Is the Government about to start selling off Royal Bank of Scotland shares.

[hard2miss]

I wouldn't put it past some of the Tory Millionaires paying people abroad to buy shares on their behalf, knowing in 12 months time they will have doubled up +

 

I would sooner trust a man stealing the Big Issue than a Tory.

[anywebsite]

They had every choice. In Iceland the government had a far starker choice, but handed stock to account holders rather than buying it themselves. As for the price paid it is very relevant. It was the difference between the taxpayer picking up at £25 billion bill or RBS's shareholders doing so. Perhaps you need to stop pretending you live in Baghdad and try inhabiting the real world.

 

In the real world, RBS isn't from Iceland, it's one of the world's largest banks. Iceland has a population the size of Nottingham, their main export is fish, their GDP is less than 1/6th of Iraq's. I think you need to stop pretending we live in Iceland, Baghdad is a much more realistic comparison.

 

A lot of UK businesses depend on RBS/NatWest for banking services. If they were allowed to go bust it'd have big effects across the economy. Private account holders would be guaranteed up to £50,000 from the government (which would total a lot & taxpayers never get anything back), businesses would lose everything.

 

Also in the real world their share price was trading higher than 50p before the last election. If the Tories hadn't interfered in the running of the bank (limiting bonuses, etc) it'd probably be even higher now & we could've sold at a profit.

[Anarchon]

What planet are you living on?

 

They had every choice.

 

Not really. When a government is faced with the imminent collaspe of two of the countries largest banks and with it the threat of complete financial meltdown, then you've got to act prety damn fast.

 

In Iceland the government had a far starker choice, but handed stock to account holders rather than buying it themselves.

 

Are you seriously suggesting there is any comparison between the Icelandic banks and our banking behemoths? Get real.

 

As for the price paid it is very relevant.

 

Er - no. Completely irrelavent in this context. They had to act there and then. Are you suggesting that the government should have waited until the shares were worthless before attempting a rescue. By that time it would have been too late. Which part of the bigger picture I described above do you not understand?

 

It was the difference between the taxpayer picking up at £25 billion bill or RBS's shareholders doing so. Perhaps you need to stop pretending you live in Baghdad and try inhabiting the real world.

 

Well, considering your naive comments above, who's really living in the real world? It certainly isn't you.

[Riannon]

I wouldn't put it past some of the Tory Millionaires paying people abroad to buy shares on their behalf, knowing in 12 months time they will have doubled up +

 

I would sooner trust a man stealing the Big Issue than a Tory.

 

Wasn't the man selected to run the part nationalised bank selected by Gordon Brown and Alistaire Darling?

Wasn't it the Labour Party that kicked up a big fuss about how much they had agreed to pay him?

If you think the share price is about to double you are perfectly free to buy as many shares as you want and make a killing yourself.

[Uptowngirl]

In the real world, RBS isn't from Iceland, it's one of the world's largest banks. Iceland has a population the size of Nottingham, their main export is fish, their GDP is less than 1/6th of Iraq's. I think you need to stop pretending we live in Iceland, Baghdad is a much more realistic comparison.

 

A lot of UK businesses depend on RBS/NatWest for banking services. If they were allowed to go bust it'd have big effects across the economy. Private account holders would be guaranteed up to £50,000 from the government (which would total a lot & taxpayers never get anything back), businesses would lose everything.

 

Also in the real world their share price was trading higher than 50p before the last election. If the Tories hadn't interfered in the running of the bank (limiting bonuses, etc) it'd probably be even higher now & we could've sold at a profit.

 

The size of the bank has nothing to do with it. Icelandic banks had grown to the point where their investments exceeded the GDP of Iceland itself. Most of the cash was from foreign investors.

 

What Iceland did was give investors bank stock pro rata to their cash investment. As the UK government bought shares at market rate the stock clearly had value of more than the cash required by the bank. In Iceland the economy is now out of the woods and the banks trading again, despite being far deeper in the myre than the UK where just a couple of banks needed rescuing.

 

Bigger banks have more depositors. So the spread of stock would have been far thinner than in Iceland.

[Uptowngirl]

What planet are you living on?

