Coffee House

Selling RBS

16 February 2013

3:17 PM

16 February 2013

3:17 PM

The state owning banks is not a good thing. It is, as the annual row over bonuses at RBS demonstrates, very difficult to keep politics out of the running of the business. So, it’s encouraging news that the Treasury is moving to sell the government’s 82 percent stake as soon as possible.

Today, the Mail and The Independent report that George Osborne is considering simply handing over the shares to taxpayers, who would then be able to sell them when they at a time of their choosing. As I wrote earlier this month, Osborne is very keen to avoid a row over RBS bonuses in February 2015, just three months before the general election. The return of RBS to the private sector would also be a politically potent symbol that the coalition has guided the nation through the worst of the economic storm.

But one thing the government might well do is sell the shares in tranches, to avoid depressing their price.

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Show comments
  • paulus

    Your not listening to what he is saying they cant write down the debts as they are the only equity the banks have. The entire economy was fuelled upon debt based upon an imaginary valuation. You just have to wait until reality catches up with it.

    In one sense you could just say their is nothing there so we can all just go home. It isnt real. Or you could go back step by step deleveraging it the same way you got into it.

  • Derek

    Erm, who pays back the debt that was taken on to buy the equity?

  • Daniel Maris

    But is it really established that private banks are “better” than state-owned or co-operative banks. If you google on this I think there is no clear evidence.

    For instance you get this sort of thing: *ttp://www.kfacts.com/uploads/File/IAES.pdf

    State banks may be less efficient on some measures, but they may be far more cautious as well, not necessarily a bad thing in a bank.

    I think government policy should promote a good range of different sorts of banks: privately owned, state owned, regional, sector-specialist and co-operatively owned.

    • Makroon

      Judged by it’s actions, Government policy is to facilitate the takeover of the entire building society sector by the (well-known for it’s appalling level of service, and Spanish practices) Banco Santander.

      • Daniel Maris

        Having had dealings with Banco Santander I would like to second that comment on Banco Santander. They are absolutely appalling. You can’t get a sensible answer out of them and even when they send you a demand for an alleged missed payment which they subsequently admit was completely wrong, you’ll get nothing more than an acknowledgement – nothing that a human would recognise as a proper apology for the waste of time, the expense and the anxiety you were subjected to. Please people, take note and tell your friends what people with personal experience of the Bank say about them.

  • David B

    It is vital the shares are sold do some of the debt can be paid off

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      Noone can pay down the debt. RBS has a bigger balance sheet than the UK. They have FAILED to write down bad debts because it would wipe out Equity. Commercial Property LOans alone are horrendous

      • David B

        I mean the funds borrowed to bail out the banks the is currently hiden of the national balance. As for RBS loans to commercial sector, the sooner they realise these loans are unrecoverable and start writing them off the sooner the economy willl start to move forward

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    There is nothing wrong with the State owning a Bank. It is PRIVATE creation of CREDIT that is wrong. The Bank of England is a State-owned Bank and it is this bank which is propping up the whole Banking System by transferring the liabilities of PRIVATE Banks onto taxpayers. Giving away shares in RBS will not rescue RBS when it goes belly up – they were burned with Rights Issues in 2008. Oh, I forgot the Private Sector employs brilliant bankers like Fred Goodwin, Eric Daniels, Andy Hornby, Adam Applegate, Bob Diamond, Victor Blank, ………Our revered government says it cannot control RBS with 82% equity but expects Private shareholders to be able to do so none of whom would have 82%. It shows Companies Law is not suited to controlling Banks that CREATE CREDIT and expand Money Supply

  • Jupiter

    Time to go back to the gold standard

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      For a country without gold – it is No16 behind Portugal in gold stocks that is impractical

      • David B

        Thanks Gordon, time for the Ed’s to apologise again

  • alexsandr

    or we forget the banks and move to peer to peer lending. Funding circle and zopa are lending more and more. Even the government is lending via these vehicles now.
    The old banking model will be as dead as woolworths in a few years time. Why spend time worrying about them?

