CRASH 2: Urgent – RBS on the edge…but don’t miss Summer recess Sir Humphrey, whatever you do.

Some of you will be fed up of hearing me issue RBS warnings, but equally, some of you may have spotted that there’ve been murmurings in government about the bank over the last few days. I find this muttering very disturbing. This from last Friday’s FT (my italics):

‘The UK government’s ownership of Royal Bank of Scotland is likely to be reinforced before it is reduced, the UK bank’s chairman Sir Philip Hampton has indicated, with an autumn-time capital restructuring being discussed with regulators. RBS is locked in three-way talks with the Financial Services Authority and the government, which owns 82 per cent of RBS, to decide a mutually acceptable way of restructuring‘.

Increased levels of taxpayer ownership, and that dread word ‘restructuring’, are not good signs. Also less than encouraging was this:

‘“The FSA just wants us to be appropriately capitalised,” Sir Philip said. “The target for substantial completion of their thinking is end-June. So the extent to which the Treasury is involved, they can think about this over the summer recess.”’

It is odd, is it not, that the Mandarins of Whitehall think the World will wait until their break in Tuscany, or Surrey, or somehere else ending in ‘y’, is over before going mental. The urgent truth is that Royal Bank of Scotland is a massive lossmaker – over £1.4bn in Q1 2012 alone -  and admits to being heavily exposed to the worsening Irish property disaster. The exposure that dare not speak its name, of course, is that to Russian mendacity.

I worry when articles like these contain so much jargon clearly designed to obfuscate the nature of what’s going on. Talk of contingent convertibles, coco instruments, asset protection schemes and all the rest of the gibberish will equal considerably less than a hill of beans when the bad stuff hits.

Meanwhile, I am warned by a regular Slogger as follows:

‘Last week amid all the Olympic Torch and Jubilee celebrations, RBS announced a shares consolidation. The gist of it was that your holdings were reduced by a factor of 10, and so the share price went up correspondingly.  So if you had 50 shares at 20p, you now have 5 shares at 200p…..Just waiting for the next few months to see the government announcing the sale of it’s holding in RBS.  “Well we did pay 50 p per share when we bought it, but the shares are now worth 200p – which represents a handsome profit for the taxpayer”…’

This could be a very shrewd observation…and/or it could mean RBS reducing private shareholding percentages to make way for bigger (Whitehall) fish…all the while screwing the risk-taking shareholder.  Certainly, last November when UK Investments (the State’s holding the bomb company) tried to flog it to Abu Dhabi, the shareholding was worth just 23% of what it cost to bail out Freddie Badloss’s penis extension bankrupt bank.

Stay tuned. This is definitely one to watch.

30 thoughts on “CRASH 2: Urgent – RBS on the edge…but don’t miss Summer recess Sir Humphrey, whatever you do.

  1. John

    Could be (re RBS share consolidation) that they have worked out which way the wind is blowing and have come to the conclusion that 20p per share doesn’t look as bad as 2p.

    M.

  2. The RBS share consolidation looks like it was a devious maneuver for the reason you allude. But it looks like it’s being overtaken by solvency issues.
    I struggle to see any good reason for Brown’s govt pouring £billions of taxpayer money into RBS.

    • Even more inexplicable and less justifiable (apart from political reasons, Labour heartland etc) was the saving of Northern Rock. This of course allowed its recklessly stupid CEO Adam Applegarth to swan off with his huge six figure pension and made the British Leyland bailouts of the 1970′s look like a bit of loose change. Now to add insult and further injury the taxpayer has been left with all the really rotten mortgage book stuff and our old friend Richard Beardscam has walked away with the profitable savings part of the business at a nice discount.

  3. Nationalise the bastard. Close the crap and turn the rest of the bank into a small business outfit along the lines of the old IFCB later 3i and funnel some QE through it as well as new infrastructure funding. The deepositors can be transferred to lloyds.

      • That would normally be the preferred option but today the banks are failing to lend to small business because of the tightened capital requirements so this would be a better use of QE than pumping it into the existing banks who wont lend. Give it a limited life.

    • Thousands of RBS customers are being sold off to Santandar along with hundreds of RBS bank branches. Now there’s a kiss of death if ever I heard one. And when the Spanish senors shout from the rooftops that their British funds are ringfenced and come with Draper George’s pledge that all will be well, I reach for my running shoes.

      • The sheeple, if they can get off their fat duffs, should remove their funds from Santander not because they are under risk but because the institution is crap.

      • Well here’s one customer who ain’t. I moved my RBS accounts to Edinburgh over a year ago. As did a great many others. Originally the EU demanded that all customers of RBS in England were to be handed over to the appalling Santandar at the time of sale. Q serious discussions in Money Mail. That subsequently got shot down. Those who now find themselves customers of Santandar have only themselves to blame. My advice – move to another Bank immediately.

    • I took my hard earned out of Santander recently because when I performed a stress test on my gonads the results weren’t very encouraging. I passed it through an old and, since they f*cked me up 3 years ago, little used a/c at HSBC (opened in 1966 when Midland!). Now HSBC have locked me out of my a/c and every time I call them I get a different answer – in Gujarati FFS! Are they just pissed off that they couldn’t hold onto it or am I about to be investigated for money laundering?!

  4. I recently opened a new business account for a subsidiary company with RBS, only to be told weeks after the account was opened that it was being transferred to Santander later in the year. Given that it took almost two months to get the account up and running (good show boys….email can be so slow, can’t it?) I am not anxious to repeat the exercise with another bank any time soon.

