RBS and Lloyds re-made by Europe

Robert, nice to read you again!

I have a question that I've been pondering over in my mind for the past few days, I have approx 11000 Lloyds shares, should I take up the upcoming rights issue, reported to be in the region of 2-1 at circa £0.35p-£0.40p?

What's the saying "Avoid Gordon bearing gifts"

The old management of Lloyd TSB were taken to the cleaners by Gordon and really they should of seen it coming. It was obvious from day 1 that Gordon's super bank would be cut down to size due competition reasons. I would be interested to know what he offered them off the record.

More competition? More choice? Wha-a-a-at??

How do those faceless suits in the Brussels ivory tower ever come up with this rubbish?! Was there no one from the UK to tell them that our High Streets are CLUTTERED with banks and building societies? We have five main banks and plenty of other finance and insurance institutions in real life and on the net. How much MORE competition do they want?

And why now, when we know how frivolously our government plays the markets? I wouldn't trust Brown, Darling or Myners to trade anything in the markets with the hope of getting decent value for the taxpayer.

They're barmy, the lot of them.

Pathetic.

If I buy a slice of bank, will I be allowed to mint my own money? I mean, why should the BofE have the monopoly? Ummm...don't tell the EU that or we'll have more of these Brussels spouts!

I agree with your point on the amount of tier 1 (Actual cash) available to banks before the crash, most banks had only about 2% available .

Every house holder /small business knows that a reasonable reserve is required for unforeseen events and 2% was totally inadequate...

It shows that it is the quality of the regulator not the size that is important. Its quite obvious that proper stress testing of the banking system was not carried out and the the regulators were to close the organisations they were controlling.

No split between investment and retail banking then?

Pity.

As it stands this has all the appearances of yet another stuffing for the taxpayer. I doubt if Lloyds' shareholders are going to be all that excited either.

When are all these wonderful, well-rewarded government servants going to start doing something to help ordinary people through this recession? I mean if we had more than one government then there would be competition and government would become cheaper. This is utter nonsense but it seems to be the logic they apply to everyone else.

And this helps me as a taxpayer how? Do the folk who started all this mess up still have a job, pension, shares and that type of stuff?

And I have no doubt there will be a lot of self congratulation going on in the wine bars tonight.

Cynical? Me? Well yes as my job prospects (which are what really matter to most people) are still very dim.

I'm curious to know who exactly is going to be running these 3 new banks which are going to miracuously appear on the high-street. Also who is going to finance them? Also when is this going to come into place?
We know this government is on its last legs. The writing is on the wall! Is this a political gesture or a real proposal?
So will we now have Tesco Bank - buy one, get one free; Virgin Bank - a free flight with every mortgage; Poundstretcher Bank - 'Closing Down Sale' 10% off all loans.

Imagine what it is like being a member of staff at C&G. In the summer they were told that the branch network was closing and they would all be out of a job. Then, a month before this was due to happen there was a review and they were told that they would not be made redundant. Many of them would have made all sorts of plans expecting redundancy which then had to be cancelled.
Now, with this news, their jobs all depend on who wants to buy C&G and exactly what is being sold - just the branches? the existing mortgage book? what about admin and IT staff? computer systems? etc. Hundreds more ordinary working people suffering even more crippling anxiety and uncertainty through no fault of their own. C&G was a well run business and did not indulge in hyper risky lending but their staff are suffering whilst the real architects of this disaster get to run away with their undeserved fortunes (e.g. Mr Hornby with his nice new job at Boots).

Robert

The bad bank is RBS and they are going to have to pay 1bn a year to stay in the APS. The good bank is Lloyds, and they are going to have to give a discount of 2.5bn in lieu of their ten months or less in the APS. I don't understand what the discount means, but if RBS pays 1bn for a year's insurance and Lloyds pays 2.5bn for less than ten months it looks like Gordon Brown and Alastair Darling are repaying LLoyds shareholders handsomely (joke) for bailing them out. They should remember that had Lloyds not stepped in to bail out HBOS the county's finances would have collapsed (their words) and New Labour would have gone with it (my words). Who is doing the owing here?

I like the four to five year period for setting up TSB (where have I heard that name before?) and think that it is a good compromise from Neelie Kroes to prevent fire sales.

I am a Lloyds shareholder, and I have been asked for shares at 1.73 in January (I said no thank you), shares at 38p two months later (I said yes) and I aam now to be offered a massive 2 for 1 at between 30-40p. I have run out of cash, and I am going to ask my bank (why none other than Lloyds TSB) for an overdraft to buy their shares.

I would have thought you couln't make it up, but Stephen King probably already has. "Nightmare on Downing Street"?

Atrisse wrote: "How do those faceless suits in the Brussels ivory tower ever come up with this rubbish?!"

And then proceeded to defy logic and experience to claim that an industry dominated by just 4 (count them) companies is actually very competitive. Perhaps he/she is unaware that these "competitors" are actually what is known in the trade as "subsidiaries"?

A cynic might suppose that atrisse has a pre-determined view of any action by Brussels. The FACTS are that Brown was quite happy to create a monster ready to fleece its customers - the citizens of this country depend on the Competition Commissioner to protect them from this beast.

Who are the faceless suits in this circumstance? Neelie Kroes. Not exactly faceless, then... And as for ivory towers, just remind me who are going to pay themselves 10-figure bonuses again this year?

1. At 2:59pm on 02 Nov 2009, branditony

Does the phrase 'good money after bad' have any relevance?

Silly me I thought we lived in a free market. So the banks have a monopoly then or cartel isn't this against the law? Gordon promised competion laws would be waived to allow Lloyds to save HBOS, thus saving a run on the pound and possibly another Iceland situation. Having spent billions trying to unravel HBOS's debt, they now have to hand it over to Tesco's, Virgin? Perhaps if the banks are split up then they will be small enought for santander to take over so we just get one mega spanish bank. What's the point in voting if faceless unelected eurocrats run our country.

