2014년 7월 31일 목요일

[Some recent news scraps for] the Royal Bank of Scotland



RBS faces posting a loss of up to £8 billion, the biggest since its UK Government bailout seven years ago, after being forced to set aside £3bn to cover penalties for financial misconduct.
The state-owned bank confirmed it was seeking backing to double the level of employee bonuses while saying it had made the provisions to cover litigation and mis-selling claims relating to the financial crisis.
The announcement yesterday wiped £900 million off the bank's stock market value. New RBS chief executive Ross McEwan talked of "bad decisions" during the financial crisis. Business Secretary Vince Cable suggested it showed how much damage had been done under RBS former chief executive Fred Goodwin.
A deepening deficit of up to £8bn for last year is now expected as the new costs come on top of the flagged losses of £4bn. About £4.5bn of these result from RBS shifting its riskiest loans into an internally managed "bad bank".
Mr Cable welcomed the determination shown by the new management to return to traditional banking values and behave in a "responsible" manner.
He said: "It is an absolutely shocking story that the British taxpayers are still paying for the excesses of this bank in the boom period before it collapsed in 2008."
"We had senior executives paid enormous amounts of money, taking risks that backfired and caused enormous damage and cost to the taxpayer. I think the fact the current crop of directors is accepting responsibly, not accepting bonuses, is sending the right signal."
Chairman of the Commons Treasury Committee, Andrew Tyrie MP, said a banking commission should be set up to discover how to claw back "either vested remuneration or deferred bonuses" to pay fines from those responsible.
"RBS is still paying a heavy price for past misconduct. So, too, are its customers and taxpayers," he said.
RBS chief executive Ross McEwan, who took over in October last year, warned further problems are still emerging from Goodwin's time in charge.
He said: "The scale of the bad decisions during that period [the financial crisis] means that problems are still just emerging."
The annual loss for 2013 would be £3bn more than the previous year and the biggest since the £24.3bn deficit in 2008 - a record for a UK company -which led to a record-breaking £45bn Government bailout to avoid its collapse at the height of the global financial crisis.
RBS unexpectedly said yesterday that nine of its top executives on its executive committee would waive their bonuses for last year. Mr McEwan had already said he would not take a bonus for 2013 and 2014.
The Edinburgh-based bank, which will confirm its full-year financial results next month, is still expected to make proposals to the UK Financial Investments (UKFI), which manages the Government's stakes in RBS and Lloyds, about boosting bonuses.
New European rules mean that, from this year, banks must gain permission from shareholders to pay more than the level of an employee's basic salary as a bonus.
Asked if the 81% taxpayer-owned bank was still planning to seek UKFI backing to put a resolution to shareholders to pay 200% of executives' salaries in bonuses, group chairman Sir Philip Hampton confirmed there was to be a shareholder consultation on the issue.
He said: "Yes, we think the right positioning of the business is to be commercial. We obviously need to be sensitive to our shareholding structure and some of the political and media issues around that everyone is extremely familiar with. But the ability to pay competitively we think is fundamental to the prospects of the business getting to where it needs to be."
RBS confirmed the £3.1bn it planned to set aside would be used to settle conduct claims relating to US mortgage products and the mis-selling of payment protection insurance and complex financial products known as interest rate swaps.
RBS shares fell by 7.5p to 332.2p.

Royal Bank of Scotland (RBS) has been fined £390m ($610m) by UK and US authorities for its part in the Libor rate-fixing scandal.
The UK's Financial Services Authority issued a fine of £87.5m, while about £300m will be paid to US regulators and the US Department of Justice.
The fines are £100m greater than those issued to banking rival Barclays last year for similar offences.
RBS chairman Sir Philip Hampton said it was a "sad day" for the bank.
Chancellor George Osborne called the behaviour of traders "totally unacceptable" and said the bank, rather than taxpayers, would be paying the fines.
RBS is still 81% owned by the taxpayer, four years on from a massive government bailout.
The bank said that the £300m owed to US authorities would be paid using money clawed back from bonuses already paid, and reductions to future bonuses.
Last year Barclays was fined £290m and Swiss bank UBS will pay out £940m to regulators for its Libor manipulation offences.
RBS said it had uncovered wrongdoing by 21 employees, who had now been disciplined or left the bank.
'Widespread misconduct'
"There were serious shortcomings in our systems and controls and also in the integrity of a small group of our employees," Sir Philip said in a statement.
"We have to fix the culture in the banking industry... the board has used all means possible to ensure the gravity of this issue is reflected in the remuneration received by employees."
Speaking to the BBC, chief executive Stephen Hester said the wrongdoing by a small number of individuals needed to be "a part of RBS's past and not its future".
"We must be absolutely clear - this is not acceptable," he said. "The journey of recovering from its past legacy is not finished."
The FSA revealed that the bank qualified for a 30% discount on its fine because it agreed to settle at an early stage of the investigation. Without the discount the fine would have been £125m.
It said the misconduct at RBS was "widespread" and had involved "a number of employees and occurred over a number of years".
Investigators found that RBS traders colluded with other traders to try to fix Libor rates between 2006 and 2010.
The practice was designed to make money by investing in interest rate swaps - financial instruments which allow you to bet on interest rates, which can be influenced by the Libor rate.