 

 

 

Not really. When a government is faced with the imminent collaspe of two of the countries largest banks and with it the threat of complete financial meltdown, then you've got to act prety damn fast.

 

 

 

Are you seriously suggesting there is any comparison between the Icelandic banks and our banking behemoths? Get real.

 

 

 

Er - no. Completely irrelavent in this context. They had to act there and then. Are you suggesting that the government should have waited until the shares were worthless before attempting a rescue. By that time it would have been too late. Which part of the bigger picture I described above do you not understand?

 

 

 

Well, considering your naive comments above, who's really living in the real world? It certainly isn't you.

 

 

You clearly have nothing sensible to add Mr Baghdad dweller. Yeah right!!!

[Anarchon]

You clearly have nothing sensible to add Mr Baghdad dweller. Yeah right!!!

 

I think I've made perfect sense. Do you always react in this way whenever someone doesn't agree with your view point?

 

Answer this one question then as you seem to think that the government had a realistic choice of choosing whether to intervene or not at that moment in time. Would you have rescued both RBS and HBOS over the first weekend of October 2008 knowing that if you didn't, both banks would have collapsed and come the following Monday morning, RBS and HBOS account holders would have no money in their accounts, direct debits would not have been paid, financial armageddon on the stock markets, other banks would have been in danger of going under too etc? A simple yes or no will suffice.

[hard2miss]

Wasn't the man selected to run the part nationalised bank selected by Gordon Brown and Alistaire Darling?

Wasn't it the Labour Party that kicked up a big fuss about how much they had agreed to pay him?

If you think the share price is about to double you are perfectly free to buy as many shares as you want and make a killing yourself.

Yeh Ill get right onto my bank manager and try and get a loan, oh ang on a minute, there is no money for me to borrow, the bonuses are a priority over customers.

 

Do you think I could be a middle man for some corrupt Tory, brown envelopes and suitcases under the table at dawn, that sort of thing ?

[Uptowngirl]

I think I've made perfect sense. Do you always react in this way whenever someone doesn't agree with your view point?

 

Answer this one question then as you seem to think that the government had a realistic choice of choosing whether to intervene or not at that moment in time. Would you have rescued both RBS and HBOS over the first weekend of October 2008 knowing that if you didn't, both banks would have collapsed and come the following Monday morning, RBS and HBOS account holders would have no money in their accounts, direct debits would not have been paid, financial armageddon on the stock markets, other banks would have been in danger of going under too etc? A simple yes or no will suffice.

 

You've already proved you know very little about finance when you think a simple yes no answer would suffice for a hypothetical question that you concocted yourself.

 

There was no melt down because the money was still in the accounts, just not readily accessible. Furthermore the value of the bank in terms of share price was more than the banks fiscal deficit. The bank could have been put into administration and sold at any time. The government effectively bought stock at 50p/share. It would have been prefereable to sell stock to raise the money rather than have government interference. The markets have now reacted to 3 years of government interference by a further halving of the banks value. This at a time when other banks that were in trouble have seen share price increases and record profits.

 

In Iceland where the banks liabilities were more than the assett value of the banks account holders were given bank stock in exchange for part of their investment. A few years on the banks are still trading. The accounts are still there and stock is trading on the markets.

[Anarchon]

You've already proved you know very little about finance when you think a simple yes no answer would suffice for a hypothetical question that you concocted yourself.

 

How do you work that one out? Of course you are the worlds greatest financial expert and I bow to your superior knowledge . It was quite a simple question really - would you have rescued RBS in 2008 - yes or no.

 

As you're not willing to furnish a simple answer, lets go back to where you said in relation to the RBS shares:

 

The government bought them too dear

 

OK then. Answer me this. At what price should the government have bought them then? 10p a share? 1p a share? The government effectively bought RBS shares at 65p per share in October 2008. If they hadn't, the bank would have gone bust and with it most of the UKs banking institutions along with the UK economy. As such, the government didn't have the luxury of dithering and deciding when to rescue RBS to ensure it bought the shares at a cheap price. They had to buy those shares at that moment in time and at that share price to avert financial disaster. That is the point I've been trying to make (and you not understanding).

