Sunday 26 February 2017

RBS Now Considered To Much More Safer Now And Here Is How


Royal Bank of Scotland received a lot of flak on Friday after it posted its ninth consecutive annual loss, but it should be recognised that it is a much safer and more secure bank now thanks to the work of chief executive Ross McEwan, as well as his predecessor Stephen Hester.

That said, the £7billion loss RBS made took its net losses to £58billion, well in excess of the £45billion bailout it received in 2008 at the height of the global financial crisis.

Ideally RBS would pay back every single penny it owes, but the Government may need to take a loss on selling some of the shares in order to get the taxpayers’ money back.

People forget just what a mess it was in 2008. At the time, RBS was the biggest bank in the world, a sprawling operation and shrinking its balance sheet, dealing with its vast toxic debts and staging an orderly withdrawal from its numerous markets is no small feat.


It has also had to deal with former boss Fred Goodwin’s chronic underinvestment in its systems.

RBS is close to profitability, but it may take years more to hit the Government’s 502p target price or for the bank to build up enough cash to buy the taxpayer out because of its legacy issues.

The bank should be returned to the private sector as quickly as possible.

This will not be popular, but if the Government gets on with selling down its stake, which will admittedly crystallise some losses, it will help get the share price to 502p faster.

A bit of short-term pain should lead to long-term gain.



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