Someone might want to tell Alastair Darling that this is being forced on him by the EU. Not a peep on the Sunday shows!

Branditony

I am pondering the same question, only for more shares. The two things going for it are the Government's share of 43% which ought to concentrate their minds and the EU's four to five year period of grace for selling assets, avoiding fire sales. I will take them up in hope, and plan to sell tranches at varying prices up to xxxx. The range of the good bank was ten pounds on 1 May 1999 and of the bad bank 30p just this March. I am not holding my breath on the first figure, but anything north of 50p with only selling expenses is a bit like backing Sea the Stars. But then as a long term Lloyds shareholder it should be obvious that luck is not my strong suit.

The way it works in the UK is that more banks will result in more competition leading to cheaper mortgages and higher house prices.

" But RBS shouldn't be too badly damaged by the break-up, because it will have four to five years to flog these assets - which means they should fetch a decent price, not a knockdown, fire-sale price"

Robert, what makes you think that "these aaa'ssets" will be worth more than a firesale price [ie. 8 pence per kilowatt hour] five years from now?

The creaaaAAAture from the bottomless AAAbyss is in front of us ,not behind us.


Baaankstirs will carry on charging a commission for managing unrecoverable wealth at notional allies in wonderland book value ,in the the same way that spiders carry on spinning when their silk pouches are empty, or bailiffs repposessing despite their recovery costs being more than the value of the repposessed items.

Our pollytitians are still being mesmerayesed by banksterr lunatics.

What about the customers? Will we have advance warning so that we can move our accounts - I do not wish to bank with Tesco, Virgin, easyJet, Ryanair, Stagecoach or any other of the government's cheap and cheerful cronies - or should I remove my money now?

I'm increasingly confused... As I understood many moons ago Halifax had a rights issue, and all the commentary was that this was to raise an unprecendeted £4Bn to give "plenty of spare capital". Clearly this was not quite accurate. Lloyds, up till then an apparently strong and prudent businees, took over because HBOS was effectively bust. This looked like a bad deal short-term for Lloyds but the upside was that, post recovery, the huge bank would have economies of scale, diversity of business etc. that made it attractive to mount the rescue. A bit later it appeared to be an even bigger rescue, and an even worse short term deal. Now the element of the deal that made it attractive appears to be being taken away. It seems to me that along the way investors have been misled.

If they are selling off elements of the investment banking, does this mean that Coutts is also under the spotlight for sale?

What I find bizarre about all of this is the ongoing tax treatment. We in effect have a bank (or series of banks) that make foolish errors of judgement and need bailing out by us the taxpayer.

In this example bank 1 looses say £2billion, gets recapitalised by the taxpayer by £2billion, and then claims tax losses of £2billion against future profits. All of which might help the shareholders, but does nothing for the poor taxpayer that has just bailed them out.

The situation gets worst, the bank is now part of government scheme and is told to pay £1billion a year in insurance to the government. The same bank then uses £1 billion of the capital we have just given it, to pay the £1billion insurance premium and claims another £billion of tax relief against future profits.

It just seems madness that we the taxpayer give funds to the banks, which are then entitled to claim relief against future taxes that should be coming back to us the taxpayer.

Surely somebody should be arguing that if the banks have had to call upon taxpayer support, then the insurance premiums and losses so generated should not be allowable deductions for tax.

This would at least give those banks that have not had to join the scheme some tangible benefit.

Robert,

"But RBS shouldn't be too badly damaged by the break-up, because it will have four to five years to flog these assets - which means they should fetch a decent price, not a knockdown, fire-sale price."

Still counting on that recovery in the next 5 years then?
Insurers haven't been hit yet because the public haven't started cutting down their income to that level yet.....and I mean yet. Also it's expected there will be an increase in fraudulent claims as people get more desperate.

Lloyds are despreate to get out of the APS because they don't want to over-extend their lending, something which the Government can pressure them to do while they're in the scheme - that means when they leave the scheme they willbe cutting lending - adding to the ever reducing mortgage / loans market.

All these 'grand plans' of Government totally rely on recovery being quick and being substantial. However only a moron would believe this is possible as the trend is for rising unemployment which contracts business revenue, profit and increases the risk of default - making banks more reluctant to lend.
Increased militancy amongst trade unions (because the postal workers are just the start) will bring further problems to the Economy as the worker faces down the ruling classes as to who will suffer most if everything stops working.
....and this is before they've even started on public sector cuts!

The banks are playing games, they nod their heads like nodding dogs when Darling is in the room, but none of them believe recovery is coming soon and they're battoning down the hatches. You can see by their investment behaviour being heavily in fixed rate bonds - i.e. expecting low growth.

The real danger is this split is simply lumbering taxpayers with a dead pool of assets which are going to default eventually (even if they don't look like they are today). Is the Government going to start turfing people out of their houses while the 'good banks' go back to normal and start paying themselves huge bonuses again - now free of their worries?

I've never heard so much nonesense as I heard this weekend from Government - this plan is almost as good as Chamberlain's "I'm off to Germany to get some peace".

I'm now taking bets as to who brings down the Government first, the argument about the green stuff (weed) or the argument about the green stuff (money).

Either way the future is not rosy for Darling et all - green is no longer their favourite colour.

Any truth in the rumour that Sir Richard has ordered a supply of ATMs to put in his planes?

This comment was removed because the moderators found it broke the house rules. Explain.

5. At 3:30pm on 02 Nov 2009, stanilic wrote:

"No split between investment and retail banking then?"

Sadly no.....as Lord Adair thinks it could create more instability.

https://www.citywire.co.uk/professional/-/news/wealth-management/content.aspx?ID=365590

More instability than the near collapse of the entire banking system? - I'd like to see that one.

