Royal Bank of Scotland: Not yet mended

As a qualified accountant we can fully assure you that these are not accounts but incredibly complex sets of smoke and mirrors. As you say, they can restate their statements in as many ways as they choose to display the picture they want you to see, not the reality of the events.

Frankly, I'd suggest my 6 year old dog could probably undertake the same exercise and return something equally gibberish...

Any details as to what is 'core' business and what is 'non-core'?

Is it simplya case of if it is profit making it is deemed part of their 'core' business, but if it is loss making it is then deemed 'non-core', even if this is just a plain old fashioned vanilla loan?

As for profiting from our shares.... Dream on!

It is a nightmare trying to work out what the true story is at banks like these:

These days the criticism would be that most of the banks' boards won't have the faintest idea what is really going on in their organisations, unless they have superhuman analytical abilities.

Quotes like these Robert only point to one thing ..... they and all major banks MUST be broken up into manageable parts.Where WE set the total amount WE will guarantee.

I have said from the outset that accountancy must change so that it is easy to see a banks true position, 273 pages seems the ideal way to baffle us with bulls droppings as the saying goes....

On a slightly different note, Deutsche Bank it is clear for all to see that this bank is not and never will abide by the rules, IMO they should be banned from exchanges worldwide for what they were doing in South Korea.

I suspect its not only them , but you can only make an example of the ones you catch.

First, the post-tax valuation loss of £1.1bn on the insurance against future credit losses provided by taxpayers to RBS - which goes by the name of the Asset Protection Scheme - would tend to prove that taxpayers got the best of this deal (which you might say is only fair, given how much pain has been inflicted on the economy by reckless banks).
===================================

You have to ask yourself how close where we on being called on paying the losses from the asset protection scheme. After all, the Irish state got called on its blanket guarantee. So we received £1.1 billion in premium for insuring something like 90% of any asset losses over £60 billion excess up to £370 billion. It does not take a quant to tell that this was a pretty bad bet to take on in late 2008, and we're not out of the woods yet.

It was an exercise in order to guarantee confidence rather than earn a decent premium and fortunately quatitative easing was able to prevent the asset devaluation that lead to the mess that happened to Ireland's bank guarantee.

Enter the army of trolls defending the banks. They'll be on shortly with their usual excuses, about how jolly important the banks are and that we should stop bashing them. Beware their lies and deliberate deceits.


https://www.monbiot.com/2011/02/23/robot-wars/

By contrast, the bits of RBS which most people know and deal with - the retail and commercial operations - saw a rise in operating profits from £6.3bn to £7.4bn.
==================================

And surely most of this, if not all, can be accounted for by the implicit subsidy given to the too-big-to-fall banks by the BoE?

Not to mention the short-end of the curve being kept low by the 0.5% base rate - the price of which is paid by all of us in the form of inflation?

Robert Peston.

"..273 pages of tables and written interpretation.. It is a nightmare trying to work out what the true story is at banks like these.."

obfuscation?? the best way of hiding stuff is in plain sight.

#1 Bryn the Cat has a dog? Must make for an interesting household

You are doing your dog a disservice, I am sure he could produce a more understandable set of figures.

I am an old cynic. It seems to me that RBS is doing the usual trick of throwing all the bad news in to depress the figures with the almost certain effect that when the govt starts to off load the shares, the accounts can write back into the books a load of loan revaluations to make the numbers look better.

Right now govt is looking at a paper loss of around £4-5bn but is collecting in £1bn a year in charges, I guess that as the bank returns to profit the charges will go down but then govt will collect in a dividend of at least as much as charges.

Probably worth hanging on to RBS for the next 5 years then

NEVER GETTING THE MONEY BACK - you hear me NEVER!

Shall I keep saying it forever? - Never means NEVER!

"It is a nightmare trying to work out what the true story is at banks like these, because of all the revaluations of debt, the restatements of prior years due to disposals, the marking-to-market of some investments and loans and the provisions against losses on others, the impact of historic takeovers, the sheer size, diversity and complexity of their operations, and so on."

oh dear - how can investors make a rational decision about investment based on this? - luckily they're all gamblers and throw their money in like they do at the village fete tombola!

"So on that measure, RBS went into reverse."

NEVER - you hear me NEVER GETTING IT BACK.

Crikey - the optimism of some people borders on 'sublime fantasy' - I think even Roberts' giving up....

4. At 13:51pm on 24th Feb 2011, Reticent_Trader wrote:

"It was an exercise in order to guarantee confidence rather than earn a decent premium and fortunately quatitative easing was able to prevent the asset devaluation that lead to the mess that happened to Ireland's bank guarantee."

I wonder what a private sector guarantor would have charged for the provision of a guarantee that no-one else could provide? An idea never mentioned by anyone when talking about the APS.

...just more ways in which the people get fleeced.

3. At 13:51pm on 24th Feb 2011, AqualungCumbria wrote:

"On a slightly different note, Deutsche Bank it is clear for all to see that this bank is not and never will abide by the rules, IMO they should be banned from exchanges worldwide for what they were doing in South Korea."

Is that the same South Korea which is currently having the world's quietest BANK RUN?
https://blogs.wsj.com/exchange/2011/02/21/korean-officials-seek-to-head-off-bank-run/

....the suppression of the news is comparable with any totalitarian state - even the Lybians know more about this than we do. It wouldn't be so significant....but isn't this where our 'world recovery' is supposed to be coming from?

It's like 2007 all over again...

Never getting the money back? I'll take the other side of that bet please.

8. At 14:06pm on 24th Feb 2011, Justin150 wrote:

"I am an old cynic. It seems to me that RBS is doing the usual trick of throwing all the bad news in to depress the figures with the almost certain effect that when the govt starts to off load the shares, the accounts can write back into the books a load of loan revaluations to make the numbers look better."

The 'old trick' - aren't accountants supposed to be honest people? More importantly on what basis do you claim that "when the govt starts to off load the shares" - haven't they got to offload the NR shares first?
Who's going to buy all these shares? - the saudi's????

