Is RBS bust and they are not telling us? Part two

Today I thought I try and concentrate on a more positive picture of Royal Bank of Scotland (RBS). First, the British economy is going to need a counterweight to the new domestic banking giant Lloyds Banking Group. A diminished or disappeared RBS is not what we want in competition terms.
RBS still has some massive assets. For instance, I have been a NatWest customer since student days and I have been impressed how cheery the Potters Bar branch has been despite the uncertainty.
The bank's foreign assets, especially the U.S ones, should be kept. I thought it was a mistake to sell the Chinese interests just because cash could be easily raised. The original deal made a lot of sense.
The RBS brand is well-known. I know scorn has been poured on Fred the Shred's sports sponsorship activities but again these made sense, if the aim was to become a global bank.
RBS chairman Stephen Hester has been here before. I suppose he did not personally sort out the aircraft leases of Abbey National but a lot of work was expended in sorting out the mortgage bank. He delivered up the bank to Banco Santander, which was possibly not in the national interest, but it did sort out the problem.

I think RBS is bust but nobody is telling us.

In the old days the Bank of England used to take its time sorting out a collapsed bank such as Johnson Matthey and in some cases it would make a profit. The official
scheme is for Royal Bank of Scotland (RBS) to keep on lending, sort out the toxic stuff, make profits and then reduce the British state holding in the bank to a more reasonable level. However, it might be that RBS is bust and would need the tender treatment of the Bank of England reserved for collapsed banks of yore.
For instance, if we are wondering about the future of the City of London, then we might have to let Edinburgh as a financial centre look after itself. I think it could survive the wounding up of RBS.
Would New Labour and the Scottish National Party (SNP) allow the dismantling of RBS, which is about to take a £500m hit on Cattle's according to the Sunday Telegraph, just to save a few billion? Obviously not but if it is £100bn, then there might not
be much choice. Perhaps, the regulator Financial Services Authority (FSA) could fudge
the issue for a few years.

Fred the Shred walks the plank!!

People will wonder how did a massive, proud organisation like the Royal Bank of Scotland succumb to nationalisation. Buying Dutch bank ABN Amro was in retrospect a very bad idea but it was obvious that Fred the Shred wanted to put one over Barclays,
which set the ball rolling. This year's £12bn rights issue was again in retrospect not enough capital but Fred the Shred should have perhaps gone then. However, he should certainly have been replaced in the negotiations with the UK authorities.

It is thought that the UK government taking control at Royal Bank of Scotland (RBS) and at Halifax Bank of Scotland (HBOS) will put a dent in the SNP's ambitions for Scottish independence. Perhaps, the party will make a bit of a comeback asking for representatives on the respective boards.
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Apparently, Gordon Brown and Alistair Darling will say there will be no state interference but if the state holdings are in place for a long time, then there will be government control.

UK stocks are taking a bit of a battering today.

The FTSE is down 7 per cent this morning and so UK stocks are taking a battering.
Royal Bank of Scotland is down almost 15 per cent to 81 pence. This is despite the UK government bailout plan, which was allegedly leaked by the authorities earlier in the week and which put bank stocks under so much pressure. These stock market falls will affect the plans of many small investors. Ages ago I saved in a long-term investment plan for college education and I think the value has just been
shredded. I suppose I could resume investments but the British stock market is (was) quite dependent on the high dividends paid by the banks. This was especially true with income funds.
Meanwhile, if you need an accountants in Bromley there is the local firm Hammonds (www.hammondsaccountants.co.uk)
There has been some quite positive comment on the UK government bailout plan, which is seen as more comprehensive than the US one. Perhaps Gordon Brown and Alistair Darling should be applauded but they are responsible for the tripartite regulation of the banking sector, which has unnecessarily complicated matters.

It looks pretty bad for share markets at the moment.

It looks pretty bad for share markets at the moment. Apparently, investors are not impressed by the rescue of Fannie Mae and Freddie Mac in the United States. Here, at home in good old Blighty I am worried that my modest portfolio is going to become
even more modest. The Daily Telegraph's Tracy Corrigan writes today that "The British banking system seems in a dreadful mess." She says that Alliance and Leicester is a drop in the ocean for Santander, the second biggest bank in
Europe.

I would recommend that bank shareholders lie down a bit and ponder why did they let those overpaid executives get away with it. There were siren voices all throughout
the past few years.
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I wonder what the main shareholders are planning to do with "Fred the Shred" at Royal Bank of Scotland. However, you have to hand it to RBS. The Scottish bank got its
capital raising/rights issue off first in the queue and out of the way. Now RBS is in a hurried phase of selling off unwanted assets.

PS. I really like Tracy Corrigan's articles.

How was the credit crunch for you? Part two

In the previous instalment I now realise I was perhaps a little optimistic in saying that the worst will be over this year. The recent share price performances of Royal Bank of Scotland (RBS) and Bradford & Bingley (where the missus has 250 shares) have been terrible. www.searchaccountants.co.uk Hopefully, the banks will weather the storm but it cross-finger time on whether they raised enough money through rights issues.

The rights issues show that the British banks are very worried about the economic outlook and apparently there has been talk of a perfect storm. Alistair Darling seems to fall flat on his face when he suggests tax changes (in reality increases).
Being Gordon Brown's poodle might make sense politically for the Great Leader, but it
is terrible in terms of requiring a UK chancellor to have enough credibility to sway
financial markets.