interestrateripoff Posted September 5, 2009 Share Posted September 5, 2009 http://business.timesonline.co.uk/tol/busi...icle6822830.ece Royal Bank of Scotland (RBS), which is 70 per cent owned by the taxpayer, has been blocked by the City regulator from making repayments on bonds worth £920 million. The Financial Services Authority (FSA) has told RBS that it cannot make a payment on the bonds next month because of its reliance on billions of pounds of taxpayers’ money to keep the bank afloat.RBS, which received £20 billion from the Government last October, is in advanced negotiations with the European Commission over what remedies Brussels will impose on the bank in return for its state funding. The Commission is expected to force RBS to shrink its share of the small-business banking market, among other measures. Brussels is also in detailed discussions with Lloyds, which received £17 billion in state funding, and Northern Rock, which is nationalised. Rulings on all three banks are expected within the next couple of months. The Commission warned last month that it expected both shareholders and bondholders to absorb some of the pain in cases where the banks they have invested in would have collapsed if they had not been kept alive with public funds. RBS said yesterday that it had been told by the FSA that under the Commission’s “burden sharing†rules it could not make a payment to bondholders next month. Brussels has already intervened in several cases to spread the burden of bank bailouts to shareholders and bondholders of higher-risk subordinated bank debt. Northern Rock, which was nationalised in February 2008, said last month that it would defer interest payments on eight subordinated bonds with an aggregate face value of about £1.7 billion. The Commission ruled last year that Bayern, of Germany, could not pay out any interest on a Tier 1 bond, which ranks just above equity, as a condition for approving billions of euros in state aid. The Commission also told Anglo Irish Bank recently not to pay interest on Tier 1 bonds. KBC, the Belgian bancassurer, said last month that it would not pay interest on a Tier 1 bond pending regulatory approval of a restructuring plan and after discussions with the European Commission. In a reversal this week, however, the Belgian bank said that it would indeed pay coupons on certain outstanding Tier 1 bonds. For British investors, “the concern is other UK banks could be forced to follow suit by the regulator,†BNP Paribas analysts wrote in a research note. What will the implications for RBS be with this, will this force the share price down? The other comment that they need to scale back business lending seems at odds with all the announcements coming from the liar party. Seems that small businesses will be starved of even more cash if this happens. Seems like we'll be having the no lending recovery. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted September 5, 2009 Share Posted September 5, 2009 (edited) Its the bondless recovery! Anyway don't worry about it. The new head of RBS retail has been awarded a £1M bonus just for turning up, so things must be OK Edited September 5, 2009 by HostPaul TAFKA Rover2000 Quote Link to comment Share on other sites More sharing options...
mbga9pgf Posted September 5, 2009 Share Posted September 5, 2009 http://business.timesonline.co.uk/tol/busi...icle6822830.eceWhat will the implications for RBS be with this, will this force the share price down? The other comment that they need to scale back business lending seems at odds with all the announcements coming from the liar party. Seems that small businesses will be starved of even more cash if this happens. Seems like we'll be having the no lending recovery. Implications for government owned bank defaulting on its debt more like? Things must be getting pretty bad with the coffers if they are resorting to this... Bond holders wont be happy. I reckon Q3 Q4 are going to be ABSOLUTELY shocking... we are about to see our own mortgage asset wipeout in the near future IMO, hence the reason the BOE are asking for more cash, why RBS are being told to stop bond payments, why Gordon is begging the G20 to carry on the bailouts because he KNOWS once global monetary expansion finishes and we carry on, the pound, gilt sales and therefore the economy are TOAST. QE and monetary expansion are great, as long as everyone else is doing it. Not so much if you are the only one. Quote Link to comment Share on other sites More sharing options...
Number79 Posted September 5, 2009 Share Posted September 5, 2009 http://business.timesonline.co.uk/tol/busi...icle6822830.eceWhat will the implications for RBS be with this, will this force the share price down? The other comment that they need to scale back business lending seems at odds with all the announcements coming from the liar party. Seems that small businesses will be starved of even more cash if this happens. Seems like we'll be having the no lending recovery. this was out yesterday, reuters ran it before 1500 hrs, prices dipped a little but nothing exciting, priced in already and widely expected me thinks. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted September 5, 2009 Author Share Posted September 5, 2009 this was out yesterday, reuters ran it before 1500 hrs, prices dipped a little but nothing exciting, priced in already and widely expected me thinks. The markets are experts at pricing they did a magnificent job with Enron and World Com. Quote Link to comment Share on other sites More sharing options...
Number79 Posted September 5, 2009 Share Posted September 5, 2009 The markets are experts at pricing they did a magnificent job with Enron and World Com. I bet some did. 'Markets' doesn't include everyone. How many have been confused as to why bank shares jumped on the release of bad news? Quote Link to comment Share on other sites More sharing options...
Guest DissipatedYouthIsValuable Posted September 5, 2009 Share Posted September 5, 2009 Do non-yielding bonds mean the tax burden on the populace doesn't go up so much? Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted September 5, 2009 Share Posted September 5, 2009 Implications for government owned bank defaulting on its debt more like?Things must be getting pretty bad with the coffers if they are resorting to this... Bond holders wont be happy. I reckon Q3 Q4 are going to be ABSOLUTELY shocking... we are about to see our own mortgage asset wipeout in the near future IMO, hence the reason the BOE are asking for more cash, why RBS are being told to stop bond payments, why Gordon is begging the G20 to carry on the bailouts because he KNOWS once global monetary expansion finishes and we carry on, the pound, gilt sales and therefore the economy are TOAST. QE and monetary expansion are great, as long as everyone else is doing it. Not so much if you are the only one. Yep. And the banks have made such a shocking and disgusting mess of the situation that the likes of Brussels will have no truck with letting these particular taxpayer funded numbskulls screw up the situation even further by skewing the rest of the market here and around Europe. Germany in particular will view bank asset bubble induced destruction with total contempt, they have spent years carefully working through the absorption of East Germany without resorting to getting others to pay the tab and keeping as much of their productive base as possible, these shylocks will not be allowed to do anything like this again whilst they have any say.. When push comes to shove the UK government will have no say, the decisions will be made with or without UK political/regulatory or central bank acceptance. Quote Link to comment Share on other sites More sharing options...
mdman Posted September 5, 2009 Share Posted September 5, 2009 Does this have any implications for CDS on RBS? Quote Link to comment Share on other sites More sharing options...
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