Who is Ms Kroes? Who voted for her? Who does she work for? In what way is she accountable to the taxpayer and the UK government? This is the first I had heard of her. Answers, anybody, please, on a postcard to dazed and confused here in simple city.

#3. At 3:16pm on 02 Nov 2009, atrisse wrote:

"More competition? More choice? Wha-a-a-at??

How do those faceless suits in the Brussels ivory tower ever come up with this rubbish?! Was there no one from the UK to tell them that our High Streets are CLUTTERED with banks and building societies?"

But isn't that the point, they are not, they only appear to be (same with insurance companies), the same few banks own most of the names you see or use - this sort of break up is not before time.

Can anyone tell me why the banks are charging over 17.5% on credit card balances ?

15. At 4:08pm on 02 Nov 2009, Wee-Scamp wrote:

"The way it works in the UK is that more banks will result in more competition leading to cheaper mortgages and higher house prices."

Surely it could actually have the opposite effect, more banks could mean less available capital in each bank to lend leading to more expensive and/or less high risk mortgages being available thus cheaper or at least no return to the housing bubbles of old.

A little reminder to all those thinking it's good that RBS has 5 years to sell off it's assets

Don't you remember at the start of this recession the '10 years of Austerity'? Surely you haven't forgotten already.

Darling, Osbourne and Cable have all said it - and yet we're expected this only applies to consumerism?
Which insurance companies are looking to purchase at the moment? (and I mean actually looking, not just suggesting it to justify a rights issue to keep them afloat)

The contradictions are coming thick and fast now.

There is talk of opening the money printer at the BoE again because of deflationary worries......and yet we're expected to believe that the next 5 years will be a good time to sell assets??? (Government ones, Tote, Royal Mail etc. and RBS's)

Come on folks, we're either expecting inflation or deflation - we're not expecting both.

If I were more cynical I would suggest the Government are going to print money to provide the funds / boost to purchase these assets.

Common-sense-onomics

Now that youve got that off your chest Robert, how about your take on fractional reserve banking ,how you must be longing to tell us about the BANKING wonder of creating fiat currency from thin AAAir AND THEN CHARGING INTEREST ON IT

DESPITE their HAVING CONSUMED ALL THE RISK CAPITAL IN THE FORM OF BONUSES ,its back to pleaserr can i have sumawe

Maw they want some maw ,certainly how much maw

Is their no end to the governments farce saving measures?

Banking is a Sirwould forrest full of Robing hoods and Friar plucks

25. At 4:34pm on 02 Nov 2009, KennethM wrote:

"This is the first I had heard of her [Ms Kroes]. Answers, anybody, please, on a postcard to dazed and confused here in simple city."

Then you are not very diligent on business or consumer affairs issues then!

https://ec.europa.eu/commission_barroso/kroes/index_en.html

18. At 4:19pm on 02 Nov 2009, TonyC

An excellent point

Many rights issues have been done over the last year and in most cases the reason was either:
a) To bolster capital ratios (for banks)
b) For acquisitions

As you pointed out HBOS did one and then needed bailing out anyway. Lloyds are about to make another call in order to get out of the APS - an issue which is the same amount of their market cap.

I have seen very few acquisitions so far, despite there being so many companies 'ripe for the picking' - i.e. near collapse. Many companies are showing 'good value' and yet there's no interest?

This is because it's all LIES - total and utter rubbish.

They cannot spook the markets by saying "We're having a rights issue to make sure we can survive to the end of the year" - because that will create the inevitable withdraw that will bring on the demise.

...so by their reckoning it's easier and safer to lie. Their mentality is simply to rob Peter to pay Paul and hope you can survive until the upturn.

As soon as the first one goes bust there will be no confidence left - and that will be market wide. This is how depressions start - remember very few banks went bust in 1929, they went bust in the following years starting in 1930 - the reasons were the same as today....

They cannot handle the truth

27. At 4:37pm on 02 Nov 2009, Ruth Whalley wrote:

"Can anyone tell me why the banks are charging over 17.5% on credit card balances ?"

To entice/force you to pay your accounts of promptly perhaps?!...

There has been enquiry after enquiry into banking by the Competition Commission and they have all concluded that there is strong competition in UK banking markets. Lloyds was rightly stopped by the Competition Commission from taking over Abbey National but allowed to takeover HBOS on the basis that it was no longer capable of being a credible standalone competitor.

In fact the past competition has been so strong that in retrospect bank interest margins have been narrower than the risks justified. Customers have benefitted but shareholders (who are often the same customers) have seen the value of their shares decimated.

There are still plenty of major sources of bank services with Lloyds, RBS, HSBC and Santander let alone the multiplicity of smaller financial companies. So why does the European Commission think it necessary for Lloyds and RBS to spin off some small elements of their business to increase competition? Is the only reason that the European Commission is flexing its muscles and wants to be noticed?

30. At 4:45pm on 02 Nov 2009, SpartacusmartyrAAAs wrote:

"Now that youve got that off your chest Robert, how about your take on fractional reserve banking ,how you must be longing to tell us about the BANKING wonder of creating fiat currency from thin AAAir AND THEN CHARGING INTEREST ON IT"

Ahhhh, I've missed you FRB's - you haven't been around for a while.

Are you saying Government takes control (Centralised banking) - or that we return to the Gold standard (Serious devaluation of all assets)?

The truth is they cannot survive anymore without FRB - they're like junkies - if you remove it now they will have serious withdrawls (geddit?)

I just lost £500 on "PLASTIC INFLATABLE" [the steam went out of it in the final straight] IN THE 3.30 AT KEMPTON , can i claim it as a tax deductable in my next tax return .

Why are our pollytitians so in thrall to the conmen good

Post 25. Ms Kroes is a Dutch politician and the EU Competition Commisisoner. She is also generally accepted as the "consumers friend" or at least relative to many of the other commisioners.

https://ec.europa.eu/commission_barroso/kroes/profile_en.html

It was her that forced the mobile phone companies to lower their roaming charges and to start to charge sensible prices for making and receiving mobile calls and sending texts within the EU.

