody can get past. Individuals are directly affected adversely by the bank there.

But expecting them to safeguard the 'service of banking' for the benefit of all - no. To take action to that end would cost their investors and customers. So enforcing such a safeguard has to be government's job.

You mention the examples of ethical banking and acting with integrity, but you're saying that banks should do this to satisfy their customers. In other words, they are not safegaurding the 'service of banking' but meeting their customers' direct needs. This is market forces at work - some customers would walk away if their banks were not 'ethical'.

But how many customers would walk away if the bank had inadequate capital adequacy. Or what about lending to high risk borrowers? Would customers care? Or indeed feel they had the right to demand the bank did not lend to person A, as they felt they might not repay their mortgage.

I'm not at all saying that the role of banks is to be self-perpetuating. A bank's role is to provide a service which its customers need. No more no less. Indeed that's what you say yourself, when talking about customers expecting ethical banking. The bank has to provide what customers want. Otherwise it goes under.

But to expect the bank to ensure the safety of something for the good of the country - that is simply not their function. Otherwise why not say petrol stations should ration motorists to 8 litres per day, for the good of the environment, out of a sense of public duty, and without any regulations saying they have to do this.

There are lots of other ludicrous examples I could invent, but the fact remains, society elects government to govern, and to put in place rules to safeguard society in the form in which we want it to exist. They are democratically appointed (in theory) and hence answerable to the electorate (again in theory).

Society does not elect banks, and they have no duty to it in return. Banks are answerable to their own 'client state' which is their customers and investors. What right do they have to consider doing the best for another organisation's client base (government's voters) to the detriment of their own customers?

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

Given the probable state of the bond market, don't tie your savings into low fixed-term bonds, as the banks are DESPERATE for you to do. With QE also kicking-in there is only one way interest rates are heading. By this time next year inflation will be back and returns on cash will be surging ahead.

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

@63 - so your not opposed to the principle of being paid for failure, it is just the amount that you have problems with? Doesn't that smack a little of jealousy? Should all redundancy/layoff or whatever you want to call it payments be means tested? Are you saying that two workers doing the same job in a manufacturing plant are sacked because of not performing and that they should get different pay offs based on their personal circumstances and that would be a fair and equitable way of doing things? Should this then apply to how much they get paid in the first place?

You are right - Fred was in a position of vast power, hence the large payment he received. Why would someone want to take on that kind of role without the accompanying compensation?

Confidence in the Banks will not return,
we all know they are keeping two sets of books,
the book with good stuff they show to the mugs.

The book with the losses is hidden
it will not work, the general public
know a con trick when they see one.

69, Moncursalion-Occamist

What about the Porn her husband watched at OUR expense, happy with that are you?

Your labour rantings are embarrassing!

Hey Pesto!

No we don't need this bank to recover. Why did we even try and save a busted flush last year ? We should have let it go down, albeit guaranteeing all the depositors cash. The bank should have then been asset stripped to recoup as much money for the creditors,which is what would have happened in any other industry and what is happening to a lot of other businesses great and small, thanks in many ways to the banks.

As usual the good family business and be thrown to the wolves , whilst we make sure the bankers are OK. We are now propping up a bank which brought its own plight onto itself and one which will have a key competive advantage (thanks to us) once the upturn begins. Not really capitalism at work really ?

#51 RBS_TEMP ur and your profit that will be taken soon , will be being paid for
by everyone else and there grandchildren.

ah "gambled"

though the idea was that we were to get away from casino capitalism.

or

is it ok when you benifit persoanlly?

Just had a Drogba moment reading your comments ONWARD HO.

Cap my salary and bonus?
But that's terrible.
That means I won't be quite as rich as I thought I was going to be.
That's outrageous!
I want my millions!...or I'll throw a tantrum.

Another 20 odd pence on the RBS share price and the government will be back in-the-money on its investment. I hope they're thinking up a strategy on how to dispose of those shares in a controlled manner!

The government needs to lay out a plan stating how it will protect itself from being the implicit guarantor of any business in the future.

This is hilarious, the ivestment banking sector stoke the market to suck in and scrape up the last bit of cash around by those who still have it and are desperate to make a bit of interest or keep their companies going by loans in order to counterbalance the huge losses on loans and asset rightdowns.

It is the last act of of short-termism in banking to bolster their figures in the short term while they wait for an economic miracle in the real world to emerge from...where exactly?

Where will the huge demand come from to get us back on track to a model of unsustainable year on year growth using more and more efficinet technology.

The whole thing is an absolute sick joke and RP's post just assist to stoke up the investment bankers plan..they will be cutting and running soon.