    But there is worse: one of the first customer cheques I paid in was for a five-figure sum (not including the pence digits). It was a great start to the bank balance. Imagine my horror when, a few days later, the money had disappeared from the account. Many, many phone calls later (all 0845 expensive numbers not included in phone service ‘minutes bundles’, of course) I was eventually told that the BANK had taken it from the account and it was with their ‘security department’ for checking. Expect it back in your account in the middle of next week, they said.

    WTF ??????

    • I think the only thing we can be sure of is that this sort of bollocks is going to be on the increase for the forseeable. FWIW, a company of which I am a director had banked with RBS for many years until about 18 months ago when we needed to increase our borrowing against very solid collateral. The manager (Adam Smith!) tried to have us over so egregiously that we told him to stuff it and went to Lloyds who, at that point, were far more civilised about it. Borrowing aside, what is a person now supposed to do with cash in hand – keep it under the bed?!

      • thanks wfd.. i, as i’m sure others do, get very upset at the blatent profiterring and mindless waiting that the companies who use them put people through.

      • Branch based accounts with RBS in England and Wales, (not Scotland), will over the 18 months, from May 12, be transferred, owned and operated by Santander. I just found this out thanks to MM. Natwest accounts in England will not be affected by the takeover, so they say. I think it’s time for another move. Any suggestions or are they all f****d?

      • @Milkman: Thanks, I also discovered that after I posted.
        On Natwest…I dunno. I’ve noticed that most banking discussions over the last 2-3 years have studiously avoided mention of this bank. Not sure if that means people are scared to mention it or whether it operates very independently from RBS and is safe …or safer.

    • The use/abuse of 0845/0870 numbers by virtually every commercial organisation and government dept nowadays is nothing less than a racket introduced by British Telecom. I pay about 5p per minute for those wretched calls and always get held in push-button queues. Rarely does a call take less than 10-15 mins, often much longer. By contrast, standard STD numbers cost me a flat fee of 5p however long they are. It is appalling that Ofcom have conspired with British Telecom on this.

      I use the website @Wfd mentions, wherever possible to discover the real STD number.

      • Yes, and if you look on the bank’s website at the contact page you will often see a 44 no. for those calling from abroad. Just use the 0 instead and you’re through – I’ve been doing it with HSBC last few days, so satisfying. It’s a complete scam deliberately designed to get their hand in your pocket and neatly exemplifies the reality of our parlous position about which we are, apparently, powerless to do anything.

      • Try “Say No to 0870″ web-site which often has the background 01 and 02 numbers for the 087 and 084 con-jobs.

      • @H…..b: Yeah, I have used those intl numbers successfully a few times.

        Although 0845/0870 codes are not currently shared revenue, they cost users up to 5p per minute. There are also one or two others codes being used courtesy of the evil British Telecom eg: 0844/0871 which cost more and some are shared revenue, meaning that the party being called shares the revenue with BT. All of these codes have to be routed thru BT’s network which routes them to the correct STD number. This allows BT to cream off a fat charge and set the minimum price. So, even if you use one of the ‘indirect access providers’ as I do, they cannot include calls to these codes at rock-bottom prices because of BT. Thus, the only reason for introducing these codes is to rip off customers. There can be no doubt that this is monopolistic pricing and in the US would be prosecuted under anti-trust laws. Not so in the UK as Ofcom are in cahoots with BT. Here’s a link to the BT bollix about these codes: https://www.inboundservices.bt.com/IA/%28S%28bibr0ousklwn4hyd0sy1mw2g%29%29/InboundServices.aspx?TAB=RESERVERANDORDER&ACTION=NONE

  5. Pingback: John Ward – Crash 2 : Urgent – RBS On The Edge… But Don’t Miss Summer Recess Sir Humphrey, Whatever You Do. – 11 June 2012 | Lucas 2012 Infos

  6. Here in Ireland RBS are pulling the plug on all of their investments/loans and selling off all of the repo’d assets. Rumour has it that they are looking to be gone by December this year, assets are going at as low as ten cents in the euro so massive writedowns, if they are taking those kinds of losses now I reckon they see it as value. Makes you wonder wtf is coming down the road really.

  7. Hmm, time to ditch Natwest, then! For one thing I was in a Santander branch last week to pay money (note below) to one of our suppliers and they are easily the slowest counter staff of any bank I’ve dealt with. And for another, the nearest branch is 10 miles away!

    Note: I wandered in with 300-odd quid in cash and they initially refused to take it! Wtf? Apparently the business account our supplier uses is only intended for electronic fund transfer and can neither be funded with cash, nor have cash physically withdrawn from it. One more step along the path to the banksters’ ravenously desired cashless economy, methinks! Much easier to steal from you with impunity if you can’t even go and take all your money out in protest, after all!

    The counter girl did eventually relent after I refused to leave until they sorted it, though. I was making a scene in front of a very long, angry queue by that point.

  8. Only last week a PIRC analysis showed RBS is currently maintaining some £18 billion in undeclared losses on its loan books. If that is what can be dug out of the figures then the actual amount is far higher. And wasn’t all the BAD debt was taken off the books before it was refloated?

    I would still like to know where the £40 bn that was transferred out in the days before it went belly up actually went.

  9. Sarcasm > I´m so glad that I´m a Canadian and I don´t have to listen to the same news like you do in the UK. Canadian banks supposedly have >
    Strong capital levels, the conservative lending culture and strict regulatory oversight under a single supervisor are just some of the reasons for having one of the soundest banking systems in the world. Canadian banks are forced to hold their level of capital higher than the most other countries. (quoted from Canadian Banks Are Among World’s 10 Strongest)
    I hope we are all prepared for some shakedown haha.

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