RBS is morally and financially bankrupt
So well is the RBS system of defrauding, scamming, overcharging and otherwise fleecing its customer base going, it will soon be able to leave the Government’s Asset Protection Scheme (APS) reports yesterday were suggesting.
The APS was (and is) a bit like insurance cover, the only difference being that whereas you and I insure the house knowing it almost certainly won’t burn down, we insured Chateau RBS when it looked likely to vapourise at any minute. But now Stephen Hester says things are so tickerty-boo, he doesn’t need the insurance any more.
The net effect will be to reduce Britain’s National Liabilities bill by some £114bn, or roughly 2.7% of the total. But my own feeling is that the main reason The Hester Pest has done this is to see if he can placate the EU by showing that he is now not really receiving any taxpayer aid…except of course for the 500p per share we paid for the privilege of buying four-fifths of RBS three years ago. This would mean he could stop worrying about the decision by Santander not to buy the bank’s 316 branches in the UK, because the Sprouts would no longer insist on selling it to some other mug. We shall see.
Either way, most of the press coverage missed a vital point: the APS was only ‘insuring’ a proportion of RBS toxicity…that based in the UK. As we’ve already seen at The Slog, Hester’s Hobgoblins have been busy helpfully hitting SME and individual UK debtor customers over the head with mallets in order to either fire them or bring them into line. Needless to say, they cannot follow such Mafioso policies abroad…where a further £170bn of radioactive toxicity is busy humming away quietly.
We need to keep an eye on the relative size of some of the numbers involved here – and ignore the spin-puffery bollocks put out by the RBS management team along with their partners in crime, The Treasury. For example, RBS looks likely to sell its ‘Citizens’ sub-brand in the US – for around £6bn, and the share price yesterday rose 4.4% on news of the APS exit…upping the valuation by a further £1bn. This sounds good when set against a market capitalisation of £31.3bn, but miniscule in comparison to £170bn of awfully dodgy debt, some of which involves Russian property which exists only in the minds of the borrowers.
Equally, yet again there were Treasury noises off yesterday about a ‘taxpayer profit’ following RBS’s APS exit, but this is complete twaddle. In the first place, we won’t see any of it given a national debt over £2.3 trillion; and in the second, the RBS share price closed at 280p yesterday…which still leaves all of us 220p per share in the red.
The Rogered Bowel Syndrome is exposed to around £75bn of eurozone debt. The requirement now (for those of us who can tell sh*t from putty) is to focus on both that debt in particular – and some of the fantasy assumptions made by the book-keepers at the ‘bank’. RBS and the government need to level with people about the real nature of the balance sheet.
For instance, European sovereign bonds in there bear no relation at all to real market value.
Loans backed by UK property should be written down by as much as 30%. The description in the accounts of RBS’s property value is complete tosh – even though the bank is busy stealing such assets by deliberately undervaluing them.
And as for the debt taken out in ClubMed….well, stop treating it as an asset. It is an asset in pretty much the same way as a rusty car with knackered steering and three slow punctures is an asset.
Stephen Huckster talks a good game, and gets paid handsome golden hellos. But neither he nor anyone else can change the fact that, in the real world, RBS is insolvent. Don’t be surprised to see Vince Cable buying the remaining 18% at some point during 2013.