In the meantime all the banks are planning for next year locking you into 12, 24. 36 month deals in order to get the 'best' interest rates now. I.e. they are preping up for another sucker punch to normal people because they know that in 12, 24, 36 months interest rates are going to be much higher than they are now and guess what ITS BIG PAY DAY AND BONUS TIME AGAIN.

You clever bankers!

Jericoa

And I don't care if you lot are losing your jobs, your pensions and your houses!
I work in the City, and I still want my millions!

#64 stevewo

I'm not sure I'd call myself a city bank staff supporter, or a detractor for that matter, but...

It's very simple. The city bank worker is "worth" their salary for exactly the same reason that the top oil-rig worker is "worth" theirs and the car I recently bought is "worth" what I paid for it. Because on the day the deal was done, two people were able to agree on a number. The city bank employer didn't feel the number was too high and the city bank worker didn't feel the number was too low and so the contract was signed.
There's nothing more complicated to it than that and nor need there be.

Whether you or I think the city bank worker is worth that much is utterly irrelevant because neither of us was the employer. If you feel particularly strongly, you are of course perfectly at liberty to try going into business as a city bank and offering potential staff lower salaries, more commensurate with what you think they are worth, and see how you get on.

The stock market is booming and sterling now climbing against the Dollar

Jericoa is "spot on" to observe that suckers are being drawn in by Banks offering slightely higher interest rates now, knowing that in six to twelve months time, these will be much higher.

I see inflation seriously kicking in by Winter 2009. These low interest rates now will kick in when everyone realises that "standards of living" are falling and everything needed for daily life is getting more costly.
There is no global "Growth" on the horizon fo many years, maybe not for a decade, we simply have to cut back and beocme efficient and respectful to savings and lower risk investments. meanwhile, the BANKS are rebuilding their fortunes very fast.

I'm all for good news and it appears a moderate loss compared to recent history.

The debate seems to have morphed somewhat to banking renumeration. Basically it's obscene. Same as premier league footballers and politicians expenses. If you live in these rarified atmospheres however they seem normal. But please don't expect the general public to consider it normal.

At times of strife you will be vilified.

#66. chrisworriedvoter

"Society does not elect banks, and they have no duty to it in return".

So it's all the fault of those politicians to whom various people gave one written X on a bit of paper.

The banks, to whom people gave trust and their hard-earned cash in return for services, shares, investments - and sometimes on a recurring and even regular basis - are somehow exonerated from responsibility.

The theory is that the politicians who you gave a vote for are accountable but the dodgy bankers - who clearly were not as managerially capable as they liked to fantasise themselves to be - somehow escape from accountability, enen from their own industry regulators. The reason being the political expedience of certain elected representatives.

The irresponsible behaviour of these bankers - if not rescued by various governments spending vast amounts of tax payers money on them - would have been totally disastrous even for their own industry. I seriously criticise these poor calibre managers and directors who failed abysmally, driven by their own greed, to manage risk, due dilligence and their corporate cultures. They weren't just poor quality employees from the point of view of the banks and in some cases, clearly promoted beyond their capabilities, they were socially irresponsible.

Truth be told, some of these really couldn't be safely given the task of directing the traffic. Nonetheless, because of the 'integrity' of the industry and the lack of regulation to prevent it, these characters will no doubt, even when ejected from their boardrooms, show up elsewhere in the circus courtesy of the old pals act.

Actually, if you turn the clock back say forty years or so, you'll find that many U.K. bankers did indeed take their social responsbilities seriously and also sought very clearly to not jeopardise the economy, be that the local or national one.

The problem here is that the U.K. banking industry has bought hook, line and sinker, the U.S. 'greed is good', Harvand Business School (crush the opposition at all costs) way of doing things. However, they have failed to realise that many of their customers aren't interested in buying that any more.

# 59,Re: #48 - Sorry Mr Pirate, I was, of course, referring to post 48 (not 40). I have to agree with you on one particular point: Mogadishu is far superior to Detroit as a place of residence. You can leave open your front door without fear, the islamic courts soon sort-out any problem. Gangsta rappas don't have much street cred in Moga. Private enterprise flourishes, not like in those western states where banks live on social security.

OK heres a question (slightly off the topic but worth thinking about):

Q. Spot the three odd ones out (see below for answer)

Guilt Auctions
Date Maturity Nominal Raised
1 April 2015 £3,500m £3,937
2 April 2039 £2,250m £2,247
7 April 2019 £3,000m £3,260
8 April 2032 £1,100m £1,101
15 April 2037 £ 500m £ 536
16 April 2014 £4,000m £3,839
28 April 2022 £3,000m £3,022
29 April 2049 £ 187m £ 184
30 April 2022 £1,100m £1,196
6 May 2019 £3,500m £3,765
12 May 2030 £2,250m
14 May 2047 £ 700m

A. Yes, thats right the Gilt auctions on 8 April, 29 April and 14 May are all for maturites outside the Bank of England maturity profile of 5-25 years where the BoE will buy up the governements debt.

