Results tagged “Royal Bank of Scotland” from The Business7 Blog

Royal bank of Scotland will take little comfort from its $100 million settlement award from the US Securities and Exchange Commission from Goldman Sachs admission it was economical with the truth in its selling of toxic bond deals wrapped up in Abacus 2007-AC1.

RBS is now "considering all options" which obviously includes the possibility of pursuing Goldman's for a considerably larger chunk of the $870 million it lost in the Abacus investment deal.

Those losses stemmed from the fraudulent omission Goldman's hedge fund client, Paulson & Co was not only selecting mortgages for the portfolio, but was also making side bets those mortgages would drop in value.

A very cosy arrangement for Goldman's, which also charged Paulson & Co $15 million for the privilege of selecting mortgage backed securities to go into Abacus both Goldmans and Paulson must have known were at the very least suspect.

I'm sure I am not the only person scratching my head in wonder at the punishment delivered to Johnny Cameron (no relation) by the Financial Services Authority.

The full details can be read here with the FSA statement here but basically the former head of Royal Bank of Scotland's investment banking operation has agreed not to work full-time in a bank or insurer ever again.

As a result the FSA is not going to pursue any further action against him. So basically he has been cleared of any wrong doing, did not admit any guilt and was not fined.

Oh and the independently wealthy 55-year-old can still work in lucrative part-time consultancy roles.

Revealing details have now been published by HM Treasury on exactly what sort of assets Royal Bank of Scotland will put into the government's Asset Protection Scheme.

The due diligence of the assets RBS proposed to add to the APS, conducted by Ernst & Young and KPMG for a collective £16.4m fee, identified £43bn of assets they either rejected from the scheme or deemed to "no longer require protection."

So this reduced the £325bn in toxic assets RBS hoped to dump into the APS to £282bn.

However, the Treasury report documenting which of the Scottish bank's assets are entering into the scheme is rather scant on the details of those assets which the auditors refused to add to the APS.

The Treasury appears to have won its battle with the Board of Royal Bank of Scotland over a speculated £1.5bn bonus pot for its investment banking arm.

RBS, having bowed to intense political pressure, has now agreed to pay bonuses at the "low, low end of the scale" - even if this means it will lose staff to better paying rivals.

Lloyds have also announced a bonus package for its top 200 executives of up to 80 per cent of their salaries, in a shares only package spread over three years.

And this on the same day the National Audit Office revealed the actual cost to the taxpayer so far for the banking crisis currently stands at ￡850bn.

The revelation of 'secret' loans totaling £62bn to Royal Bank of Scotland and Halifax Bank of Scotland last year is startling.

Equally eye opening was the answer City minister Lord Myners gave when asked what other banks had received covert loans.

In a rather convoluted way he told Channel 4 News: "The very definition of covert is that is not a question I am going to answer."

What is important to differentiate here is the fact these were not loans made in the traditional sense, but rather the Bank of England (BoE) stepping into the role of lender of last resort after the money markets closed up following the collapse of Lehman Brothers.

So after months of wrangling, posturing and hand wringing the shape of the post-credit crunch banking landscape in Britain is starting to take shape.

If you are here reading this then chances are you know the basics. Lloyds and Royal Bank of Scotland doing a mixture of fund raising, protecting assets and selling off sections of the business to avoid painful competition pitfalls.

Oh and probably a couple of thousand jobs lost in the process as well.

I had no idea when I booked a week off in October I would effectively be missing out on putting together most of Business7's 100th issue.

Still the time away did give me time to reflect on the two and a bit years I have been working on the publication.

When we launched the tremors from the American sub-prime mortgage crisis were still fairly minor and Royal Bank of Scotland was just about to complete a deal for ABN Amro.

Since then the world has been turned upside down and I have been fortunate enough to play a small part in recording the changes.