 

There was no melt down because the money was still in the accounts, just not readily accessible.

 

Of course there was no financial meltdown precisely because the government re-capitalised the banks. If they hadn't, then it's a given fact that ALL savings deposits and current account money held in RBS would have vanished overnight. That's what happens when a bank becomes insolvent. That's why Northen Rock had a run on it's accounts. There wasn't any kind of firewall between the high street retail bank operations and the riskier investment banking operations. Why do you think the government went on to set up the Financial Services Compensation Scheme? In the event that a bank went under and people lost all their money, account holders would be compensated up to the first £85,000. What you've said above is simply not correct.

 

Furthermore the value of the bank in terms of share price was more than the banks fiscal deficit.

 

What was the RBS's fiscal deficit? The term fiscal deficit is usually used in the context of budgets and a comparison between incomings and outgoings. RBS couldn't generate income because nobody was willing to lend to it. I presume you mean financial liabilities? Are you seriously suggesting that the value of all RBS shares put together in Autumn 2008 was greater than it's total financial liabilities? RBS Group had billions upon billions of pounds of liabilities on it's books - many of them inherited from it's diasterous purchase of ABN-AMRO and billions in toxic sub prime mortages etc. RBS shares had already nose dived before the government was forced to intervene.

 

The bank could have been put into administration and sold at any time.

 

If you hadn't noticed, the bank was effectively put into administration by UK government PLC by part nationalising it. Are you seriously suggesting that an

outfit like PriceWaterhouseCoopers could have just come in and sorted out a multi trillion pound bank on the brink of bankrupcy? RBS could have been sold at any time? Yes, of course it could provided a buyer could have been found - but at a massive loss to the UK taxpayer?!!?!!? HBOS (the other bank in trouble) was sold to Lloyds Banking Group at the height of the crisis and what a disaster that was and is the reason why we ended up owning 43% of Lloyds bank. The financial climate over the past three years has meant that no-one was willing to seriously invest in RBS shares or buy it as a going concern - part nationalised or not.

 

The government effectively bought stock at 50p/share. It would have been prefereable to sell stock to raise the money rather than have government interference.

 

Sell stock to who and when? Nobody has wanted to buy RBS stock over the last few years because it was toxic. RBS was sitting on billions of pounds worth of losses. Would you have bought RBS stock knowing that it has billions of pounds worth of toxic mortgages and god knows what other horrors sitting on it's books?

 

The markets have now reacted to 3 years of government interference by a further halving of the banks value. This at a time when other banks that were in trouble have seen share price increases and record profits.

 

Are you sugesting that the current low share price is exclusively down to government interference? Nothing to do with ordinary market forces then? All banks have suffered in their share price value over the last three years. What specific government interference are you talking about? Do you mean the Stephen Hester bonus issue earlier this year? RBS shares were lower last summer than they are now. In what way has the government actively interfered in the day to day running of the bank? I agree with you that the current share price partly reflects the concerns of potential investors not wanting to invest in part nationalised banks and hence why it would be prudent of the government to sell them off a bit at a time. You've claimed that banks that have been in trouble have seen record profits? And by 'record' profits you presumably mean largest EVER profits? Good luck in finding one cos I'm not sure there aren't any.

 

In Iceland where the banks liabilities were more than the assett value of the banks account holders were given bank stock in exchange for part of their investment. A few years on the banks are still trading. The accounts are still there and stock is trading on the markets.

 

How can you still compare the Icelandic banks with RBS? RBS had billions and billions of pounds worth of liabilities and losses on it's books. They far outweighed the combined sum of all RBS savers deposits. RBS ordinary account holders make up only a very small percentage of the banks business. What about compensation for the institutional investors - i.e. pension funds, other investment banks etc? An Icelandic solution would never have worked because you are forgetting that RBS was once the worlds third largest bank. The Icelandic banks were little tiddlers compared with the RBS shark.

 

Kaupthing bank, which was Iceland's largest bank failure, isn't trading anymore - it's broke and is in Icelandic government receivorship. Landsbanki, the

other major Icelandic bank that went bust was also put into government receivorship. The good bits of the bank were hived off to create a much smaller (new) Landsbanki bank.