"Right now govt is looking at a paper loss of around £4-5bn but is collecting in £1bn a year in charges, I guess that as the bank returns to profit the charges will go down but then govt will collect in a dividend of at least as much as charges."

£1bn a year is no good to you if the borrower is NEVER GOING TO PAY IT BACK!

"Probably worth hanging on to RBS for the next 5 years then"

Oh that's convenient - what happened to the 'we'll turn this round in 5 years' line the people were sold when the stake was taken?

Oh dear - all the capitalists lies coming back to haunt them....

6. At 14:00pm on 24th Feb 2011, Reticent_Trader wrote:

"Not to mention the short-end of the curve being kept low by the 0.5% base rate - the price of which is paid by all of us in the form of inflation?"

That price is nothing compared to the price being paid by others around the world (those who are rioting because they're hungry) - only capitalists living in bubbles can't make the connection between QE and 'world commodity bubble'.

Hey, they think a 'new market' is about to open up on the moon and start our 'export lead recovery'!

Who is the more foolish, the fool, or the fool that follows him?

Bobby P - I'm quite disappointed by your lack of knowledge on the subject. It makes me doubt all of your other blogs, I mean saying £100m is a mere bagatelle suggests that you don't understand rounding or materiality. £100m is a lot of money but it doesn't effect the reader's opinion now does it?

For such a poorly performing company as you see it, tis strange that the Qatari Royal Family are having a sniff but then again you wouldn't report that because it doesn't fit in with your agenda. Unfortunately for you left wing fantasists, HM Treasury will make a sizable return on this and hopefully we will see a corporation tax cut as a result.

9. At 14:07pm on 24th Feb 2011, writingsonthewall wrote:

NEVER GETTING THE MONEY BACK - you hear me NEVER!

Shall I keep saying it forever? - Never means NEVER!


Whilst i would agree with you in principle, reading between the lines methinks Qatar holdings or some such similar company may buy part of RBS.It will like the Barclays deal be made to sound like a great deal for the tax payer,when in fact it will only be a great deal for Qatar.

Which ever way you look at it the tax payer is being left with all the dross.

If they had many any money , you could be assured that the accounts would of been less complex.

They are obviously buying time for another 12 months , or are they hoping the government give up on expecting a decent return and the shares are bought on the cheap by affiliated foreign investors.....

12. At 14:21pm on 24th Feb 2011, a_sensible_comment wrote:
Never getting the money back? I'll take the other side of that bet please.
================================

Double or quits? Now that isn't very sensible, is it?

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

here's some figures for RBS subisdiary Ulster Bank (from rte.ie today)

"Ulster Bank has also transferred some of its bad assets to a section of RBS. Impairment losses on these were just over £2.7 billion last year, up from £1.4 billion in 2009"

"The 2010 figure included almost £1.2 billion which was set aside for loan losses. This was up from £649m in 2009. Excluding loan losses, profits were up 50% to £400m, mainly due to cost cuts."

15. At 14:27pm on 24th Feb 2011, Lindsay_from_Hendon wrote:

"For such a poorly performing company as you see it, tis strange that the Qatari Royal Family are having a sniff but then again you wouldn't report that because it doesn't fit in with your agenda."

Haha ha ha ha ha ha whoooo hoo hoo hoo hooo hoo ho ha ha ha ha ha hee hee hee hee hee hee..

"Unfortunately for you left wing fantasists, HM Treasury will make a sizable return on this and hopefully we will see a corporation tax cut as a result. "

Pwwwwwhar Ha ha ha ha ha ha ho ho ho ho ho ho ho he he he he he ha ha ha ha ha ha ha hoch hoch urch....

...stop it - you're killing me... please stop it....

Funniest comments ever - who says Capitalists are out of touch?

Didn't we hear this last year.....and the year before.....and the year before that....oh and the year before that....?

...and on RBS itself also from rte.ie today

"On an underlying basis, RBS clawed its way out of the red with operating profits of £1.9 billion, compared with losses of £6.1 billion in 2009. Its bad debt losses dropped 33% overall in 2010, but it suffered a £1.2 billion charge at the end of the year from Ulster Bank.

"The bank has already revealed its controversial bonus plans, with Mr Hester awarded £2.04m in deferred shares and its investment bankers sharing less than £950m, lower than the £1.3 billion in 2009."

"But it revealed today the so-called compensation ratio for investment bankers within Global Banking & Markets - given as a percentage of revenues - rose last year to 34% from 26% despite a fall in revenues at the division."

"Mr Hester said the bank had also agreed, as part of the Project Merlin deal with the British government, to lend 'at least as much' to small businesses in 2011 as in 2010, with further lending set aside if demand increases."

that's very kind of them, "at least as much as last year"! i.e. possibly a cut in real terms.
"if demands increases" i.e. i.e. demand will depend if small business can afford their lending rates!

Robert. Can you explain how a bank that makes £1 billion loss can pay bonuses worth £1 billion. In my simple mind, not paying bonuses would have meant no loss. What other organisation could do this? These guys are getting paid so how can they deserve a bonus on top, when the bank has made a loss ( i.e. their work has resulted in a loss, for which they get paid a bonus)? What are the board of directors being paid for if they cannot understand the finances of the bank? Are they just paid to provide a cloak of respectability?

There is a chance we could get all our money back and more, and sooner rather than later. The Gulf Arabs are interested. If they can be pursuaded to stump up a per share premium in excess of what we had to pay, and they are prepared to buy all of our holding in one go, we wouldn't have to wait, nor would we have to endue a dribs and drabs selloff. There might have to be name change though, how about Royal Bank of Arabia?
Regards, etc.

14. At 14:26pm on 24th Feb 2011, writingsonthewall wrote:
Who is the more foolish, the fool, or the fool that follows him?

- Are you quoting Obi Wan?

also from rte.ie today

"Despite bigger than expected losses for 2010, chief executive Stephen Hester said the group was ahead of its original five-year recovery plan.

