Monday, 19 January 2009

RBS could lose £28 billion this year

The state-owned bank - RBS - warned today that it might report an annual loss of up to £28 billion. Potentially, it is the biggest corporate loss in UK history.

In today's trading update, the RBS board gave due respect to the "global economic downturn" which hit the bank hard. Market conditions were "challenging". Moreover, the RBS are not alone, many other banks are also in trouble.

However, be not afraid. The RBS assured us that "in this context, the support we are receiving from Government benefits all our stakeholders and enables us to provide more customer support in return."

Lets go over that last line again. All that government money thrown at RBS over the last year benefits ALL their stakeholders. The huge capital injections, the liquidity support, and the guarantees - it is all good.

So, when your tax bill goes up, and when you see your state pension crushed to a pulp as the UK government pays out massive interest payments on its banking related debt stock, just remember all those stakeholder benefits provided by RBS.


Anonymous said...

Stock down 70% in a day. This is a goner.

francois-guillaume said...

its a penny stock...

JKA on Economics UK said...

RBS closed at 12p that's a market cap of around £5bn. The government plans to cpnvert £5bn of preference shares into a 12% ord share stake sacrificing a 12% income yield in the process.

£5bn into £600 million in one deal. No wonder the market is spooked.