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How Close Is Credit Crunch 2?

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http://www.bbc.co.uk/news/business-14412390

You'll recall I recently wrote that Royal Bank of Scotland was likely to take a charge equivalent to 50% of its lending to the Greek government.

Well, in its results on Friday that will be confirmed.

RBS's impairment charge for Greek exposure will be around £840m, which represents 50% of its holding of Greek government bonds and a separate charge relating to an out-of-the-money interest rate swap (please don't ask, or we'll be here some time).

Now I can't explain why RBS is charging 50% of its gross exposure rather than the lower 50% of net.

But what is significant is that its provision for these Greek sovereign loans going bad is much bigger in percentage terms than the 21% charge recently taken by Societe Generale and BNP Paribas of France.

Why the difference between RBS and the French banks?

Well the French banks are assuming that the recent Greek rescue programme - which involves banks and other investors swapping their holdings of Greek government debt for paper implicitly worth 21% less - is going to happen.

They may be right. But as the EU Commission president Jose Manuel Barroso wrote to government heads on Thursday, the rescue package is some way from being implemented.

Is this a vote of no confidence by the UK govt? Has the UK taxpayer started to pick up the tab yet for RBS losses?

Should be a good day tomorrow for RBS then when it publishes it results, is this leak to soften the blow?

Viva recovery.

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I heard that on Sky, I think £800m write-down was mentioned. :)

What talent !

I'm wondering if we let 5 years old run a bank if they could actually run it better than these talented people?

I feel the losses would be less.

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I'm seeing the same game being played out here, another crunch, banks need saved again, printing presses turned on full throttle, then after it all calms down another monster round of bonuses...

We are all being laughed at and I for one am getting increasingly sick and tired of it.

It's high time the people put a petrol bomb through every bank window in the country and told the government if they don't put a stop to the thieving then their house is getting burned down too...

V for Vendetta :)

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I'm wondering if we let 5 years old run a bank if they could actually run it better than these talented people?

I feel the losses would be less.

Emma Atkinson, of Dolly Windows school for tiny tots said "Mr Papandreu won't be getting any more money as he smells. Of poo."

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I'm seeing the same game being played out here, another crunch, banks need saved again, printing presses turned on full throttle, then after it all calms down another monster round of bonuses...

We are all being laughed at and I for one am getting increasingly sick and tired of it.

It's high time the people put a petrol bomb through every bank window in the country and told the government if they don't put a stop to the thieving then their house is getting burned down too...

V for Vendetta :)

It's contagion! It's the coming home to roost of the largest financial con trick of all time - the worlds financial sytem bust itself on derivatives and stupid loans to people with no income in 2008/ insured it all/ reinsured it all and eventually the worlds biggest insurer had the business but it went bust. Then along came the govts....just move the debt onto our side of the fence and pay us back one day through selling off the shares. Hey presto, the world is saved.

BUT wait a minute; these govts cannot afford the debt repayments and their tax take is not covering it and existing debt, business is slow and the monthly bond auctions are becoming so large its unsustainable. Just a couple of percent more interest and the western world is bust! In fact their loans are not repayble as the interest cannot even be serviced long term, let alone capital repayment. Beyond rolling over. In comes the ECB.....PRINTY.....ETC. It's ALL BO**OC*S. Just a pretence. We might just as well have started the proper recession/depression 2 years ago and got it over with. It's coming now and nothing will stop it.

Buy some vegetable seeds. You may need them.

I look forward to a bright future where house prices are 50% of current value, sensible borrowing prevails and the world will feel much happier again. Poorer, but happier than the illusory wealth zone of the 2001-8 period.

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http://www.cfoworld.co.uk/news/financial-planning/3291323/loss-forecasts-on-rbs-toxic-loans-scaled-back/

The Asset Protection Agency, established by the government in 2009 to insure £230 million worth of RBS assets perceived to be toxic, also said on Thursday that the Treasury should ultimately emerge with a £5 billion profit from its dealings with the bank.

A statement from the agency said: “Her Majesty's Treasury is well on course to make an overall £5 billion profit, without having to pay out under the scheme.”

....

Further losses would be shared by RBS and the government, with RBS taking 10 percent of the loss and the government 90 percent.

I wondered if we where near this trigger point yet.

Although I realise the muggins taxpayer has already paid out substantially for RBS.

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I look forward to a bright future where house prices are 50% of current value, sensible borrowing prevails and the world will feel much happier again. Poorer, but happier than the illusory wealth zone of the 2001-8 period.

The way things are going if you need seeds to grow food, 50% of property will be still hugely overvalued.

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It's high time the people put a petrol bomb through every bank window in the country and told the government if they don't put a stop to the thieving then their house is getting burned down too...

V for Vendetta :)

Careful - 1st petrol bomb through any bank window and guess who will get a call from the constabulary.

Remember it's only 'freedom fighters' elsewhere who do things like that (you know, places where we are quite happy for a regime change), here such action would be 'terrorism'.

:ph34r:

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Careful - 1st petrol bomb through any bank window and guess who will get a call from the constabulary.

Remember it's only 'freedom fighters' elsewhere who do things like that (you know, places where we are quite happy for a regime change), here such action would be 'terrorism'.

:ph34r:

Quoted for truth. Government = hypocrisy.

Edited by Mr 0.01%

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I heard that on Sky, I think £800m write-down was mentioned. :)

What talent !

Yes but high salaries and bonuses are needed to attract the "right caliber" of individuals to these demanding positions.

Just think what sort of a mess we'd be in if second-raters were in charge. ;)

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I don't think this 50% write-off is as exciting as it looks. I'm in fact pretty sure that Robert Peston discussed that this would happen in one of her blog-posts. Essentially at the current state they can't yet write it as 21% reduction, so have to account for the full 50%. At a later stage they will then readjust to 21% giving them a profit.

See the following blogpost: http://www.bbc.co.uk/news/mobile/business-14289137

edit: link to the actual post added

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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