Looks to me like they are very afraid that noone wants to buy it. The auction in march failed and the 2 April one didnt exactly blow the lights out!!

Well, suddenly fanny needs another 15bn and other US banks plan to raise similar through share issues! I was wondering just what, exactly, was at the bottom of the recent sudden rise in share prices: NOW WE KNOW. Benny the bouncer at the Fed must have had this up-his-sleeve for weeks. Lord save us!

The investment income (in my humble opinion) was probably due to playing the yield curve with customer deposits at close to zero whilst buying short term debt from AAA rated companies. It is part of the life support system provided by the Bank of England to ALL the banks including Barclays.

The bad debt is the legacy of the truly dreadful Fred Goodwin.

#83 Sutara

"it's all the fault of those politicians to whom various people gave one written X on a bit of paper".

If you're referring to the fact that we in this country will have a recession and a public sector debt larger than almost any other developed nation, and that businesses and householders have borrowed too much and are now finding it difficult to get credit - yes! Spot on! It is indeed the fault of our elected government.

But no, the banks are not exonerated of all responsibility for everything. As you say "people gave trust and their hard-earned cash in return for services, shares, investments". The banks have a responsibility *to them* to look after those assets. For the government to have to step in and safeguard the assets of depositors is appalling. Of course they have to, but those banks have failed in their duty to their customers and investors.

So you're right - banks do have a responsibility to their customers. And in a purely free-market environment, what would happen? The bank goes bust, they sell all their assets, share the pickings out among their creditors (ie depositors and other lenders) and close their doors for the last time. Thousands of people out of work, millions of depositors losing their savings, industries having to renegotiate finance with a new bank, not to mention the wave of worry about exposure to other banks shutting down interbank lending.

Therefore the government have to step in and provide some kind of safeguard.

And this is exactly my point - you could just let the bank go. In many cases you would (an unprofitable car plant, or mine perhaps) - but if you chose not to it would be a matter of policy overriding economics. You want to keep those jobs for the good of the country, preserve those depositors' savings to stop pensioners dying etc. But that is a policy decision to be made by elected governments - what do we preserve, what do we let collapse. It's not a decision to be made by bankers.

And since the government have to make that decision, it is for them to impose rules to minimise the chance it ever comes to that - again, in the industries which they choose through policy to apply rules to.

You're totally right though some very bad decisions were made by bank directors. If I were a shareholder, I would chastise myself for not having spotted their incompetence, or enforced the appointment of sufficient independent non-execs to look out for my interests.

You're also right though about the lack of regulation. Regulation was inadequate for its purpose - whose fault was that though?

But to blame a few directors for the world recession? If their actions were that critical that they could cause mass distress in many countries among people at all levels of society, were they not then so critical that their actions should have been monitored more closely by those people we elect to protect our society?

The buck has to stop with someone - there is always someone at the top. In this country it is the PM. Anyone below that level can only be blamed for problems in the area under their control. So a bank director has responsibility for the thousands of staff under them, for the millions perhaps billions of pounds of assets they look after for customers, for providing a return to their investors. But not for a whole country's or world's economy. There is only one person responsible for things which affect the whole country, and that is the national leader.

And if they have insufficient control over critical people such as bank leaders who could cause such worldwide problems through incompetence, then it is for those leaders to create rules which ensure such incompetence is detected and prevented. Not to sit back and say: "bother, I knew they were critical to our world economy, but I never realised they weren't doing everything right. Not my bad, they should have spotted their own mistakes before they made them". Utter rubbish - it is your bad, since you are in charge, Mr elected government leader.

Edit: actually not always elected even in a democracy, but that's another discussion

~85 NEWHERO

Genuine question, why would people be afraid to buy very long dated issues?

No one can tell what the Aliens will have done to humanity by then and as I will have been buried with my NEWCASTLE UNITED TRIPLE CHAMPIONS LEAGUE WINNERS and NORTHUMBRIA - WORLD CUP WINNERS FLAGS, I won't personally worry.

#2 - the profits on a debt buyback are not quite like buying your reposessed house back at half the price - you are still liable for your mortgage shortfall. Suppose I offered to sell you £5 notes for £2.50. Have you made a profit? Undoubtedly yes. You have been able to buy something for considerably less that the value you can extract out of it. Suppose now, I agree to take £2.50 for the £5 I lent you last week. Have you still made a profit? Yes. You've had your full value, but only had to pay back half of this. The fact that you're a greedy little scamp and spent it all on sweets that you've eaten is rather irrelevant. You started the day owing me £5, but only paid me back £2.50.

