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How come they are still trading?

Community Veteran
Posts: 16,849
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Registered: 06-11-2007

How come they are still trading?

R.B.S. have reported a "Loss".. of nearly 9 BILLION POUNDS.... Shocked            doesn`t that mean they are Bankrupt?...
How come they can "lose" so much money in a years trading, AND still remain in business, Shocked
Yet... the small business guy who has his rates put up and can`t afford to pay, has to go bankrupt because he owes a few hundred pounds?
Oh, and did I hear right... they are still going to be paying bonuses ?  Shocked Shocked
18 REPLIES
TORPC
Grafter
Posts: 5,163
Registered: 08-12-2013

Re: How come they are still trading?

Look at Santander, however they were eventually bailed out
Quote
Santander announces 1900 job losses in the UK
Spanish banking giant Santander has today announced 1900 job losses in the UK across its three main UK businesses which are Abbey, Alliance & Leicester and Bradford & Bingley. The move comes at a time when many had hoped the UK banking sector was over the worst only for rumours of further state aid to start circulating and the £8 billion HBOS write-off being announced today. So is the UK banking sector under yet more pressure?

It might be that they have not got a decent laundry Roll eyes Cheesy
Thunderclap
Grafter
Posts: 673
Registered: 08-09-2008

Re: How come they are still trading?

If you or I owed the bank just nine pounds on an overdraft, we would be threatened with legal action including interest charges, handling fees, recovery fees, legal fees, and so on and on and on.... And your credit rating would be downgraded so your credit cards no longer worked.
So what maketh RBS untouchable? The Treasury cannot be seen to have burnt hundreds of billions of pounds of tax payers money on a project that was just wrong in the first place. Many economist agree (sic) that it would have been best to let RBS go bankrupt - the money required to cover personal bank account losses would have been a fraction of the ongoiing investment required to keep this Costa Concrodia of company floating on fresh air. As it stands, the success of RBS has more to do with political ego than common financial sense. Made a loss? Print more money.
Maybe Alex Salmond should be gifted RBS, for an English Pound, so he can pay off it's debts with the oil money he'll be hoarding in 2016?
Community Veteran
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Registered: 12-08-2007

Re: How come they are still trading?

The losses will continue all the time they carry on trading in their present form. The new CEO has announced a massive restructuring programme and this looks to be the sensible approach for the future of the bank. 
Community Veteran
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Registered: 02-02-2008

Re: How come they are still trading?

It's pretty simple really, it's a collection of businesses that are still being "sorted out". Some good, some bad.
Some are probably doing well (hence the bonuses being paid) others are in deep deep do-do (hence the need for the original bailout) and that's still working through.
Community Veteran
Posts: 18,547
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Registered: 12-08-2007

Re: How come they are still trading?

Yes they are returning to be a standard bank and shredding their investment businesses and other speculative operations. This is forecast to take three years to achieve.
Community Veteran
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Registered: 02-02-2008

Re: How come they are still trading?

Profit was reported (just now by BBC) as £2.5billion on the "good" businesses.
Community Veteran
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Re: How come they are still trading?

I still think that the banking crisis should have at least resulted in one bank going bust.
Besides saving money in the long run it would have brought other ailing banks into the real world with a jolt.
Community Veteran
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Registered: 12-08-2007

Re: How come they are still trading?

Quote from: HPsauce
Profit was reported (just now by BBC) as £2.5billion on the "good" businesses.

There appears to be a good business there once they have got rid of the problems.  They are also shedding some of their periphery interests, such as Direct Line which is a profitable company.
Community Veteran
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Registered: 01-08-2007

Re: How come they are still trading?

I thought Direct Line had been got shot of a year or two back? - to UK Insurance?
I need a new signature... i'm bored of the old one!
Community Veteran
Posts: 18,547
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Registered: 12-08-2007

Re: How come they are still trading?

RBS still hold a small stake of around 28% which they are disposing of.  Being bought by Peter Woods I think.
Direct Line
Community Veteran
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Re: How come they are still trading?

Ah ok.
I need a new signature... i'm bored of the old one!
WTF
Grafter
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Registered: 14-09-2012

Re: How come they are still trading?

Quote from: HPsauce
Profit was reported (just now by BBC) as £2.5billion on the "good" businesses

According to R4, the bank made £2.5 billion profit before write downs, write offs and fines - basically, things related to the pre-crash activities and restructuring costs.
In the interview, the new(ish) CEO claimed the bank needs another 2-5 years before it makes a profit.  He was then played a tape, from almost exactly 2 years ago, of the last CEO saying it would take another 2 years.
I guess that means, don't hold your breath  Roll eyes
On the upside, the bank's capital position is much healthier than it was - obviously nothing to do with the billions the BoE has been pouring into the financial sector over the last 5 years in Quantative Easing (= printing money) as the banks are totally opposed to bailouts and stimulous .. unless they're beneficiaries and you call it something else, of course.
Community Veteran
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Re: How come they are still trading?

Quote from: billnotben
... brought other ailing banks into the real world with a jolt.

The situation, ignored for so long by the UK and USA governments, came within a few hours of a full banking collapse, for example you and me being unable to pay for goods using debit/credit card or even be able to withdraw money from an ATM. Banks should not have been allowed to fail, but all of the senior directors should have been debarred from ever running any organisation and their pension funds used to help pay back the debt. They should have been personally ruined. Unfortunately the outcome is many of the guilty were unpunished. They knew they were allowing trading which they didn't fully understand, but they did know it wasn't properly underwritten.
Now Zen, but a +Net residue.
Community Veteran
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Re: How come they are still trading?

Quote from: 7up
I thought Direct Line had been got shot of a year or two back? - to UK Insurance?

Did they get rid of "the dog" as well?