Re post 27. The answer is sadly simple. They do it because they can get away with it and the government does nothing to stop them! As long as people put up with it they will continue to do so.

We have our own currency and we have the Bank of England. We presumably have the FSA and we have the Treasury. So how come some Eurocrat is telling us how to run our financial system?

Has Gordon handed all decision making over to Europe for he seems to rely on their 'support' every time he opens his mouth.

Did he have to ask them what to do during the banking crisis or were they in such a mess they all ran scared.

As if life wasn't complicated enough we now have Eurocrats trying to sort out the British banks. I think they have enough to do trying to sort out Euroland.

This sounds like another too hasty move before we have even got to grips with the problems within the banks. Act in haste repent at leisure again.

Your wife and family are clearly much more important to you than greedy banks, paper money or an electronic blog. I am sure a great many of your readers feel the same way: our thoughts are with you.

From a customer perspective one of the problems with retail banking today is that the old clearing system seems to have broken down, in that nowadays it seems that one can only pay in cheques (and/or cash) at a branch of one's "own" bank (or an affiliate, e.g. NatWest for RBS customers) or pay in cheques drawn on accounts at the 'paying-in' bank. For those of us living in small towns without a branch or affiliate of one's "own" bank we have to rely on the post (risky) or pay special delivery (a rip-off at £4.95, but less risky.) Or of course switch to a bank with a local branch whenever one moves. It strikes me as being much less customer friendly than the old clearing system

38. At 5:08pm on 02 Nov 2009, virtualsilverlady wrote:

"We have our own currency and we have the Bank of England. We presumably have the FSA and we have the Treasury. So how come some Eurocrat is telling us how to run our financial system?"

Because we are in the EU, but more to the point, thank g*d that they are as our own City, our own FSA, our own government, our own investors, our own bankers etc. have made a right pigs ear of things for the last 25 years!... :-(

Cue smiling faces in boardrooms up and down the country.
The cats will soon have got the cream.
Slicing the banks up will make it easier for them to dispose of assets at givaway prices.
Crest Nicholson and McCarthy & Stone owe hundreds of millions to us through their ownership by the likes of HBOS.
So the banks solution? Give them land. Sell off our, the taxpayers, land at givaway prices. There is so much else being given away at the moment that nobody will notice.
Err hello. Why give the land away to companies owned by the banks?
I could do with a new house on a new plot of land.
I could certainly do with an allotment. Or five.
But no. The banks will look after themselves by using the taxpayers money to support the banks bad investments.

Are these companies nationalized?
Nope. Just owned/supported by banks owned/supported by the taxpayer.
These companies will soon be rolling in dosh.
Back in profit. Their directors profit of course..
Just as well there are taxpayers. Or future taxpayers.

But hang on - the whole banking system benefited from the bail outs including Barclays and HBSC - the fact that they did not take the government's shilling misses the point.

All the banks should be broken up, otherwise competition will be distorted.

Problem - How do you stop them re-amalgamating?

And why not just split the shares and issue new shares in the new institutions to the existing shareholders of the old institutions?

Message 24 WOTW

Thank you for the link.

Yes, I agree that a split between retail and investment banking will create more financial instability as it is only the retail deposits which are keeping the investment banks afloat.

My suspicion is that the toxic debts of the investment banks which we are not allowed to quantify must be so large it will take a century of bonuses to clear them up. This is why they want to detoxify those debts by reinflating the bubble.

Unless these issues are cleared up now it will not be long before the whole thing goes pop again: only this time the taxpayer will be completely burned out.

As far as I had thought all Lloyds TSB mortgages are managed through C&G so obviously the only element of value sold with C&G will be its own mortgage book - what proportion of the mortgage market is that for adding to competition?. No point in losing its brand name so can't see Tesco/Virgin being bidders - another Santander aquisition?
As for setting up TSB once again then this could only be done through LTSB Scotland dropping the Lloyds title and seeking to extend into E&W and who would finance that?. Makes no sense breaking up the integrated LTSB retail bank other than the alternative is that LBG sells Bank of Scotland and we all know why Gordon won't allow that. Maybe the SNP will challenge the LBG strategy of offloading LTSB Scotland - that would make for a jolly party north of the border and in No10.

Spartacus

"I just lost 500 pounds on Plastic Inflatable".

Gosh. I didn't realise there were gamblers on this board. I thought they were just people who owned banking shares...

Virtualsilverlady

"How come some Eurocrat is telling us how to run our system?"

The self-same regulator from Brussels who (like her counterparts here) either turned a blind eye last September when Gordon Brown and Sir Victor Blank set up the deal for Lloyds to take over HBOS, and in the process agreed to a clear breach of EU and British competition rules on monopolies, or was in on the negotiations and cleared the bid on the grounds that they could always come in later as if nothing had happened.

The deal was brokered in Sep 08 but not finalised until the end of Jan 09, a gap of almost five months for anyone to have come in and stop the deal. None of them did, nor did anyone enquire about the robustness of the Lloyds due diligence.

In my view the responsibility lies with:

The Prime Minister who sanctioned the monoploy busting deal;

The Chancellor and the Treasury who must have been in on the arrangements (I would like to see the papers for that one);

The Board of Lloyds who were suckered into one of the worst deals in British banking history;

The said regulators in brussels and here, including whatever they call the MMC;

Wise people who are accredited with being in the vanguard of issuing warnings, like Vice Cable - this one seems to have escaped him;

The media, none of whom spoke out about the monopoly and its flagrant disregard for our laws;

Me, for falling for Eric Daniels oft-repeated words that Lloytds was a prudent and strong bank that would easily weather the recession.