    • David B

      You are correct. Peer to peer lending is the only show in town for the SME. There are some very good sources coming on line over the next few months

  • dalai guevara

    Simply ‘handing over shares’ demonstrates that RBS is in fact worth nothing. Given that this is the case, and comparing that scenario to any other company in private ownership, how can you justify paying even one penny of bonuses?

    Out of which pot of money are these bonuses taken? Unless you wish to further reduce the company’s assets, why pay anything? Can we please just stick to ‘what the market would do’, ie no profits, ergo no bonus?

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      Lloyds has NO DIVIDENDS for Shareholders since 2008 but Bonuses for Staff

      • Andy

        What pisses me off is how staff in all banks have looted the company at the expense of the Shareholders, who own the bloody thing. No bank should pay out MORE in bonuses than it does in Dividends. And it is the shareholders who have been shafted over the last 5+ years.

        • The Laughing Cavalier

          Well said. It could be said that the behaviour of bank management has been a classic marxian supplanting of of the rights of capital by the labour force. Not only that, shareholders were induced to subscribe to the fund-raising share issue by a blatantly dishonest prospectus.

      • HooksLaw

        Lloyds Group you mean.
        Lloyds TSB shareholders had a chance to vote down the take over of HBOS engineered by Brown to save his neck but did not – despite all the evidence to show it was a bad deal.
        Perhaps the private shareholders should sue the institutions who voted it through.
        Perhaps pensioners should sue the pension funds who were so gullible.
        Perhaps taxpayers should arrest Gordon Brown.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          I voted against as a Shareholder of both Banks but NEITHER Prospectus revealed that HBOS had been given £60 BILLION by the Bank of England in March 2008 to keep it afloat. That Lloyds repaid the £60 billion in September 2008 just after the vote. Not a Word in either Prospectus which is a Criminal Breach engineered by the Government

  • David Lindsay

    Earlier this month, none other than Nigel Lawson for the whole of RBS to be nationalised, so as to force it to lend to business. That’s right. Nigel Lawson.

    But he was still only halfway there. Investment banking and retail banking should be split completely. All of the banks should be turned into mutual building societies, ironclad as such by statute, the same Statute Law that already forbids building societies from engaging in investment banking.

    Apart, that is, from the public stakes in HBOS and RBS, which should indeed be increased to 100 per cent. Those are permanent, non-negotiable safeguards of the Union, as public ownership always is.Therefore, the profits from each of those stakes should be divided equally among all the households in the United Kingdom.

    • Fergus Pickering

      All the taxpayers, I take you to mean.

      • David Lindsay

        No, they are owned by the nation as a whole.

        • alexsandr

          they should give the shares to those who paid more than (say) £1000 tax last tax year

          • David Lindsay

            Impossible to know, because everyone who pays VAT is a taxpayer. And your figure is arbitrary, as any such is bound to be.

            No, the profits from each of those stakes should be divided equally among all the households in the United Kingdom.

            Practically no administrative costs there, for one thing. And, for another, a terrific boost in spending power the length and breadth of the land. Every year. Binding the Union.

            • HooksLaw

              Brown is the worst chancellor ever. The running of RBS and LBG has nothing to do with the government despite its shareholding. Did the then government design the cars British Leyland sold (or not)?

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          We have UKFI owning Bradford & Bingley HQ in BIngley and it looks like it will be a monument to folly for decades to come…….http://www.thetelegraphandargus.co.uk/news/4401245.Former_bank_HQ_to_close___as_name_to_go/

          • David Lindsay

            The paper fiction of UKFI demands to be discontinued. It was only ever one of New Labour’s numerous throwbacks to John Major’s “next-step agencies”. As UKFI itself has said, pretty much in so many words, no one is ever going to want to buy the nationalised banks, so they are going to be in public ownership forever.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Good. Private Banks should NOT control Money Supply.