He added: 'The opportunity to sell part of the UK government's shareholding becomes increasingly visible and appealing - a 'win- win' for the taxpayer and for RBS.'

what absolute drivel - will Hester hand back his bonuses if it turns out to not be a "win-win" for the taxpayer and the bank within the next 5 years??

15. ...and hopefully we will see a corporation tax cut as a result....

Would this be to less than the 1% tax rate paid by Barclays? Surely all company accounts are obscure to avoid as much tax as possible. Just as well we are all in it together. Any body know what the 'it' in that sentance is?

16. At 14:31pm on 24th Feb 2011, AqualungCumbria wrote:

"Whilst i would agree with you in principle, reading between the lines methinks Qatar holdings or some such similar company may buy part of RBS."

Sorry to disappoint, I would be surprised if Qatar buy anything - I think they are more worried about the condition of their neighbours.

....on the brightside however, if we do sell to the Qatari's - at least we'll be following in our great tradiition in the UK of putting 'money before human rights'

https://en.wikipedia.org/wiki/Qatar

Slavery is no boundary for profit.

Capitalism - spreading 'freedom' around the world....

12. At 14:21pm on 24th Feb 2011, a_sensible_comment wrote:

"Never getting the money back? I'll take the other side of that bet please"

Please do, help yourself....and you might need this...

Gamblers anonymous - London 020 7384 3040 Manchester 0161 976 5000 Sheffield 0114 262 0026 Birmingham 0121 233 1335 Ulster 0287 135 1329

...oh and before you go...can you tell me what happened to the stock market the last time oil went over $100 a barrel? (I'll give you a clue, it happened in 2008)

Some people never learn do they....capitalists preaching 'personal responsibility' and yet they dive into reckless gambles without knowing what they're getting into...

24. At 15:00pm on 24th Feb 2011, RWWCardiff wrote:
There is a chance we could get all our money back and more, and sooner rather than later. The Gulf Arabs are interested. If they can be pursuaded to stump up a per share premium in excess of what we had to pay, and they are prepared to buy all of our holding in one go, we wouldn't have to wait, nor would we have to endue a dribs and drabs selloff. There might have to be name change though, how about Royal Bank of Arabia?
Regards, etc.
================================

How keen would you be on subsidising the Qatari royal family £7 billion a year in addition to the RBS bankers?

I wouldn't be very keen on it, nor subsidising any private shareholder to that tune, which is why the shares should remain in public hands until the bank is weaned off BoE sunsidy altogether. And that is never gonna happen with the current system.

Robert
Is it true that the shady 'City of London Corporation' claim the right to influence all legislation and regulation relating to financial transactions both here and in the tax havens?
If so, were you really expecting transparency from Barclays and RBS?

'Impenetrable'... 'pea soup'.

I ploughed through the Results this morning and came to the same conclusion Mr P.

An article in the Scotsman a few days ago alluded to a story that RBS was trying or had succeeded in buying a Caravan Park company for £200m. Their logic was that investing in property was a good thing.

I had to read it a few times because I just didn't believe that RBS management would do such a deal whilst still under pressure to support SMEs and whilst they must be aware of the incredible difficulties start-ups have in raising funding.

Seems to me that despite everything these guys really haven't learnt the lesson yet.

The bonus remuneration scheme is ridiculous, if the bank makes a loss, no one should get a bonus. You don't see it in any other business!

Bonuses at Barclays, who took no UK taxpayer money, are fine. They can give their employees whatever they want, as the bank made a considerable profit, the people who they have to answer to are their shareholders.

Simple

SOO easy to have a go at the banks. Whilst they deserve it, please spend time on a case for additional levies to come from gas and power companies. Balance please.

27. At 15:11pm on 24th Feb 2011, p2horn wrote:
Would this be to less than the 1% tax rate paid by Barclays? Surely all company accounts are obscure to avoid as much tax as possible. Just as well we are all in it together. Any body know what the 'it' in that sentance is?

- If you divide the UK Corporation Tax paid by the global profits then yes, it is 1%. Not sure how much information you can gleam from this though. I mean you obviously appreciate that the 1% doesn't include the foreign tax paid on foreign profits and you aren't just repeating something Dave down the pub says aren't you?

Of course this ignores brought forward losses which have been offset against current year profits - you have heard that Barclays made a loss recently I presume?

Not exactly surprising that the biggest fall in profit was in RBS Global Markets.

I worked with them not so long ago (I'm a freelancer) and compared with all other investment banks I worked for (and as a freelancer, that's quite a few) they are so inneficient and overstaffed that it's not even funny (for the same thing they use 3-5x more people than in other banks).

For all the the "Lets save money" memos coming down from Stephen Norman (CIO, RBS GBM), mid-management seems to be much more focused on Empire Building than on Running A Tight Ship. Just the group I was in (which had almost as many people as an entire IT division in other banks) was probably wasting several million pounds a year in people that did very little work.

The good news are that, if this is not just Fixed Income IT but the whole RBS GBM, then a lot of savings are there to be made in trimming the fat.

As somebody has already stated "smoke and mirrors" to try and bury details in hundreds of pages of text. If its a consultant that put this report together then he will be paid on the size of the report, more pages more fee!
But my guess is its a deliberate ploy to make it hard for people to extract the key data on how bad the situation was or should I say is. Its not over by a long shot this mess, interesting bit is how a Qatar investor is interested in the bank.Lets see how this develops one why out of the government involvement.

It seems quite clear to me that the new tactic of the capitalist is to make such absurd statements that we end up missing the inevitable collapses because we're so busy rolling around with laughter holding our sides in.

Stephen Hester is doing it, the capitalists on this blog are doing it, painting pictures of recovery with invisible ink.

It's quite interesting that Radio 4 (on Gaddaffi) last night said that previously regimes fell because their leaders became 'a joke' - Ceauşescu being a famous case when he stopped mid flow in a speech because he could hear laughter in the crowd.

Capitalism is going the same way - it's becoming a joke day by day as the desperation of capitalists to justify a failing system becomes more and more bizzare.

