Royal Bank of Scotland reports largest corporate loss in British history, plans to give British taxpayers parting gift of $466 billion of now-worthless assets. What’s going to happen to their unfinished headquarters in Stamford, eh?
The bank, which is already 70 percent owned by the government, said it would dump £325 billion ($466 billion) of mainly toxic assets into the program, a step that could raise the state’s stake to 95 percent.
RBS posted a net loss of £24.1 billion for the year, attributable mainly to its purchase of the Dutch bank ABN Amro. The bank had a profit of £7.3 billion a year earlier. The loss was smaller than analysts had expected, but it stunned many Britons as a record-setting benchmark of corporate disaster.
But the increased stake and the guarantee of billions in assets at RBS prompted renewed calls from some investors to fully nationalize the bank.
“The current model is pointless,” said Neil Dwane, chief investment officer for Europe at RCM. “Semi-nationalization continues to run the risks that moral hazard, political interference and incorrect incentives will all prolong the establishment of a satisfactory solution.”
Under the agreement, which is similar to plans that create so-called bad banks, RBS said it would move the illiquid assets, mainly from its global markets division, into a separate unit backed by taxpayers. It will also commit to increase lending and plans to sell or dispose of the assets in the next three to five years.
But many Britons, shocked at the size of the losses, also registered bewilderment that Mr. Hester’s predecessor, Fred Goodwin, was drawing a pension of £650,000 a year. The government hinted Thursday that Mr. Goodwin should forgo part of it. Philip Hampton, the chairman of RBS, said he asked Mr. Goodwin a few weeks ago to voluntarily reduce his pension payments but received no answer.
There’s probably no telephone service on Mustique.
For What It's Worth 
They are moving into stamford bldg in April
Yes, but who? Greenwich Capital – anyone else? Will the British taxypayers really want 100,000 sft (or whatever size that building is) sitting mostly empty? <ayor Dan Malloy (sp?) summed it up best a few months ago, when RBS first started to topple: “They’re moving in in April – after that, we’ll see.”
I cant wait for the beheadings to start…. Ive always thought they were the coolest part of any revolution
Chris: It appears some folks have not gotten your memo:
http://www.greenwichtime.com/ci_11769741?IADID
Nassim Taleb spoke out in Davos about banks and the moral hazard of bailouts.
He and Nouriel Roubini were both interviewed at CNBC recently, but soundbite journalists are incapable of handling their views sadly.
Fly, did you notice this part in that article (Greenwich Capital moving from Steamboat to RBS headquarters, land lord refurbishing bldg).
“A similar makeover occurred over the past couple of years at 100 W. Putnam Ave., the former UST Inc. headquarters, in downtown Greenwich. Antares Investment Partners bought the 148,000-square-foot office building for $136.7 million and pumped several million more dollars into renovations.
It is fully leased at rents more than $100 per square foot a year. One tenant, however, investment manager Duff Capital Advisors, is looking to sublet 15,000 square feet there.”
I don’t think we’ll see $100 per ft rents again for awhile – in fact, I wonder if Antares will ever see its “fully leased” building achieve that, either.
rumor has it RBS is moving all of their NY and some of their Jersey people to the Stamford office.
xyzzy,
Will RBS ‘relocate’ their staff? That would be at massive cost for either the company or its’ workers. These unfortunate staff can’t sell their homes or easily move schools, mother-in-laws etc., so that only leaves commuting. How do you commute if you live in New Jersey? Up and out at 5?
I can’t imagine many people will be clambering to go along with that, but I fear in this market, it’s either, take it or leave it.
A sad end to a grand institution. The Scots, noted the world over for their entrepreneurial bent, their thriftiness, and diligence, now suffer the embarrassment of a great bank going under so ignobly. I once read a study that indicated Americans of Scottish descent are at the very pinnacle of American wealth.
I doubt RBS is going anywhere. Some of their press releases may not be true. I’m not sure they’re exiting all the businesses they say they are. Their CDS trade better than other banks. IMHO
Commute worries? Nah, anyone who doesn’t want to move or commute can be readily replaced by someone across street at UBS. Having a cluster of like businesses at the same train stop does have its benefits.