Tax Payers lose £900M as investors fear political interference with RBS

[ampersand]

They are not. The Gvt is no different to a private shareholder, insofar as the question of "how well is the bank doing?" is concerned: the faster the banks are turned around and appreciate in real/stock market-perceived value, the earlier the Gvt can sell the shares at break-even or a profit (or hold and grow the potential profit).

 

 

Sorry if my selective editing of your post mis-interprets anything you've said, but this was the only point on which I wanted to comment specifically

 

The Government "investment" in the banks is on a totally different basis to a private investor - for a start they didn't do it with a view to making a profit (or a better return on their investment than they would have had if they'd invested it elsewhere) - it was done with a view to ensuring the survival of the bank - few private shareholders will have bought shares in the banks for the same reason

 

 

I try not to say the same thing twice as, if you didn't agree first time it's unlikely you'll change your mind just by my repeating it... but, the Government's position as a shareholder isn't the issue, and it is totally separate from the Government's interference which is the issue

 

Many private shareholders seek to influence the running of the company in which they have invested, but equally many shareholders don't - as can be seen by the generally low turnout (and numbers of votes cast) at AGM's - it is quite feasible for the Government to hold shares and say that it will not seek to involve itself in the day to day running of the business - it is only because Mr Cameron [edit and Mr Milliband] felt the need to jump on the latest passing bandwagon that it has become an issue now

[L00b]

Sorry if my selective editing of your post mis-interprets anything you've said, but this was the only point on which I wanted to comment specifically

No need to apologise, just a constructive discussion

The Government "investment" in the banks is on a totally different basis to a private investor - for a start they didn't do it with a view to making a profit (or a better return on their investment than they would have had if they'd invested it elsewhere) - it was done with a view to ensuring the survival of the bank - few private shareholders will have bought shares in the banks for the same reason

Let's not go on too much about the 'for profit' angle, as it's only ever going to be a "what if" until we get the benefit of hindsight (), and (IMHO) the Gvt would not have invested, had it considered that it would never recoup its investment (it would have bailed relevant creditors under UK bank default garantee provisions instead - much cheaper option).

 

I fully agree with the second bold bit (ensuring survival), however I disagree with the first bold bit (different basis to a private investor), because of the above, reinforced by the fact that, in the absence of an actual nationalisation (effecting Gvt control) of RBS and Lloyds (as a counterpart for the life-sustaining cash injection at the time), these 2 concerns remained private organisations existing in a free (hitherto "non-interfered with") market, free of political shackles.

 

Your point about active and passive shareholders is understood but, because/in the context of the above, essentially moot: both types of shareholders have the same interest in having the share price maximised at any one time, which is (IMHO) what matters -and is affected- after this bonus meddling thing.

 

The Gvt's interference does not simply turn a passive shareholder into an active shareholder - because the shareholder is the Gvt, the consequences of the interference are amplified/demultiplied/taken into a whole new arena, again because traders have always fled Gvt control like the pest, and that is what this bonus meddling clearly translates as, for the first time since the bailout.

 

Noone is going to advise a buy on RBS shares/invest in RBS (which is what's needed and has been slowly happening/worked towards), when the next big RBS business decision could be overturned by manipulating public opinion and threatening a Commons vote (we're not in Kansas...I mean, AGMs, any more ). Simple as.

it is only because Mr Cameron felt the need to jump on the latest passing bandwagon that it has become an issue now

I agree on the bandwagon-jumping comment, but disagree about the extent of its causality - that jumping is one opportunistic political move which, had Cameron AND Milliband (and/or their respective spin doctors) thought it through beforehand, would have been avoided and quietly damped in the interest of the country's finances.

[GodStar]

. The feeling is that the investment arm could disintegrate due to staff moving to other institutions. .

 

Absolute baloney, and probably spin from the bankers themselves. Who are the other institutions with all the jobs going? There isnt a shortage of people looking for jobs and banking isnt rocket science.

[L00b]

Absolute baloney, and probably spin from the bankers themselves. Who are the other institutions with all the jobs going? There isnt a shortage of people looking for jobs and banking isnt rocket science.

You should spend some time looking up the formative/academic background of most the "new generation" of investment bankers

 

Asian banks and trading houses are still recruiting by the bucketload at the moment, btw.

[T 42]

Absolute baloney, and probably spin from the bankers themselves. Who are the other institutions with all the jobs going? There isnt a shortage of people looking for jobs and banking isnt rocket science.

 

You clearly think you know more about this than all the financial institutes on Walls Street London Tokyo and throughout the world. So you would be the obvious person to explain why Alistair Darling thought it necessary to pay the guy so much when he could have got all these others to do the job for peanuts?

[biotechpete]

Frankly, I'm not particularly concerned by a small percentage drop in share prices. It's a drop in the ocean in comparison to a roughly 50% drop in the tax payers original investment in RBS. Less money in bonusses means more money for dividends and that means what Hester loses the treasury gains. Every little helps.

[Lockjaw]

The taxpayer has lost almost £900million on the value of its shares in Royal Bank of Scotland and Lloyds Banking Group amid fears that the backlash against bonuses would damage their performance.

 

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9050671/Taxpayers-lose-900m-as-RBS-shares-fall.html

 

Stephen Hester, the chief executive of the Royal Bank of Scotland, gave up his bonus after sustained political pressure that culminated in Labour calling for a parliamentary vote.

 

The share price of RBS dropped by 3.5 per cent yesterday, wiping £580 million off its value. Lloyds, where the chief executive has also turned down his bonus, saw its share price fall by 4.1 per cent, stripping £921 million off its value.

 

With the taxpayer owning 83 per cent of RBS and 41 per cent of Lloyds, that equates to a fall of almost £900 million in holdings — equivalent to £36 for every British family.

 

It makes the prospect of recouping the £45 billion used to prop up the banks in 2008 even more distant.

 

 

But on the plus side we've saved nearly a £million by recouping his bonus.

 

Hiya T 42.

 

Can you tell us how the market cap of RBS today compares to what it was a month ago?

[truman]

Frankly, I'm not particularly concerned by a small percentage drop in share prices. It's a drop in the ocean in comparison to a roughly 50% drop in the tax payers original investment in RBS. Less money in bonusses means more money for dividends and that means what Hester loses the treasury gains. Every little helps.

 

I'm not sure I understand your logic here..the shares lose £900 million (and I suppose a chunk of dividend) after the political interference in Hester's bonus but you reckon having £1 million more on the bottom line is better? I'm not saying you're right or wrong just wondering how that works..

[ricgem2002]

aww not another thread about lets feel sorry for the bankers brigade :hihi:

[NorthernStar]

These shares have been very volatile for the past five years or so, the share price has dropped massively before Mr. Hesters bonus was under scrutiny.

 

The five year chart shows the profound damage that the bankers did when left to their own devices, mere single digit moves in this market are not indicative of anything really they have been up and down like this for ages.