35. At 15:34pm on 24th Feb 2011, Robbieexbanker wrote:

"SOO easy to have a go at the banks. Whilst they deserve it, please spend time on a case for additional levies to come from gas and power companies. Balance please"

Come on - didn't you hear the man from British gas on the telly this morning - he 'assured' us all that his company was not profiteering from price rises.

Isn't that good enough for you? - what do you want, proof? That's absurd - his word should be reassuring enough.

If anyone is interested in some ideas about how an alternative economy might work, check out the following link:

https://steadystate.org/discover/video-audio-and-presentations/

There's an interesting slideshow from Dan O'Neill from the University of Leeds amongst others.

There has to be a better system than one that suffers from a massive heart attack every 40 years and has a negative impact on the wider world when it's actually "working".

Why do we have to put up with this?

What would your bank say to you if had the same story to tell them? Remember we (the taxpayers) are effectively the RBS's bank.

Come on you spineless government, these toweringly arrogant people need a realtiy check.

#35

Noooo.... Let's not tax the energy companies lets get them to invest in new energy R&D. The UK's record in funding new energy technology is pathetic.

36. At 15:46pm on 24th Feb 2011, Lindsay_from_Hendon wrote:

"- If you divide the UK Corporation Tax paid by the global profits then yes, it is 1%. Not sure how much information you can gleam from this though. I mean you obviously appreciate that the 1% doesn't include the foreign tax paid on foreign profits and you aren't just repeating something Dave down the pub says aren't you?"

What you mean like the 'foreign tax' paid in Guernsey and the Isle of Man?

...attention to detail Lyndsay - I'm beginning to doubt you're even an accountant - maybe you're just a trainee.

Luckily barclays are not making any use of the public services they have decided not to contribute towards....although there were coincidently a lot of policmen outside the Tottenham court road branch last weekend - but that must just be coincidence.....no revolution.....it's all quiet over here.

Did anyone go past Lambeth town hall last night? It seems that the people have had enough of this joke - to the point where your 'accountable and public' council are now having their budget meetings in private.

That's democracy for you!

34. At 15:33pm on 24th Feb 2011, al2975 wrote:

"Bonuses at Barclays, who took no UK taxpayer money, are fine."

Well that's not what the new CEO Bob Diamond thinks....

"He (bob) did concede that Barclays benefited from the system as a whole being bailed out with taxpayer support."

https://www.guardian.co.uk/commentisfree/2011/feb/15/bank-barclays-taxpayer-subsidy

You must stop repeating stuff you hear down the pub from Dave - I hear he's been giving out a lot of 'advice' lately.

"They can give their employees whatever they want, as the bank made a considerable profit, the people who they have to answer to are their shareholders."

Do you even know who those shareholders are and what their motives are?

"Simple"

Yes, like your assessment of Barclays subsidy from the taxpayer. No wonder you're so up for a fleecing - baa

Interesting post Robert.

I think it hits at the heart of the problem with banking - unlike any other business where you can quite easily work out the level of profit from the value of the sale, less the cost to make or provide, less overheads of the business - banks clearly operate in such a way that its unsurprising that you never know where you are with them.

Given their very core product is essentially a variable - the value of money moves around, exchange rates move around, assets and investments can be worth one thing one minute and considerable more (or less) the next, interest rates and general money transactions seem to be totally fluid - its not surprising you can't pin anything down to a robust number and there will always be a reason why one commentators analysis is rebutted by the bank when it suits them.

In this environment, why can they be so certain about how much is available for the bonus pool......

Anything coming out (accounts etc) from RBS I always compare with this little ditty: -

https://www.rbs.com/investors/economic-insight/transcript/transcript-210110.ashx

All I do is adjust the figures mentioned to bring them up to date and hey presto it’s all crystal clear.

Seems perception is more important than facts…

As I believe that the this bank's cash holdings are propped up by retail customers' deposits, what is going to happen when these retail personal accounts are transferred to Santander in the autumn? Does this mean that this bank will have a reduced capacity to lend and therefore rely on other commercial activities to trade its way back into profit - or is Simple Simon just far too simple??

12. At 14:21pm on 24th Feb 2011, a_sensible_comment wrote:
Never getting the money back? I'll take the other side of that bet please.

You already did. You bet your retirement on it and the future of your children.
However, if you want to increase your personal stake still further why not buy some shares.

I Read many of WOTW's back entries when i came to this blog last November and he called the credit crunch, inflation, and the sovereign debt crisis while the vast majority of 'experts' and most here were sprouting denials and slagging off anybody warning that a terrible storm approached as 'doom and gloom' merchants.

Now, if i had any money and assuming i could find nothing better to do with it than spend it or give it away and was forced to be gamble it i would do something that allowed me to make money if the bank went bust. This is called 'hedging' right, seeing that when they do we will all lose out big time. There must be a way the spivs do it - longing, shorting, derivating or whatever it is called. The proceeds of my bet would be given away to feed hungry children.

That feels like the better and safer side of the bet. WOTW as tipster or you. No disrespect but your out your league.

Many of the dunderheads hired by Sir Greedie still clock in at RBS.

Until those guys have been flushed, the risks will remain.

All this talk of RBS being sold for a profit seems to have hit the shareprice somewhat - it's lost over 4% today.

Maybe the Qatari's fancy a really good deal.....I mean who pays full price for anything these days?

With the price at 45.37 now and the break even price being around 50p - I think making up a 10% difference in what is now a falling market seems perfectly possible (in Stephen Hester's mind).

https://www.guardian.co.uk/business/2010/mar/25/rbs-profits-bounce-back

What's great about this story (coincidently) is it's from last year and the title is:

"RBS hopes to boost profits by £1.25bn this year" - who says we're being fed hopes and hoopla?

Did anyone mention that when you sell a 75% stake you tend to depress the share price?
Don't think that as soon as the price reaches 50p the Government can go "sell, sell, sell" and we're out......oh didn't any of the capitalists bother to mention that fact?

...strange - they're normally so accurate with covering all the facts.

RBS is the worst kind of bank in my eyes.