So why is this any different to what the banks are doing by repurchasing their debt at deflated prices? They've still made a profit by anyone's standards

80 calm down and think.
You make some reasonable points.
I'm glad you think all those multi-million pound contracts of employment were fair, because you're paying for them for the next 20 years.

CATTLES TO THE SLAUGHTER

#59 #84 me'Lordgreenshoots

I admire your taste for the risky; those Cattles shares can only go up though they could be suspended.....

I'm thinking that I might buy some Fiat/Opel/Chrysler shares in my next foray into penny stocks; my RBS profits have allowed me to kit out the boat with cannons that are TWICE AS BIG as onward-ho's big one

apologies for kicking the 'Boro while they're down; it's been a tough year for east coast teams and now that Moncursalion has admitted to being a Newcastle fan I begin to understand why some of his posts are a bit out of sorts - a touch of the Joey Bartons no doubt

Mogadishu isn't so bad - the weather's much nicer than in Detroit or Middlesbrough and all you need is a Toytoa pick-up with a machine gun mounted in the back

In the words of the WHO...Meet the new boss
Same as the old boss..We wont get fooled again....Trouble is we will of course because the banks will fiddle the figures and the government will fiddle everything else. These people are pathetic in their total lack of respect for the public.

The only reason the share prices are up is unfortunately a lot of people cannot accept that the party is over, like most gamblers they do not know when to stop, they want the rush, so they carry on betting with the rest of the herd until they are bust again, the Markets love these short term punters/suckers.

90 AnddrewH

I'm not so sure. I suspect that as usual they are playing games with what things are called to milk the system and get bonuses. There aren't that many big banks and they probably all hold each others bonds.

Suppose:
Bank A owes bank B 1 gazillion quid
Bank B owes bank C 1 gazillion quid
Bank C owes bank A 1 gazillion quid

What needs to happen is that these debts get netted off and nobody is really making any money. But when you take into account govt insurance schemes, bonuses based on the amount of trading done and 'profitability' there are lots of opportunities for sneakiness and collusion.

Suppose instead of just cancelling matching debts at full price the debts were valued at half the face value. Each bank could present this as a profit on buying back its own bonds for less than face value plus a bad debt loss on other banks bonds. The bad debt loss might be covered by government insurance. The loss looks like a historical thing in the accounts where the profit looks like ongoing business.

And all these bond transactions involve commissions for the banks that handle them - so traders are presumably getting bonuses based on this activity and the activity itself makes the banks business look better.

Let's face it, the US and UK governments need sentiment to go positive again so stocks and house prices will go up again. So I've no doubt the plunge prevention team (aka Goldman Sachs) is out buying S&P futures again. Then finally the banks bad assets can be revalued at decent levels and the 'toxic' book can be taken out the cupboard again while 'profits' are booked on the books being shown to the public.

It's a suckers game folks. The piper must be paid one day. All that's happening now is that we're papering over the cracks and hoping to collect our fill before the next 'greater fool' comes along. It's also known as musical chairs and the music has started again. Yeeha, time to dance!

Anyway, you all need to come on down to South Africa. The weather here is great, the beers are cold and Armageddon will be a northern hemisphere thing anyway. The banks down here have been largely insulated from the crisis because the SA govt brought in a new credit act years before prohibiting over-extending lending.

Don't forget, you've still got a massive credit card bubble to pop still. Unemployment is inflating it as we speak. Then there's the coming pensions time bomb and the collapse of the NHS as Brown has broken the piggy bank for years to come. Oi, pass another cold beer there please.... Ah, hits the spot!

you know what's very possible? ... within 3 years or so, return of mega City bonuses, reckless risk taking, cooking the books etc etc

oh yes, and a UK housing boom

at first, that's a very depressing thought but (looked at another way) it's rather comforting, isn't it? ... I feel both depressed and comforted, funnily enough

Talking of companies that have no social function nor indeed are of any use whatsoever to the nation I see that 3i is trying to raise £700m and some of its big shareholders are happy to oblige.

3i I remind you used to be a venture capitalist but now calls itself a private equity company. In other words it's of no use whatsoever because it no longer creates anything new. Bit like the banks really.

great news if ukip push labour into 4th spot in the euro elections brown will probobly quit, best news ive heard all day.

and to mr rbs temp"whats a sound bite"?in technical terms please? as an electronics engineer ive never heard this term.