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Taxpayer Nursing Huge Losses On Rbs And Lloyds

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http://www.guardian.co.uk/business/blog/2011/oct/13/taxpayer-losses-rbs-lloyds-shares

When taxpayers bailed out Lloyds Banking Group – which was two separate banks Lloyds TSB and HBOS at the time – and Royal Bank of Scotland and the expectation was that the government stake would have begun to be sold off by now. And at a profit.

Instead, three years later, the taxpayer is nursing a loss of close to £32bn on stakes originally worth more than £60bn. The meltdown in the financial markets and the impact of the report by the independent commission on banking to "ringfence" high street banks is being blamed for the fall in the share prices.

The terms of the bailout were announced on 13 October 2008 although the taxpayer eventually ended up buying its stake in RBS in three tranches – and spending more than first envisaged. The first tranche, of 22.8bn shares was bought in December 2008 at a price of 65.5p; the second was a preference share conversion in April 2009 when 16.7bn shares were bought at 31.75p and then a further slice in December 2009 of 51bn shares at a price of 50p when the asset protection scheme (APS), designed to insure its most toxic assets, was eventually set up. UK Financial Investments, set up in November 2008 to act as an "arms length" investor in the stakes in the bailed out banks, reckons this gives an average price of 50.2p share – plotted on the graph – for 90.6bn shares that were worth £45.5m at that price.

...

The investment in Lloyds also took place in three tranches: 7.2bn shares at 182.5p in January 2009 – as the HBOS takeover was completed – another 4.5bn shares at 38.4p in June 2009 and then 15.8bn shares in December 2009 when the bank avoided participating in the APS and conducted a rights issue in which the taxpayer took up its rights at 37p. UKFI calculates an average investment price of 73.6p for the 27.6bn shares although notes this could fall to 63.1p if the £2.5bn Lloyds paid to exit the APS is included.

Obviously this is the current snapshot and this time next week when the market recovers the taxpayer will be billions in profit. Still just like the price of gold it's only a paperloss at certain junctures in time....

As was noted yesterday Lamont lost £3bn in the ERM farce and Gordon loses more on just one of his many mistakes.

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Instead, three years later, the taxpayer is nursing a loss of close to £32bn on stakes originally worth more than £60bn. The meltdown in the financial markets and the impact of the report by the independent commission on banking to "ringfence" high street banks is being blamed for the fall in the share prices.

Nothing to do with those companies being a pile of shit then, irresponsible, reckless, gamblers who shouldn't be trusted with a sweetie jar, let alone a banking license.

Edited by OnlyMe

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When taxpayers bailed out Lloyds Banking Group – which was two separate banks Lloyds TSB and HBOS at the time – and Royal Bank of Scotland and the expectation was that the government stake would have begun to be sold off by now. And at a profit.

Whose expectation? Can't imagine most here on HPC, for starters.

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Whose expectation? Can't imagine most here on HPC, for starters.

Well, you see, we have two realities here. On one hand, we have 'The bubbleland reality'. In this reality, consumers have rising incomes, inflation is low, house prices have fallen to realistic levels, the eurozone crisis is resolved and growth is going to take off any minute now. Hence bank shares will soar giving us huge profits.

On the other hand, we have this silly thing called 'The reality reality'. In this bizzare world, mass unemployment and wage stagnation is killing overindebted consumers, houses are wildly overpriced and the eurozone is tottering on the precipice, meaning that the banks are about to collapse even more.

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Well, you see, we have two realities here. On one hand, we have 'The bubbleland reality'. In this reality, consumers have rising incomes, inflation is low, house prices have fallen to realistic levels, the eurozone crisis is resolved and growth is going to take off any minute now. Hence bank shares will soar giving us huge profits.

Can I live in bubbleland reality please?

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Can I live in bubbleland reality please?

It's easy, while watching an episode of Homes Under the Hammer just tap your heels together three times and say "house prices always go up, house prices always go up, house prices always go up".

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Can I live in bubbleland reality please?

Unfortunately, entry is restricted - you need to own your own properties outright and have an index linked income.

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Can I live in bubbleland reality please?

Sure thing - just watch your prescribed doses of the X-Factor, Strictly Come Dancing, Big Brother, Britain's Got Talent, I'm a Celebrity and dozens of trashy soap operas and as much football as Sky can force down your throat. Also be sure to follow up all the latest gossip about these shows and celebrities in OK/ Hello/ Grazia mags and the tabloids. Then make sure you believe everything that the BBC News tells you. Load up your credit card to the max so that you can have an array of shiny, must-have lifestyle accessories and designer gear - Paying down debts and living within your means is so last century when you can just put yourself in debt slavery for the rest of your life to emulate the celebrities that fill the lack of substance in your life. It's good for the economy don't you know?

Pretty soon, reality will be but a distant memory and you won't really care about pesky things like current affairs and the deteriorating state of the economic and financial system, like about >80% of the general population.

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http://www.guardian.co.uk/business/blog/2011/oct/13/taxpayer-losses-rbs-lloyds-shares

Obviously this is the current snapshot and this time next week when the market recovers the taxpayer will be billions in profit. Still just like the price of gold it's only a paperloss at certain junctures in time....

As was noted yesterday Lamont lost £3bn in the ERM farce and Gordon loses more on just one of his many mistakes.

Cut Gordon a break though. Though Liebour never admit to it now, Gordon and the rest of the liebour shadow cabinet were pro-ERM too. At least theyre consistently wrong.

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Cut Gordon a break though. Though Liebour never admit to it now, Gordon and the rest of the liebour shadow cabinet were pro-ERM too. At least theyre consistently wrong.

And to be fair the conservative majority position in opposition was pro-bailout for the banks wasn't it ?

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And to be fair the conservative majority position in opposition was pro-bailout for the banks wasn't it ?

Wasnt Osborne saying money printing was a sign of bankrupcy?

Didnt stop him doing it anyway.

My point is, these tories are Flip floppers. Liebour, now there's turncoats you can believe in.

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And to be fair the conservative majority position in opposition was pro-bailout for the banks wasn't it ?

That's what's so depressing :( Back in the days of BCCI or Barings a bank could go bust and noone worried too much (except of course their creditors - as with any other business failure). Or a weak Midland could be snapped up by a strong and expanding Hong Kong and Shanghai (since then, known as HSBC).

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  • 284 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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