Yes it pays low bonuses, yes it lends alot, but its just useless at making any money for its shareholders.

By its shareholders I mean the government, I made money out of RBS because I bought shares at the very bottom of the market, but I'm probably one of the lucky few, and I cant say I'm expecting many dividend payments for the next few years.

I don't actually work at the bank, so I wouldn't like to guess why it has made such bad investments, unlike some on here, I don't claim to know more about the banking sector than those working in it. However its clear that a large change of culture is needed at the top of the bank, it seems to fear the government so much its incapable of making the right business decisions.

"49. At 16:28pm on 24th Feb 2011, RedHairedGirl wrote:
12. At 14:21pm on 24th Feb 2011, a_sensible_comment wrote:
Never getting the money back? I'll take the other side of that bet please.
"

Don't worry, RHG, he's not using his money.

Robert and others appear just to have noticed that RBS is large and complex and has to publish accounts that satisfy regulators and accounting standards in all its various jurisdictions.

I agree with posts about loss making banks paying large bonuses - doesn't make sense to me. But I also suspect that however they presented their accounts people would still be saying 'why did they present them this way instead of that way?'.

And WOTW you are building p an unhealthy stake in RBS's failure. Just how embarrassing is it going to be to your credibility if the taxpayer does get the money back. You stand a reasonable chance of being completely, totally and utterly wrong. Sticking your neck out like that suggests you are a bit of a gambler too and might need recourse to the helplines you've kindly provided for others.

49. At 16:28pm on 24th Feb 2011, RedHairedGirl wrote:

"That feels like the better and safer side of the bet. WOTW as tipster or you. No disrespect but your out your league."

I thank you for your compliment - however I shall not take any credit for any of my predictions for none of them are of my own making.

The following people have shown what the logical conclusions will be to this crisis - and interestingly not all of them (Max) are socialists - but they are all called 'doom and gloom merchants' by those who refuse to accept reality.

Gerald Celente (Trends institute)
Max Keiser
Karl Marx
Dr Ravi Batra
Zero Hedge contributers
...and good old 'common sense'.

I mean if the capitalists cannot explain where the profit comes from - there must be something seriously amiss. When I smell a rat.....there's usually a fraud going on.

It's time to chase the rats out of town.

IMHO this is exactly the right moment to split RBS up into Natwest, RBS, Global Banking and Markets & ABN.

The PPS is depressed, so limiting the public shareholding impact of the split and it would allow the profitable bits to increase in value, so they can be floated off.

A couple of questions:

1. because banks are underwritten by HMG, are their managements immune from prosecution for trading when knowingly insolvent - because they cannot be insolvent?

2. restating accounts - surely so-called "profits" in the past were illusionary, so there is a case to restate previous years to reflect this - and in doing so, recalculate bonsues paid and claw them back?

52. At 16:35pm on 24th Feb 2011, mr ff wrote:

"By its shareholders I mean the government, I made money out of RBS because I bought shares at the very bottom of the market, but I'm probably one of the lucky few, and I cant say I'm expecting many dividend payments for the next few years."

Did you take advice - or was it the 'pin in the financial times' method?

I suppose capitalism always needs it's losers. Did you consider that you might not just get no dividends, but if full nationalisation occurs then you won't get a penny back?
Did you also consider that if RBS wants to buy it's shares back it might have to go through a rights issue - which will mean you need to stump up more cash - or see your holding diluted?

I love this bit of your piece.
"I don't actually work at the bank, so I wouldn't like to guess why it has made such bad investments, unlike some on here, I don't claim to know more about the banking sector than those working in it."

...and yet you bought shares? - it's 1926 all over again - you didn't take out a loan to buy them too did you?

44. At 16:00pm on 24th Feb 2011, writingsonthewall wrote:
36. At 15:46pm on 24th Feb 2011, Lindsay_from_Hendon wrote:

"- If you divide the UK Corporation Tax paid by the global profits then yes, it is 1%. Not sure how much information you can gleam from this though. I mean you obviously appreciate that the 1% doesn't include the foreign tax paid on foreign profits and you aren't just repeating something Dave down the pub says aren't you?"

What you mean like the 'foreign tax' paid in Guernsey and the Isle of Man?


- Financial services companies pay 10% in the two examples given.

I'm sure you had a good review of those 273 pages between stepping off your flight and posting this blog Robert.

You do seem to have had an effect on the share price. After initially sinking, presumably due to the larger bottom line loss figure than expected, it was recovering quite nicely until early afternoon.

I've had a brief look too and, to me, they seem to be heading in the right direction but what do I know?

Dear BBC, can you give WOTW his own blog? - his following here seems to far outstrip any interest in Robert Peston's articles. Admittedly, I'm not a fan of either but I enjoy the discussions.

54. At 16:46pm on 24th Feb 2011, Slessac wrote:

"And WOTW you are building p an unhealthy stake in RBS's failure. Just how embarrassing is it going to be to your credibility if the taxpayer does get the money back."

Whoo hoo hoo ha ha ha ha ha ha ha ha hee hee hee hee hee hee hee - no stop it please, I can't stand it anymore...

"You stand a reasonable chance of being completely, totally and utterly wrong."

Well I've been doing OK for the last 3 years....and besides, I have reason and logic on my side - not simply hope and faith.

"Sticking your neck out like that suggests you are a bit of a gambler too and might need recourse to the helplines you've kindly provided for others."

No need, I'm not gambling anything - I bother to do my research before I make statements as bold as I do.
Sure, one day, hopefully in my lifetime RBS may be sold back to the market - hey we might even get a higher price than we paid for it.

....but with inflation at 4% and RBS making losses, and the share price below the break even point, and the economy stagnant, and the massive shareholding that needs to be sold, and the 'other interests' of the Government (LLoyds and NR) and the continuing credit squeeze and the .......I think the possibility is remote.

I haven't even mentioned the events affecting the world economy, the opportunity cost (i.e. what you could have done for the economy instead of bailing out RBS), the numerous choices there are out there for people wanting to invest in banks and the rising oil price.