This deal was meant to save our banking system, but in the process Lloyds went from hero to zero. From saviour to pariah. It stinks

#44. stanilic:

"................
Unless these issues are cleared up now it will not be long before the whole thing goes pop again: "

+++++++++++++++++++

Agreed. It seems inevitable.

No measures have been taken to prevent a repetition. The same old flaky house of cards 'instruments' are out there. Do the investment bankers think business will take off again as before? I think they do but it is wishful thinking.

Brace! Brace!

Why on earth are the government speculating with taxpayers money on bank shares?

The banks did not need recapitalised they needed liquidity to allow them time to sort the problems caused by the wholesale markets closing.

This additional capital wouldn't have made a blind bit of difference and is not being used to fund assets but just sits there on the balance sheet.

Now the government seems to think that they can milk the banks dry. A better way would have been to get a fair price on the loans provided and then get monies in the normal way through Corporation Tax on profits and tax and ni on bank employees.

Interesting. What about other European Banks? Also, does anyone know how much Deutsche Bank had in Landsbanki Islands hf? I think Deutsche bank is the largest creditor, but facts seem to be hard to find, although I expect there will be a lot more information around towards the end of this month.

#31 and #37 I appreciate your responses to my question in #25 about the mysterious Mrs Kroes (our friend).

She seems to assume some authority over our banks.

I have checked out the links and I am still trying to get there. I am sure things are not as sinister as they seem. I mean there must be some innocent explanation, but I cannot find any line of accountability between us voters and Mrs Kroes. Sorry to be dumb, but where does she fit in? Where is her accountability to us?

KennethM

You will soon be able to ask the same question when we (the 27 EU States) get a Lord High Chancellor of Foreign Affairs. To decide who we should be friends with, who we go to war with, etc etc. That is why Miliband is looking for the job - he soon will be Moribund.

I was just wondering why HMG could not have nationalised RBS as with the Rock and leave Lloyds to stand as with Barclays and HSBC etc., or have I missed something. Maybe something to do with the meddling EU possibly ? as with most things these days. Now it seems the profitable parts will be sold off to, I suspect more overseas, sorry, EUropean banks, leaving us the UK taxpayer with the so called toxic bad banks. I wonder who allowed the banks to get into this mess anyway?

To all of those in the above (people saying i'm a long term shareholder)

Beware of the possibility, as you are aware of the Northern Rock situation, it is not impossible that both of these banks or one of, might not make it..

51. KennethM :
"Where is her accountability to us?"

+++++++++

Isn't she Rijk Protector for Competition inEU?

-Toldyouitwould

# 8. At 3:53pm on 02 Nov 2009, Elemental wrote:
Imagine what it is like being a member of staff at C&G. In the summer they were told that the branch network was closing and they would all be out of a job. Then, a month before this was due to happen there was a review and they were told that they would not be made redundant. Many of them would have made all sorts of plans expecting redundancy which then had to be cancelled.
Now, with this news, their jobs all depend on who wants to buy C&G and exactly what is being sold - just the branches? the existing mortgage book? what about admin and IT staff? computer systems? etc. Hundreds more ordinary working people suffering even more crippling anxiety and uncertainty through no fault of their own."


In spite of Brown's dramatically sorrowful face when redundancy is mentioned, he doesn't care a monkey's. It's one of the sour issues of capitalism. Employees are numbers not people. The social need for work never once enters the boss's heads. Employees can be unplugged and plugged in at the whimsy of shareholders/costs/downsizing etc. No concern whatever for work-study or customer service, nope. We want to cut 10% of the staff costs? Just terminate their contracts. That's why contracts rather than permanent employment are so popular these days.

Neither politician nor boss cares a toss about their employees' anxieties, consequently the health of people - as long as the tax/profits meet expectations. They'll be happier when machines can do the same jobs.

Yet we still live in times when long-term job prospects are important if we are to support families and 25-year mortgages, live mostly stree-free and in a cohesive society. Without that, society falls apart, morale bottoms out then you've got trouble because people no longer care. Why should they?

We seriously need that new thinking: that the beneficiaries of the wealth in society should care for those who produce/give them that wealth. You can still have your capitalism under such a scheme but without the blatant greed. Don't look to politicians in any of the existing parties to know how to achieve it.

What hasn't been changed is the root of the problem. The same financing schemes are still in place and in use. Once the dust settles the banks will be back to bascially undo these changes. A slap on the hand, not any real change in banking and financial services. It will all happen again. Think of the great rewards given to leaders of the banks for system failure and public betrayal. Where is the incentive to change?

#10. At 3:59pm on 02 Nov 2009, PorterRockwell wrote:
" - Atrisse wrote: "How do those faceless suits in the Brussels ivory tower ever come up with this rubbish?!" -

And then proceeded to defy logic and experience to claim that an industry dominated by just 4 (count them) companies is actually very competitive. Perhaps he/she is unaware that these "competitors" are actually what is known in the trade as "subsidiaries"? "

I think you'll find that HSBC, Barclays, Lloyds, RBS and Santander are separate business entities! (Laughing quietly). Get your facts straight!

You think that isn't enough for competition? I'd LOVE to have 5 supermarkets in our high street for the sake of competition!!

And there is no way that just one person, Kroes, could be allowed to reach that decision. She's just the front. Okay?

:D

#51

"I have checked out the links and I am still trying to get there. I am sure things are not as sinister as they seem. I mean there must be some innocent explanation, but I cannot find any line of accountability between us voters and Mrs Kroes. Sorry to be dumb, but where does she fit in? Where is her accountability to us?"

Her appointment is cleared, ratified if you like, at the EP level by all the elected MEP's, who are elected democratically by the citizens of the EU member states.

I hope this blog isn't going to start down a anti EU vs. pro EU route...