Guilty plea
At RBS, traders in multiple offices around the world were involved, including London, Singapore and Tokyo. They focused on the manipulation of yen and Swiss franc Libor rates, using instant messaging systems to communicate with other traders.
According to the US Commodity Futures Trading Commission (CFTC), which hit RBS with a £208m fine, RBS made hundreds of attempts to manipulate the rates and succeeded on a number of occasions.
It said Libor rate-fixing continued at RBS, even after traders learned that regulators had opened investigations into the bank.
RBS's Japanese subsidiary has pleaded guilty to one count of wire fraud relating to the manipulation as part of the settlement with US regulators.
The bank has entered into a deferred prosecution agreement with the US Department of Justice on other charges.
The head of RBS's investment banking arm, John Hourican, will also leave the bank, it has been confirmed.
The case is another blow to RBS, which is still recovering from the financial crisis that left it on the verge of collapse in 2008.
More than four years on from a massive government bailout, the bank is still 81% owned by the taxpayer.

RBS stands accused of sending small businesses to the wall so it can grab their assets
"FORGET Libor. Forget mis-sold swaps. Forget PPI," says Jim Armitage in The Independent. The claim that RBS, and to a lesser extent Lloyds, "deliberately and systematically" pushed small-and-medium sized companies into default so they could seize their assets "on the cheap" is surely so damaging as to be "potentially terminal". 
The allegations, made in a report by the care home entrepreneur Lawrence Tomlinson, are still to be investigated. RBS has appointed lawyers Clifford Chance to investigate, and the serious Fraud Office is considering a criminal probe.  "But there is enough in the report to justify tenfold its core conclusion: that RBS and Lloyds, with 60 per cent of the SME market, are now bigger than too-big-too-fail". They are also "too big to serve" and "too big to regulate". 
Tomlinson says he feels "sick" about the way "vibrant businesses" have been treated after being forced into RBS's Global Restructuring Group. But "fairness is in short supply" in his report, says Jonathan Guthrie in the FT. His position as entrepreneur-in-residence at the Department of Business "gives it queasy quasi-official status". Yet "his evidence is anecdotal" and "none of his sources have been identified". That, of course, hasn't stopped politicians from using the report "as a stick with which to beat up a bank they themselves control".
Everyone agrees that there has been "an endemic" problem of poor and inadequate lending at RBS, says Jeremy Warner in the Daily Telegraph. But the idea that the bank is engaged in "some kind of full frontal assault" on small business is "rubbish".
The main criticism that should be levelled at RBS and others is that "they have been too tolerant in keeping bad companies alive". Most of the companies that Tomlinson complains about seem to be in property. "They are classic 'zombie' enterprises that in any normal recession would have long since been allowed to go under", freeing up bank capital for healthier, more viable businesses.
"A surge of war weariness overtakes many of us on hearing news of yet another banking scandal," says Max Hastings in the Daily Mail. Of course banks sometimes have a duty to call time on failing businesses. But if Tomlinson is right, we're talking here about "a state-owned bank that kills small firms to feed off their corpses". It's a shocking revelation "even by Fred the Shred standards".
That the more recent of these "dirty deeds" have been done "in our name" makes the whole thing even worse. "The only credible answer to the giant horror story that the industry represents is to break up the giant banks, so that their successors can offer real competition." Since the Government owns controlling stakes in both RBS and Lloyds it is ideally placed to make this happen.  It is a waste of time inviting bankers to reform themselves. "Like every other kind of dangerous dog, they are only safe when chained."
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