...but please do enlighten me - what factors do you have that make you think it's all going to be sold for a profit?

I am all ears.

15. At 14:27pm on 24th Feb 2011, Lindsay_from_Hendon wrote:
"HM Treasury will make a sizable return on this and hopefully we will see a corporation tax cut as a result. "

I distinctly remember a few regulars on this blog a year or two back, boasting about how much they had personally invested in RBS, and what a huge killing they were going to make in very short order. Strangely, none of them seem to post here any more-unless perhaps you are a renamed incarnation of one of those financial geniuses?

These figures are rather like a comparison with trying to decipher Mr Cameron's "Big Society". I think it would be more understanding to shorten them both with the title "BS"

54. At 16:46pm on 24th Feb 2011, Slessac wrote:

"And WOTW you are building p an unhealthy stake in RBS's failure."

...oh and it's not unhealthy - as I think Nero's advisor once said, it's better to be pessimistic than optomistic, for if things go badly as a pessimist you were expecting it, if things go well then you are pleasantly surprised.
However an optimist will be either 'expecting' the result or he will be dissapointed.

...but that's only for economics, about everything else I am a gleeful optimist!

36. Precisely, my very point....company accounts are prepared for the sole purpose of avoiding tax.
By "Dave" do you mean the gentleman who is Prime Minister and First Lord of the Treasury?
On separate point would it not be better to treat bank bonuses like school fees....they can only be paid out of taxed income

So much for the word of bankers and government's.
All the money "loaned" will never be seen again. And all the taxpayer has is a load of nonsense about us all being it together and we have never had it so good (sorry, wrong quote) We have to all bare the pain caused by someone else and not this very good and in no way responsible government.
So if we are in so much debt, how did the current politicians manage to loan Ireland the money

Simple explanations on this would be good, along with if it is possible to get cheap money could we not get a loan to pay off the current government debt?

Ive read a lot of these blogs now and although there are a lot smart people, making robust and valid observations, its all a bit pointless.

What are you all going to do about this system?
Do you think these forums are giving you a voice?

I'm not a banker or anything as horrible as that, but Ive made the decision to try and get on with 'it'. It being the closed system that we all live in.

This isnt a dig at all the bloggers, just merely a question of: are you not getting a bit bored with talking about it all?

58. At 17:00pm on 24th Feb 2011, Lindsay_from_Hendon wrote:

"Financial services companies pay 10% in the two examples given"

Well done - you should pass your ACCA now.

For your follow up question - what is the capital gains rate in those two countries?

for those of you talking about the bank stakes being sold at a profit - you need to get real. Min 10 years for this to happen.

I'll say again, the banks will need to be bailed out again, never mind the govt. stakes being sold at a profit!

just watch exposure to Portugal coming your way soon. and let's see what happens when the markets get nervous to the new incoming Irish govt.

not to mention a UK housing downturn.

not to mention the impact of any other external "shocks".
(who in early December predcited Arab world uprising?)

I'm am no better than the next person at predicting future economy but anyone stating "govt will sell stakes at a profit within the next 5 years" is in the PR business (or a politician or banker vested interest).

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

If accounts are so impenetrable as to be meaningless, why bother? How do we measure corporate performance now? Is it dividend payouts, bonus payouts, or fewer imprisonments for embezzlement? How about corporation tax? The lower the tax, the less valuable the company. Dump the shares, and see what happens.

Maybe the low value of the shares is because no one understands the annual figures and so can't value the company. The purpose of an annual report is so that the shareholders know what is going on in their company. UK PLC owns 83% of RBS. I would not expect to be able to fully appreciate the subtlties of the figures, but I would expect financial journalists to be able to interpret them for me. If I read the deliberations of several financial journalist I will get a view of what the figures mean. If only a few people in the more rarified levels of banking understand the figures then I feel that the report is not fit for purpose. I would suggest that the report be rejected by the shareholders and instructions issued to produce something more intelligible. I would take the inability to produce something that many in the industry understand as an indication that those running the company haven't a clear view of what is going on. The problem for George and Vince and other cabinet members is that asking for clarity is an admission that they haven't a clue either.

@writingsonthewall

by this point full nationalisation was very unlikely.

I bought shares not because I thought the bank was one of the better ones (clearly not), but because they represented very good value compared to any other banks shares at that time.

I also realised that with RBS being, 'too big to fail' there was very little chance of me losing my investment.

Finally with its enormous amount of assets, I knew RBS would benefit from a global upsurge in asset values and share prices that was inevitable now that the worst of the crash was over (for businesses at least).

My only regret now is not buying more, the percentage increase in value they benefited from would be pretty much unheard of in more 'normal' economic times.

"65. At 17:18pm on 24th Feb 2011, p2horn wrote:
36. Precisely, my very point....company accounts are prepared for the sole purpose of avoiding tax.
By "Dave" do you mean the gentleman who is Prime Minister and First Lord of the Treasury?
"

More accurately "Dave down the pub" - obviously he and Lindsay are well acquainted.

Why do we pretend to run a mixed economy but then decide to shore up some industries but not others? In my lifetime the list is long ... ship building, steel, some defence contractors, the auto sector (in the 60s & 70s), farmers and now the banks. Why not let the market decide - and why use taxpayers' money, not commercial loans. I am self employed and get only grief from the Government & its agencies (and always have done, whatever colour government). When will we learn that a bad business is just that. Let them go, because it always ends in tears ... shipbuilding, steel, auto etc.

Wow Korean Bank Run gathers steam

https://etfdailynews.com/blog/2011/02/23/seven-korean-banks-shut-down-so-far-ewy-kg-shg-wf/

#67 S-M-T - blogs like this provide two things. News you wouldn't otherwise have picked up on as the combination of us all gathers more news we are interested in. Second it provides a diverting way to express views and read others and have a debate without the fuss and mess of having to leave home. In any case S-M-T why did you bother posting?

