‘failed’ bank costing us a lot of money
Posted by michael on February 26, 2009
The problems with the Royal Bank of Scotland are much greater than we were originally led to believe.
Its 2008 loss totalled £24.1 billion.
It will also put £318.6 billion of toxic assets into a new government insurance program. The bank will have to pay the first £19.5 billion of these losses. They will also pay a fee of £6.5bn to take part in the scheme.
The government will then pay £13 billion into the bank to strengthen the RBS balance sheet and there is a further £6 billion available if the RBS need it.
If I have got the figures right, it would appear that the government is giving £312.1 billion of tax payers money (and maybe plus another £6 billion) to RBS and getting £6.5 billion in return.
And of course, the taxpayer is also getting the portfolio of toxic or bad debt. How much of this money is recoverable is not known.
RBS is also likely to get rid of a lot of jobs. Each one of these people will potentially cost taxpayers money in benefits and (possibly) housing costs.
I fail to understand why the entire bad debt is not simply being ‘loaned’ to the government over the next 10 years or so. This would give time for RBS to rebuild itself as a proper bank and to pay back the taxpayer for the total amount of debt that we have taken on to save RBS from going bust!
The government should also demand that RBS keep all their staff to avoid addition unemployment and benefit costs.
When a company saves money by getting rid of staff, it is actually (in most cases) passing on it’s staffing costs to the government (e.g. the tax payers) .
But this still leaves The government will inject £13bn into RBS to strengthen its balance sheet on top of the £20bn the government already injected into RBS last year. The bank will have access to another £6bn should it need it.
lupie said
What a contrast on the one hand you have the government handing out government money to banks who are wasting the money, on the other hand you have people who are being made to beg for disability benefits.
When I was fit enough to work I was expected to do my job well, I was not rewarded for mistakes (I was a good worker who did not make many mistakes) so why is the boss of RBS being rewarded with £650,000 pension? RBS got greedy and wanted to be the biggest bank. They did not follow the rules and advice that they give to their own customers and now they want the government to bail them out.
How ridiculous.
michael said
I wouldn’t mind if the government were handing out their money, but it is tax payers money they are giving away so much of it and raising such high debt levels that it could take a generation to pay it all back.
And this is on top of all the taxes needed for the UK to operate!
Remember that when the government borrows money we have to pay it back! And we don’t pay back just what was borrowed, the interest charges mean that we could be paying back four or five times the money originally borrowed!!
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