53. At 7:52pm on 02 Nov 2009, simpletone wrote:

"I was just wondering why HMG could not have nationalised RBS as with the Rock and leave Lloyds to stand as with Barclays and HSBC etc., or have I missed something."

Pure politics, a (small S) 'socialist' government didn't want to be seen owing most of the banks, it was one of the hard far left ideas of the 1970s to nationalise all the banks, no one wanted to be seen close to that sort of ideology again I suspect.

Hello RP, hope you are dealing well with family matters, i'm sure a report on banking has done you a power of good.

The problem with selling off regional branches is that they will still havebe the same "monopoly" power in their area. There is no more reason for them to lend to local SME's rather than take easy return from bonds and they are still likely to come to interbank agreements and dependecies meaning that their failure would still be catestrophic.

You only have to look at the way Richard Branson's virgin group, one of the anticipated waiting in the wings companies, opperates.

Richard Branson was the acceptable face of capitalism lobying for privatising of the rail network saying he could deliver cheap modern reliable rail travel without government subsidies, the reality is that virgin rail continued to depend on billions of pounds of government subsidies and aggresively protects its monopoly. Virgin Airways enterend into price fixing arrangements with British Airways only to avoid punishment as it was it was the one to rat on its partner in crime.
The group started by a using cashflow from a purchasing tax fraud at virgin records. Virgin cola, virgin clothes, Virgin Vie, Virgin Vision, Virgin Vodka, Virgin Wine, Virgin Jeans, Virgin Brides, Virgin Cosmetics and Virgin Cars were all failures. Investors in V2, Richard Bransons second record company, virgin express and virgin blue lost heavily.
Virgin finance's "ethical" climate fund invests in Arms manufacturers, tobacco companies, mining giants and oil companies.
Dispite his pretence to green credentials his airlines co2 emmisions are greater than most African nations.

Do people still think Richard Branson getting together with his pals in parliment, or anybody else with their own agenda would be the in best interest of the economy to own banks.

To me if the idea is for the banks to operate in the interest of the economy, sensibly and under control, then they must be nationalised

God what a never never Land we have created, nothing and nobody seems real anymore, If there was ever a time that we needed a certain Nazarene to parachute down on us and drive out the money lenders it is now...

#27. At 4:37pm on 02 Nov 2009, Ruth Whalley wrote:
"Can anyone tell me why the banks are charging over 17.5% on credit card balances ? "


Good question. Anyone taking out a loan at 17.5% with the base rate at 0.5% would be considered barmy (unless they are so broke as to have no choice).

1) you pay for those glossy leaflets you don't want but they send all the same;
2) you pay for all the defaulting and IVAs going on at the moment.
3) you pay for others' credit card fraud.
4) you pay for any free insurance that comes with the card
5) you subsidise those who pay their balances in full each month. They HAVE to cover you losing them profits.
6) the price of plastic is going up all the time.... :)

What's even better is that merchants pay a fixed fee per transaction plus a few percent of the price of your purchase.

Best thing is to give them up unless you pay off the balance each month. Then only the merchants get fleeced.

For anybody who may feel that i have been unfair in highlighting just the virgin group, here are a few facts on the other heavily repoted possible buyer. In 2005 Tesco and unilever were labled as the two most unethical companies in the UK. in 2006 it was aledged that factories supplying it in Bangladesh used child labour, paid as little as 5 pence per hour and staff were required to work 80+ hours per week. In 2009 it was accused of breaking promises by still demanding 80+ hour weeks at 7 pence per hour pay.
Milk suppliers regularly claim they are forced to sell milk at a loss, of the retail price of milk over the last 15 years, the farmers share have been reduced from 60% to 35% while at the same time the retailers share has increased tenfold to 30% . Another example is in 1991 potatoes were bought from the supplier at 9p per kg and reatiled at 21p per k, by 2000 the supplier price was still 9p but the retail price rose to 47p.
The company also charges an admin fee to staff wishing to donate to charity.

Whilst this is being done wouldn't it simply be more honest to nationalise RBS? After all with the taxpayer owning 84% that is what de facto is about to happen. Under normal rules don't you have to bid for all the shares when you go over 30% ownership?

If the government wants a bank to lend it will then have its own and could direct it to offer mortgages with minimum deposits ( say 15 or 20%) on good terms and lend to small businesses. Doing this could help the economy recover. It would also help Alistair Darling fulfil some of the political ambitions of his youth.

This is actually to Robert Peston... or anyone who may be able to answer my question really. But does anyone know in real terms how much profit if any, we as tax payers stand to make from all the money that has been pumped in to the banking system since this crisis started?

Thanks Robert for again explaining things so lucidly.

Now we will see if this EU that we have been dragooned into will save us.

The EU is now deciding what to do with our banks, as we and our elected government are apparently incapable.

However, we are not in Euroland, so there is a major risk that the EU aka Fourth Reich will use this fine opportunity to achieve its fundamental objective; destruction of the UK who once stood alone against it as a separate entity. We shall see.

Here we go again. More EU directives aimed at totally wiping the UK off the face of the earth.
Is there nothing these meddling imbiciles wont stick their dirty little fingers in.
The reason we are having trouble with the RM is because of 2 EU directives telling us that OUR mail system was uncompetitive. "Sell the profit making bits and we will leave you alone".
The sooner we leave the EU the better.

Simple questions.

When is all the dirty laundry to be exposed?

Can we really expect 'joe public' to swallow another £25 billion on top of previous similar sized bailouts, without knowing what it is propping up? What is it now? £6000 'per head' in total?

Lets see the details of what RBS (and Lloyds, HBOS and Barclays) investments and loans they messed up on!

MP's were exposed (their expense claims) and the point was made that nobody should be above the law.

So why should bankers and their institutions be above the law?

There has got to be a little bit more 'spine' and 'resolve' in both the Treasury, the regulators and the Bank of England or has HM Gov got something to hide?