69. At 17:32pm on 24th Feb 2011, avulcan wrote:

" anyone stating "govt will sell stakes at a profit within the next 5 years" is in the PR business (or a politician or banker vested interest)."

Or someone who is sitting on a load of unwisely purchased RBS shares, and is trying to ramp the price so they can get out quick!

But, Robert, you and your Labour friends had 13 years in power to sort this out.
The failure of accountability , transparency and regulation of the Financial Services industry is down to Gordon Brown and his cronies and you know it ! So no point in complaining now !!!

WOTW. You said

'...but please do enlighten me - what factors do you have that make you think it's all going to be sold for a profit?

I am all ears.'

Well we have one thing in common, then. I too have unusually large ears.

But in answer to your question I don't profess to know whether the government will get its money back - and in my earlier post I didn't express a view - other than to say the call might be closer than you suspect and you could therefore find yourself completely wrong (or completely right - who knows). But my point was that your comments are along the lines of Private Fraser (and I'll admit that mine now might be a bit Manwairing-ish) and the trouble with making these gloomy predictions so publicly is that you end have to hope you will be right. Especially when you say 'NEVER' repeatedly in capitals. That's very definite and placing a hefty stake in failure - and I prefer to have a stake in success. So on your scale I suppose that makes me an optimist.

But overall, given the government's likely reluctance to take steps that would jeopardise recovery in the banking sector I think here's a fair chance that the RBS share price might claw its way back to a level at which I as a taxpayer might get a modest profit. But I wouldn't buy the shares or place a bet on it. You never really know when a market has hit the bottom. That must be especially true in your case when on virtually all topics you always predict that things are going to get terribly much worse.

@ Johnatwork8922

It all depends on what the government at the time sees as strategically important.

If BAE got into problems would you support it being allowed to collapse?, personally I think it is too important to us as a country to be allowed to fail.

At times it is important to remember what is essentially a 'good' company can be taken off the rails by 'bad' management, the nationalisation of rolls royce in the 70's is an example of this, and the benefits of saving said company.

62. At 17:14pm on 24th Feb 2011, haufdeed wrote:

"I distinctly remember a few regulars on this blog a year or two back, boasting about how much they had personally invested in RBS, and what a huge killing they were going to make in very short order. Strangely, none of them seem to post here any more-unless perhaps you are a renamed incarnation of one of those financial geniuses?"

He he he - you don't expect capitalists to be ACCOUNTABLE for the tripe they produce?

If anyone has ever known a serial gambler - they will recognise this behaviour - it's all shouty, shouty and "I'm such a clever person" when they win...but when they eventually lose....it all goes quiet.

I mean rbs_temp claimed he paid off his mortgage with a 'punt' on the RBS shares - when I pointed out such a 'punt' required an investment of over 50,000 (based on the share price and the average mortgage) - it all went a little quiet.

You see there are many punters - but nobody slaps that sort of money on a bank which has come so close to bankruptcy and which was hovering above nationalisation at the time.

However the Capitalists HAVE to believe there are winners - otherwise they will realise they don't stand a chance!

60. At 17:06pm on 24th Feb 2011, pkr1771 wrote:

"Dear BBC, can you give WOTW his own blog? - his following here seems to far outstrip any interest in Robert Peston's articles. Admittedly, I'm not a fan of either but I enjoy the discussions."

I'm too busy revolting - but come on the 26th March and you can meet the man himself (and I shall prove I am who I say I am)

Just remember "I am the one in ten....a statistical reminder of a world that doesn't care...."

Follow it and you shall find me.

Finally, finally you're getting angry with the way our financial institutions play fast and loose.

To the complaint that their accounts are unfathomable the banks argue it's because of regulation. Regulation that's as much framed by the bank's own self interest than any sense of financial probity and common sense.

If the banks and the Government keep up this charade there'll be riots in Threadneedle Street let alone in Sharia - al -Jala'a in Tripoli.

#79 Excuse me. Private Fraser was an optimist. Who do you think benefitted most from the "doomed" if not the undertaker?

65. At 17:18pm on 24th Feb 2011, p2horn wrote:

"On separate point would it not be better to treat bank bonuses like school fees....they can only be paid out of taxed income"

Please dissist with your 'fairness' agenda - Capitalists don't like you having fairness, fairness is for the wealthy alone.

67. At 17:20pm on 24th Feb 2011, S-M-T wrote:

"This isnt a dig at all the bloggers, just merely a question of: are you not getting a bit bored with talking about it all?"

Talking? - was it not communication which brought down Mubarak, Ben Ali and soon Gadaffi?

You underestimate the power of communication - however you will see on the 26th what 'blogging can achieve'.

...and you clearly missed the 'George Monbiot' day - which I am no longer allowed to mention.

Sorry to intrude on the private correspondence between WOTW and slessac, but just in case it helps the RBS share price in 2007 was around £6.00. That's what the market thought the bank was worth. What is it now? Under 50p? If it can continue to shore up its capital, sell off non-core elements, improve efficiency, return to profit and payment of dividends then I reckon you have to think there's more upside than down. That's not to say there aren't risks. Of course there are. Big, fur-lined, copper-bottomed, ocean going risks.

But you don't have to believe that it's all hopeless, that there will be plagues of locusts, etc. Don't we all in our hearts want to government to make a profit on its investment and instead of RBS being a drain on finances put a large chunk back. Wouldn't that be a bit good? A bit more money for hospitals, schools, libraries, etc?

69. At 17:32pm on 24th Feb 2011, avulcan wrote:

"I'm am no better than the next person at predicting future economy but anyone stating "govt will sell stakes at a profit within the next 5 years" is in the PR business (or a politician or banker vested interest)."

...or simply a hopeful fool....

United Dreamer - good point, but you wouldn't want too many optimists like that, would you? I like the sort of optimists who think things might get better. What's the right name for those ones? And what would a REAL pessimist look (or blog) like?

73. At 17:47pm on 24th Feb 2011, mr ff wrote:

"by this point full nationalisation was very unlikely."

It's still likely now! when was this time? - who told you it was unlikely?