            • David B

              UKFI is Gordon Browns construct. As for the banks get rid of the rubbish on the loan book and they will sell. After all Northern Rock sold

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Unwinding it crystallises losses. You clearly have no financial nous

        • HooksLaw

          No they are consumers, not wealth creators. Discretionary spending is not tax paying.

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      If you wanted the State to own HBOS you should have told Gordon Brown to buy it instead of destroying Lloyds which has paid no dividends for 5 years; has now to lose £1.25 billion in giving away 632 branches to The Coop and provide Management and IT Systems so the Coop can run branches it cannot manage and have 4 million customers forcibly transferred to the Coop because the EU makes that the price for Lloyds Shareholders being raped by Gordon Brown

      • David Lindsay

        The customers are now the shareholders.

        As it should be.

        • RobertC

          As in the case of Equitable Life?

          • David Lindsay

            As in the case of Northern Rock, in better days. Far, far, far better days.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Northern Rock was crooked and ran a Labour slush fund

              • David Lindsay

                Differing only in party from the City, then. Gordon should have just let that go.

                • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                  The Coop has no capital. I should be allowed to have Lloyds Branches on the same terms – £1.25 billion subsidy from Lloyds plus free use of Lloyds IT and Online Banking to port Coop systems across, and compulsory transfer of 4 million Lloyds Accounts in Summer 2013 – first to TSB Plc then to Coop thus splitting families and customers with multiple accounts. Why not do the same to Tesco and compel them to give 500 stores to The Coop at Tesco Shareholder expense ? This is Expropriation

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Equitable Life traded while Insolvent just like HBOS

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          NOt really. HBOS was forcibly merged into Lloyds Bank by Gordon Brown. Last time I looked Shareholders owned 100% Lloyds Banking Group and the UKFI owned 41%. You live in a dream world

          • David Lindsay

            No, the branches that are now part of the Co-op.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Theyv are NOT part of the Coop. the Coop has no money and it is not clear this stupid deal will ever complete. I am sorry you are cut off from mainstream financial information in your location

          • Andy

            Indeed to the great disadvantage of Lloyds Bank shareholders.

            RBS should be broken up and the bits sold off.

            • David Lindsay

              No one wants to buy it.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              You cannit break it up without assigning a value to its Portfolio and Derivatives Book which would probably leave the Bank insolvent and the taxpayer with a Toxic Waste Dump of say £1 Trillion. The Sum of the Parts is worth LESS than the Bank RBS currently trades at. The same is true of most banks. The Netherlands nationalised another bank a day or two ago – they have 2-3 big nationalised banks now. Germany has spent most in the EuroZone propping up banks

    • http://twitter.com/Shinsei1967 Nick Reid

      When you say “forced to lend to businesses” I presume you mean it would be forced to lend to HMV, Woolworths & Jessops ?

      • David Lindsay

        Imagine if someone had been. And if that someone had been accountable to Parliament and scrutinised by the media.

        • David B

          Gordon Brown was supposed to be that person, but his party were sold on his hype to call him to book

          • David Lindsay

            Gordon Brown was supposed to have been forced to to lend to HMV, Woolworths & Jessops?

            • David B

              No he and his advisors should be brought to account for their mismanagement of the banking system

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        HMV was OWNED by Lloyds and RBS

        • David Lindsay

          Blame the Worst Chancellor Ever, then.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Gordon Brown ! Emphatically !

            • David Lindsay

              He and Darling didn’t leave it in that condition.

              • HooksLaw

                You are a dipstick which probably you cannot help but also a fool which you can.

    • Nicholas chuzzlewit

      If you convert these banks into building societies they will not be able to lend to businesses be they small, medium or big. They will only be able to lend for house purchases. Of course, you could create a provision that allows them to lend to businesses but such institutions would be called banks.

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