OPEN THE BOOKS. Let's see the dirty laundry behind the accounts and the balance sheets and above all, let's see what is being KEPT OFF THE BALANCE SHEETS!

Any newspaper or media journalist brave enough?

Can anyone tell me whether the big bonuses are paid to City Bankers or High Street Bankers. I suspect that it is almost all to the former. And that rather highlights a problem. When I see screaming "Bankers Bonuses" headlines the image conjured up includes the retail banks, with their fabulous services and lowly paid workers. The rich and powerful City Bankers should be very happy with the use of the generic term banker. And I would be surprised if they discouraged it.

Lord Turner comments on the problem of instability caused by splitting the City and High Street banks and I'm sure he is right. Cutting a cancer off a spine is likely to cause paalysis for the patient. Chemotherapy is probably a better treatment but has very serious side-effects for the patient.

Ian-the-Chopper


Ian

So here we are with half the information, perhaps two-thirds on the Lloyds rights. We know it is 13.5bn and it has been strongly mooted that it will be 2 for 1 (buy one get one free!). What we are missing, and here you are genius on the board, is what would the price be to raise 13.5bn at 2 for 1?

The amounts are getting a bit scary now and any help you can give would be much appreciated (ps I amm trying to avoid the need to arrange an overdraft with Lloyds to buy their shares. ...).

I am an RBS customer who used to live in Scotland but now dwell in the Home counties. Quite a few years ago RBS allowed customers to retain their sort code and account number when they moved to other parts of the UK. So, I know that in a few years time I will be an ex RBS customer as for some bank transactions you do need to go to your local branch.

Yet Stock exchange analysts routinely use the number of customers and any growth in these to gauge their market worthiness amongst other measures. The forced sale of branches could have huge implications for RBS future market share and it's profitability. I do not understand the sale of all the insurance business (I first thought it was Direct Line, Churchill and Green Flag, but I also saw RBS Insurance mentioned), as a common deal of mortgage and home insurance combined gives the customer good savings.

Now RBS will be left with some investment banking, retail banking and ABN Amro - no conflict of interest here from the Dutch Commissioner then! If ABN was to be sold the Dutch government and Euro Central Bank would have to step in and that would not do.

The only way I can see RBS making sizeable profits in order to repay the taxpayer is to let rip with the investment banking, as the rest of the business at best will break even. Casino banking at a scale that would bring tears to the eyes of a Goldman's staffer!

PS now that RBS is a small bank will all the top execs have downgraded pay packages as a result? Thought not.

My best wishes to you and yours Robert, and thanks for the update.

The fact that this in no way serves to redress the inherent weakness in excess profit-based banking, becomes more apparent than ever.

Just listenning to the ex-risk manager at HBOS on Radio 4!
Bullies and Nutters in charge!
Delusional leaders.

Margins.

No one trusts them any more so it'll be robbery with threats or a gun, and it'll be the poor and underpriveledged who will miss the money that's already been given to the rich, and will continue to be given to the rich.

Bilderberg!

Ms. Kroes I presume is Dutch. RBS in their infinite wisdom, thanks to Fred the Shred bought ABN Amro, which is also Dutch and full of more toxic assets than my stomach after a Doner Kebab. Rather than shredding Fred's old stomping ground, she should be rewarding RBS for bailing out the Dutch Banking system - shouldn't she? There is no justice in the world except I foolishly didn't buy shares in RBS - hooray!

Since it seems we will only get sporadic postings from Bobby, my comment is to do with Lord Myners fears (a bit slow) concerning HFT (Hi-frequency automated milli-second market trading between computers).

In August or September, AIG shares on the US market traded the equivalent of 8 times -for every share- in one month. No wonder the stock prices are going up, it is a self-perpetuating rise (until it falls off a cliff).

The automated trading has been puffing lots of warm air into the markets. Lets hope your pension fund wasn't sucked in (of course it was)

Regards,

The banking two step- - 15 years ago they were all bought up now they have to be sold off meanwhile Santander swallows three of our banks - is it 'cos they're Spanish? very fancy footwork- three forward -two back! Olé!
Oh hell!

You make a fair point grumpynotoldman and this move indicates that we have failed quite spectacularly in getting our own house in order if the EU feels it incumbent on them to help sort out the mess. Us the so called financial capital of the world!
Labour have already claimed this as their idea and the Tories no doubt will do the same. This is even more pathetic, especially as both have tried to keep arms length from Europe.
There are many problems with Europe, but there are times that we should be glad they take an interest (though probably in self interest to help Europe in general). We could do worse than actually get involved with Europe rather than making some grand statements about bailing out the banks and then pretending to have saved the world, as Brown did.
Now lets tackle the greed in the banking system, or do we have to wait for Europe again?

good to hear from you.
Tony - StH

It seems like the tax payer is providing substantial funding simply to enable these two monoliths to avoid being nationalised or go under.
They can't afford to pay into Gaps and can't afford to stay out of it so we'll give them a randomly calculated x billion so they can do what they want.
Without a significant manufacturiung base we are a rice paper economy laid on artificially laid sand surrounded by angry seas just waiting to wash it away.
Cheap imports built with cheap labour is not fair competition with our own manufacturing base. The global economy is not a level playing field and we should not play in it.

The shareholders of the old Lloyds TSB have a justifiable right to be extremely aggrieved at their treatment by Brown et al. Alone of all the major UK banks (with the possible exception of HSBC), they had done little wrong through the credit crisis, yet they emerge as two-times losers.

They were strong-armed into rescuing decrepit HBOS, with the promise of a stronger market position and a guarantee of anti-trust immunity which turns out not to have been worth the paper it was written on. Brown et al turn out to be little better than con-artists.

# 36. At SpartacusmartyrAAAs wrote:
I just lost £500 on "PLASTIC INFLATABLE" [the steam went out of it in the final straight] IN THE 3.30 .