"I bought shares not because I thought the bank was one of the better ones (clearly not), but because they represented very good value compared to any other banks shares at that time."

Classic - so you also buy junk bonds (because they're cheap)?
If that's your strategy - then have you considered they might be cheap for a REASON? - I mean the market is supposed to point to a 'true value'.

...but remind me, when you assessed the 'value' - what was the P/E based on the expected dividend payout?

"I also realised that with RBS being, 'too big to fail' there was very little chance of me losing my investment."

Even better - clearly you don't know what happens when a bank comes back for a second bailout. I'm sure people thought they were onto a winner when they bought into Railtrack too!

"Finally with its enormous amount of assets, I knew RBS would benefit from a global upsurge in asset values and share prices that was inevitable now that the worst of the crash was over (for businesses at least)."

Oh this gets better and better - please somebody call in an emergency financial advisor.
Who told you this? - your morning paper?

"My only regret now is not buying more, the percentage increase in value they benefited from would be pretty much unheard of in more 'normal' economic times."

...but you still have them - and you were talking about future dividend payments. What is your strategy? - are you a long term investor or a speculator?
You seem to have bought these without enough consideration - lets just hope you're just blagging or it was a tiny amount.
..and have you taken into account your transaction fees and taxes? - don't forget the tax laws are changing all around you...

Please, please, please speak to a professional (and not one who works for RBS) - this is like watching a 4 year old play with a revolver.

#89 Well that depends if they just look like they are getting better and actually are getting much worse.

After all I'm sure most people in Britain were happy war was avoided in 1938 until September 1939 arrived.

Just carrying on the dad's army theme...

76. At 18:00pm on 24th Feb 2011, Ilkeston_Tim wrote:

"In any case S-M-T why did you bother posting?"

Maybe he's an astroturfer....

https://www.guardian.co.uk/environment/georgemonbiot/2011/feb/23/need-to-protect-internet-from-astroturfing

78. At 18:03pm on 24th Feb 2011, Isatou wrote:

"But, Robert, you and your Labour friends had 13 years in power to sort this out.
The failure of accountability , transparency and regulation of the Financial Services industry is down to Gordon Brown and his cronies and you know it ! So no point in complaining now !!!"

What about the bogeyman - I thought HE DID IT!

Why don't you leave Gordon alone - blame me instead, I'm always talking the economy down and we all know it's all about the confi-dense don't we?

#89 Well that depends. Deferral of bad news can just be storing up worse news.

Carrying on the Dads Army theme, I'm sure those happy war avoided in 1938 were less than ecstatic in 1939 and by 1945 might have at least questioned if war in 1938 might have been preferable.

Ouch sorry about double posting!

"What about the bogeyman - I thought HE DID IT!"

Sexist!

79. At 18:09pm on 24th Feb 2011, Slessac wrote:

"But in answer to your question I don't profess to know whether the government will get its money back - and in my earlier post I didn't express a view - other than to say the call might be closer than you suspect and you could therefore find yourself completely wrong (or completely right - who knows). But my point was that your comments are along the lines of Private Fraser (and I'll admit that mine now might be a bit Manwairing-ish) and the trouble with making these gloomy predictions so publicly is that you end have to hope you will be right."

No - I am quite happy to be wrong - you don't think I (as a taxpayer) want to see my stake dissolved?
However what I desire and what is going to happen are two different things - clearly you can't split one from the other.
As for private Fraser - are you saying I should merely 'play along' with all the other RBS shareholders and vested interests who foolishly believe this is a confidence game (Ponzi's are based on investor confidence, not stable economies)

"Especially when you say 'NEVER' repeatedly in capitals. That's very definite and placing a hefty stake in failure - and I prefer to have a stake in success. So on your scale I suppose that makes me an optimist."

Nah - I'm saying in capitals because every day it's becoming more and more likely. I wasn't 100% at first, but 3 years in, with the incoming crisis - I'm pretty certain this wil be the outcome. It's not pessimism in this case - it's realism.

"But overall, given the government's likely reluctance to take steps that would jeopardise recovery in the banking sector I think here's a fair chance that the RBS share price might claw its way back to a level at which I as a taxpayer might get a modest profit."

...but define 'profit' - I presume you mean "get back what we put into it" - whereas as someone who works in finance I know that money is devaluing at the rate of 4% a year (roughly) as inflation bites - so we already need more back than we put in to make it a profit in real terms.
This is how banks calculate profit - and this is also why so many ordinary folk get ripped off.

"But I wouldn't buy the shares or place a bet on it."

I am pleased - unfortunately not everyone is as wise as you!

"You never really know when a market has hit the bottom. That must be especially true in your case when on virtually all topics you always predict that things are going to get terribly much worse."

Fundamentals my son, market fundamentals and long term trends - that's where it's at. Not this 'hit and hope' nonsense.

96. At 18:49pm on 24th Feb 2011, United Dreamer wrote:

"Sexist!"

Very good - I retract my earlier statement - it should read.

"What about the bogeyman - I thought HE, SHE or IT DID IT!"

Some of the more interesting no's included:
loan to deposit ratio 117% down from 135% (end '09) and from 151% (end '08) (A-)
total assets £1,453bn down from £1,522bn (B-)
short trem wholesale borrowing down to £157bn from £260bn (A for progress, D- for position) (£343bn at its worst !!!!!!!!!)
Leverage ratio 16.9x (last year 17.0x) (at worst 28.7x!!!!!!)
Net interest margin (retail) 3.91% up from 3.59%
Assets in the APS down £35bn to £190bn ish- mainly from customer paying back loans (shock)
RBS was a basket case, its capital and even more so it liquidity position was terrible. The improvement in its liquidity position is dramatic, & Ulster bank is still a mess.

...oh and just a word of warning....

I'm off tomorrow (doing some REAL big society stuff volunteering) - but while I'm away, there is a price of oil at which the US economy cannot function. I read it in an article somewhere.

If someone tracks this down then please let me know - I'd like to know when the economy capitulates and I need to put 'Plan A' into action.

Have a good weekend!