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.