Tuesday, Apr 22, 2008
Shareholder bail out now required to complimemt BOE bailouts
Times: Mervyn King: RBS 'will be first of many banks to make cash call'
More British banks are poised to tap shareholders for billions of pounds in emergency capital, Mervyn King, the Governor of the Bank of England, revealed yesterday. As Royal Bank of Scotland put the finishing touches to a £12 billion rights issue, expected to be announced today, Mr King hinted strongly that RBS would be the first of many. “I’m pleased that banks have recognised the need to raise capital. I expect we will see more of it in the coming weeks,” he said as he announced details of the Bank’s plan to loosen the paralysed money markets with a £50 billion injection of fresh liquidity.
Posted by jack c @ 09:40 AM (310 views) Add Comment
5 Comments
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1. paul said...
Here's a philosophical question.
What exactly would a governor of a central bank have to do to lose his job?
1. Preside over a period when the central bank consistently under-priced credit, encouraging irrational exuberance
2. Preside over the first run on a bank in over 140 years
3. Admit that they "don't really understand" financial markets
4. Abandon inflation targeting in favour of asset price targeting
5. Have to bail out commercial banks with taxpayers money for the first time in the central bank's history as a consequence of 1.
It's a good job we've got Mervyn King at the helm eh? Who knows what we would have had if it had been someone who doesn't know what they're doing?
2. taffee said...
I would love to see full disclosure on boe,fsa and government property dealings.
The post from paul shows 'vested interest' decisions if you ask me
3. jack c said...
paul said..."What exactly would a governor of a central bank have to do to lose his job?" -
Answer - not toe the party line
4. Icarus said...
Two things shareholders in British banks (or British companies in general) hate: (1) Cuts in dividends (2) new rights issues. Hence the need for the MBS - Treasury bond swap and the pressure on the CEO of RBS.
5. Ijjhall said...
Not ignoring past errors as earlier posts point out but don't forget there was a lot of media whispering doing the rounds that Gordon Brown was against re appointing Mervyn King as Governer. Why ? Maybe he is not the lackey some of here paint him out to be. Judging by the scowl Brown wore throughout Darling's statement yesterday I don't think his reported suspicions of King have abated. King appears to have done a decent job in attaching a lot of strings to yesterday's deal largely protecting the taxpayer and not reinflating the housing bubble - we could have someone a lot worse at the helm when all sorts of desperate schemes are going to be demanded..