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Rbs Poised For Biggest Loss In Uk Bank History

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Hang on, I thought they had written off all their bad debt?

Isn't this what some of the investment banks did back in Jan/Feb when they wrote off billions, got Arab State funds to invest... and then admitted more billions of losses?

Oh dear, we appear to have found another 6 billion of losses in the filing cabinet!

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Hang on, I thought they had written off all their bad debt?

Isn't this what some of the investment banks did back in Jan/Feb when they wrote off billions, got Arab State funds to invest... and then admitted more billions of losses?

Oh dear, we appear to have found another 6 billion of losses in the filing cabinet!

It was a bit like saying "There won't be anymore losses until the next losses". The statement is as unhelpful as it is true.

I'm amazed anyone subscribed to the rights issues, etc.

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Somebody pls explain:

Is a loss the same as a writedown?

I'm presuming not. I assume a writedown to be a reduction in the value of some investment that is based on an underlying asset that has reduced in value (ie propert).

A "loss" is exactly what is says on the tin.....(ie opposite of profit).

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Maybe it will take someone smarter to correct me, but a writedown is a reduction of the value of assets on the balance sheet. If everything else balances and the value of assets go up, it's reported as a profit. If they go down, it's a loss.

Think of it like a BTL where the rent exactly equals mortgage costs and maintenance. Value goes up = profit, value goes down=loss.

(EDITED TO ADD:) Therefore, a writedown may lead to a loss, but is not a loss in itself.

But I may be wrong

Edited by Mr. Gruff

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Somebody pls explain:

Is a loss the same as a writedown?

I'm presuming not. I assume a writedown to be a reduction in the value of some investment that is based on an underlying asset that has reduced in value (ie propert).

A "loss" is exactly what is says on the tin.....(ie opposite of profit).

Yeah, you're right. A writedown is not a loss, but can lead to losses if there are enough. It might not necesarilly affect dividends though, provided the income the bank is making is the same. Thing with a lot of mortgage investments is the asset value might fall, but banks have been increasing margins with higher rates, and people are being forced onto SVR, so their cashflow potential improves

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Writedown will go through income statement, and affect the net profit for this period.

Note with the A&L results they has some writedown against reserves. Presumably the bad debt provision?

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Does a writedown affect the capital ratio of the bank?

http://en.wikipedia.org/wiki/Tier_1_capital

http://ftalphaville.ft.com/blog/2008/04/01...lysts-reaction/

"but if the write-downs are over the Tier 1 ratio should rebuild quick"

http://www.efinancialnews.com/homepage/content/2451402195

I think so, but I will try and find out for sure tomorrow

Edited by Noel

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Reading the Wiki one can banks have undisclosed reserves, if so what are they?

A good definition of Tier I capital is that it includes equity capital and disclosed reserves, where equity capital includes instruments that can't be redeemed at the option of the holder (meaning that the owner of the shares cannot decide on his own that he wants to withdraw the money he invested and so cannot leave the bank without the risk coverage). Reserves are, as they are held by the bank, by their nature not an amount of money on which anybody but the bank can have an influence on.

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Maybe it will take someone smarter to correct me, but a writedown is a reduction of the value of assets on the balance sheet. If everything else balances and the value of assets go up, it's reported as a profit. If they go down, it's a loss.

Think of it like a BTL where the rent exactly equals mortgage costs and maintenance. Value goes up = profit, value goes down=loss.

(EDITED TO ADD:) Therefore, a writedown may lead to a loss, but is not a loss in itself.

But I may be wrong

If the bank is holding billions of £s worth of AAA rated securities backed by dodgy US/UK mortgages, a 'writedown' is as good as a writeoff...

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Hang on, I thought they had written off all their bad debt?

Isn't this what some of the investment banks did back in Jan/Feb when they wrote off billions, got Arab State funds to invest... and then admitted more billions of losses?

Oh dear, we appear to have found another 6 billion of losses in the filing cabinet!

Some industry rep on the radio the other day was making the case for exchanging govt securities for mortgage debt, saying there is virtually no risk for taxpayers. As you say, losses keep on increasing. How can they even know what the end losses and risks will be unless they know exactly what the economy will do over the next 5, 10, or even 20 years?

If anyone believed the risk is zero, govt wouldnt need to step in. It irritates me how these guys are allowed to make these assertions with no scrutiny.

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Hang on, I thought they had written off all their bad debt?

Isn't this what some of the investment banks did back in Jan/Feb when they wrote off billions, got Arab State funds to invest... and then admitted more billions of losses?

Oh dear, we appear to have found another 6 billion of losses in the filing cabinet!

Did anyone have a copy of the rights issue prospectus? I didn't read it. Did it mention some big losses in the pipeline? Still I'm sure they were all jolly sound chaps and well worth trusting.

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Guest Steve Cook
Maybe it will take someone smarter to correct me, but a writedown is a reduction of the value of assets on the balance sheet. If everything else balances and the value of assets go up, it's reported as a profit. If they go down, it's a loss.

Think of it like a BTL where the rent exactly equals mortgage costs and maintenance. Value goes up = profit, value goes down=loss.

(EDITED TO ADD:) Therefore, a writedown may lead to a loss, but is not a loss in itself.

But I may be wrong

A "writedown" means you have "lost" money that you would have otherwise expected to posess.

Writedown = Loss

"Writedown" sounds nicer though.... ;)

Edited by Steve Cook

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A "writedown" means you have "lost" money that you would have otherwise expected to posess.

Writedown = Loss

"Writedown" sounds nicer though.... ;)

Yes Steve - but a writedown doesn't specifically mean money has been lost "on the whole".

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Guest Steve Cook
Yes Steve - but a writedown doesn't specifically mean money has been lost "on the whole".

Well....that's no different to saying that a loss in one area of a business does not necessarily mean the business has lost money as a whole.

True enough. However...

That still doesn't mean you shoudn't define it as a loss, though

e.g....

I "wrote down" the money I made from the sale of of my cabbages this morning because they all rotted on the way to market

However, I "wrote up" the money I made from the sale of my carrots becasuse they all made it to market intact.

Or

I lost on the sale of cabbages

I profited on the sale of carrots

Which of the above do you think sounds the least obtuse?

In other words, which is the least deceptive?

Edited by Steve Cook

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Well....that's no different to saying that a loss in one area of a business does not necessarily mean the business has lost money as a whole.

True enough. However...

That still doesn't mean you shoudn't define it as a loss, though

e.g....

I "wrote down" the money I made from the sale of of my cabbages this morning because they all rotted on the way to market

However, I "wrote up" the money I made from the sale of my carrots becasuse they all made it to market intact.

Or

I lost on the sale of cabbages

I profited on the sale of carrots

Which of the above do you think sounds the least obtuse?

In other words, which is the least deceptive?

True....

Can we pick this debate up in the morning....ive had 2 x bottles of red wine.....and I'm unsure of my capability for rational debate..... :lol::blink::lol:

Edited by Notlongnow

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How about:

"A writedown is a reported loss on an asset that is no longer considered to be worth what it once was, but whose final true value will not be known and realised until a future date."

Any good ?

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How about:

"A writedown is a reported loss on an asset that is no longer considered to be worth what it once was, but whose final true value will not be known and realised until a future date."

Any good ?

Spot on.

A bit like buying a footballer for £3.5m (no names mentioned).....and he turns out to be a pile of cack.

....but you can only put a value to said footballer when you try and sell him...even though you know dam well you'd be lucky to get shot of him for a free transfer.

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This morning 04-08-08, BBC Brekkie and R4 were reporting that losses in the UK were lower than expected, and no-one in the industry believes them!!

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  • 399 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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