++++++++++++++++++

Hmmmm. Your girlfriend let you down again, eh?

Probably cooled to you. You know what happens to steam then!

Toldyouitwould

Cognova wrote:
The shareholders of the old Lloyds TSB have a justifiable right to be extremely aggrieved at their treatment by Brown et al.

I am TSB heritage employee, still working for Lloyds and sorry to see the TSB brand go but we are too big. Sentiments aside, we could have turned a blind eye to RBS/HBOS but because of the huge dependency on the finanical services industry in Britain, Brown was never going to allow our banks to hang out to dry as the BOE did to Lehman Brothers in the USA. The impact of doing nothing would have been potentially catastrophic. The Government acquired approx 43% holding in Lloyds Banking Group in Janauary. In May, LBG was the first British bank to repay a substantial sum to HM Treasury so the shareholders do understand this difficulty. LBG chose not to continue to participate in GAPS because the Government’s stake would have increased to approximately 62%. Today is hopefully a major step towards the objective that the government and LBG operates as a wholly privately-owned
self supporting commercial enterprise.

I think it is about time that the Prime Minister and the whole cabinet were paid in LLoyds and RBS shares, instead of money. They would soon make sure things got going again!

I would like to comment from the ordainry workers of the banks prospective - We dont get massive bonuses if any - as reported in the media - but we feel just as persercuted as the bosses and we have done nothing wrong- what everyone forgets is the ordainry workers of the banks are taxpayers to so are we now self employed ??????

If Lloyds management hadn't been so greedy or thought they were the smartest guys in the room, once they had realised HBoS was an absolute dawg, they should have told the government they were going to split into good-bank/bad-bank themselves -and the Govt. could have 100% of the bad-bank (the HBoS bit).

But I still think Lloyds foolishly believe they can make a fortune out of this.
If I was a shareholder I would be revolting............ (?)

I see you have given a few of the confirmed name changes. It may seem a superficial point to some, but resurrecting aspects of our banking past may well be the way to restore our banks to the level of national and international respect they enjoyed before the casino mentality took hold in the City.

Acronyms like HBOS, TSB and RBS could be on the way out in Scotland at least, so why not go back to happier times? Trustee Savings Bank of Scotland has a trustworthy ring to it. Royal Bank of Scotland sounds classier than than the spivvy RBS - OK, not so much a name change as a dropping of the acronym. And ditch Natwest for the solid National Westminster Bank. Back to august institutions which command respect rather than attract derision.

Robert,
Instead of commenting ( the easy part )you are now given the opportunity to run a bank. The LBG website suggests it will set up a new Bank ( TSB Group ? ) based on LTSB Scotland, C&G, IF and maybe 250+ LTSB branches in E&W. Given that LTSBS is the third equal bank in Scotland, LBG commented earlier this year that it was to close C&G branches as fewer and fewer people were visiting them and IF has never set the world alight. You are then offered 250 of LTSB's least profitable, worst positioned, poorest maintained branches with least potential. I say branches as the Beeb is quoted on its site as saying the customers of these branches will be TOLD that their accounts are being transferred, without any choice. Except, of course they will rebel and stay with LTSB,so what new customer base south of the border.
All this is in the name of added competition and to get Darling Gordon some sort of accolade ( aside from Nellie undermining British banking even more ). Will you put your money where your mouthh is? Comment please.

I feel sorry for Lloyds. They were almost blameless compared to RBS, HBOS, investment bankers, politicians ...

Why not just sell off RBS and return Lloyds to what it was before it got involved, or arms twisted by the government, with RBS?

Whether by accident or crafy design, the Labour government, yet again is going to sell more of the family silver silver. it will be the crown jewel next.

If RBS sells its insurance businesses to a company who already does that sort of business, won't there be a danger of another monopoly?

#59 Boilerplated

I just guess I am old fashioned. I just happen to prefer democracy.

My Scottish Endowments have failed. Pension? what do I care about banks anymore. I wish I had kept my money under the bed never paid any tax or NI.
The biggest social disaster of our time all caused by the sad Scottish fraud Gordon Brown.

The problem with many of the government's actions is that they have not been thought through as New Labour is not strong on long term strategic planning.

As a result we tend to stagger from one crisis to another as the government tries to find a solution.Unfortunately each "solution" involves greater national debt and an increasing bill to the taxpayer while those who made these failing decisions line their own pockets with Taxpayers' money.

Unfortunately, time is not on our side and while decisions are being made the state of the nation gets worse.This mess is compounded when many of the decisions taken are wrong.

This view is reinforced by the fact that while many other countries are coming out of recession the UK is not.

It's said that if things don't alter they will stay as they are and as the bonus culture and their associated toxic debts are still with us, it seems ever likely that the UK will be rocked by another greater financial crisis i.e.national bankruptcy.

Only time wil tell if this is true.

This is rich comming from the organisation that has yet to heve its accounts signed off and that is run by appointed dictators who are obviouisly hoping that the parts of RBS and Lloyds that will be sold off will be picked up for a song by some European bank. Hopefully after the next general election UKIP and the BNP will have sufficient MP's to pull us out of Europe and tell the unelected demigods to get stuffed. It seems to me that every time I see a comment from Europe it is to the disadvantage of England and the UK. Why was the idiot Brown not told when he threw money at the banks that his friends in Europe would not like the forced marriage between HBOS and Lloyds. Makes you wonmder who is running this country, parliament of the EU commission.

So the dictatorial mandrins in Brussels are at it again. There are those of us who did not want Brown's solution of forcing HBOS into Lloyds but having some foreign politician telling us how to run our banks takes the biscuit. However the EU seems to think that it runs our country and I surpose that Blair and Brown have given them the idea that they do. Time to vote UKIP and get out of the criminaly run EU that has not had its accounts signed off ever and has the cheek to tell us how to run things.