Wednesday, 3 October 2012

RBS to take €212m hit on Spanish bankruptcy

You won't be surprised that RBS were one of the group of 13 banks investing heavily in Spanish real estate firms Alteco Import and MAG, which have just announced their €1.3bn bankruptcy.

Another thoughtful and well considered move from the bank run into the ground by Fred Goodwin. Goodwin remains at large and unimprisoned.

19 comments:

Anonymous said...

Just like there will be no prosecutions over the Libor scam. If Libor wasn't price fixing what is?

Anonymous said...

Aye and remember this ucnt?

Jobs for failure, rewards and knighthoods for gross mismanagement: wasn't that what Labour was all about?

Edward Spalton said...

Anonymous,

People who got together to rig a horse race and the odds on the runners would, at the very least, be warned off every race course in the country and prosecuted, if there was sufficient evidence.

The banks have created these "products" called derivatives, which are essentially complicated bets on what rates of interest are going to be.

Now, it emerges that they got together to rig those rates of interest on which their bets were riding - a clear case of fraud against every non-banker.

Yet the best the authorities have come up with is a proposed law to make such behaviour criminal IN FUTURE.

Not only that, the political class has gone out of its way to retain the perpetrators of this scam "to keep the best people" in the failed banks which have been bailed out by the taxpayer.
Common sense would suggest that the sooner these "best people" left to work for our competitors, the better.

Clearly the politicians (ultimately responsible for regulation) and the bankers are so far into each other's pockets that fraud on an unimaginable scale is likely to go unpunished.

I may have mentioned it before - I bought a hunting print with a picture of a pack of hounds belonging to a baronet (circa 1835). A note on the back mentioned that he was partner in a bank which went bust (so losing all his own money as there was no limited liability) and also got 14 years transportation to Van Diemen's Land. I would say that was about right.

We still have the Falklands - and South Georgia for the really bad boys.

right_writes said...

I take a slightly different view of the Libor "scam"... Barclays were caught... No doubt others are still "on the run", they were fined (probably not enough)...

But there is one thing that you can guarantee, as soon as an "official regulator" is appointed, the LIBOR rates will be "fixed" good and proper and we will never have a market led interbank rate again...

Who do we think will lose out in this scenario?

Anonymous said...

Now let me just re-jig the headline to this article.

"Tax payers to take €212m hit on Spanish bankruptcy"

Its a real [b]shame[/b] that the meaning of bankruptcy has been lost over centuries. The word "bank" comes from the Italian for "bench" and this is what money traders worked from centuries ago. If a trader got it wrong and lost his or other people's money, officials would arrive and smash his bench up to stop him trading again. The act of smashing his bench was called "rupta". Banca-Rupta; see?

Now what we have is the tax payer taking the losses (socialised losses) and the senior banking officials taking any of the gains.

We simply cannot go on like this!

Coney Island

Edward Spalton said...

right_writes

The point is not that some corporate penalty has been paid but that the individual malefactors (like Fred the Shred) are not only not prosecuted but left in possession of their ill-gotten gains - and on a scale quite unimaginable to the ordinary people whose assets have been plundered and whose incomes are now being taxed/confiscated to pay for the scam.

Corporate penalties simply mean that the banks put up their charges to recover them. Until penalties are fixed on the personal assets of those responsible, they are just a laugh.

Anonymous said...

'Libor'

The other beneficiary of the LIBOR scam was of course the government, they could borrow at artificially low rates too.

And that's what you won't ever hear from the politicians, they were in on the scam as well.

right_writes said...
This comment has been removed by the author.
right_writes said...

@Anon "Libor"... Yes sir, the banks and the government are so closely associated, that it is difficult to tell them apart...

@Edward Spalton, I was only addressing the "Libor" scam, and suggesting (stating) that (bearing in mind that the government and the bankers are virtually the same thing), that any "official regulator" is going to set rates that benefit them and them alone...

...Whereas if the banks are competing with each other, we customers and shareholders have some chance of getting a fair rate of return on our investments and a fairer rate for our borrowings. Building societies and Friendly societies were one of the great inventions of the nearly free market place, and if our banks were more like this, every borrower is also a shareholder, and every lender too, there is true mutuality.

Now, your point about "individual malefactors" is a bit less simple, they hide behind the limited liability that the government created for them... However, if the implications of limited liability were to be followed through, the RBS, should not have been nationalised, it should have been "banka-rupta"ed. And Fred would be known as an asshole who broke a massive bank, and would be avoided by every employer... And not only banka ruptaed himself, but possibly up before the beak too.

Mind you, these blokes are pretty damn clever, and if "banka-rupta" had been the likely consequence of f*ck*ng every single customer, he might have been a bit more careful.

Anonymous said...

Edward Spalton @3 October 2012 08:03

Concise comment, as usual, Van Diemens land - a man these days could do a lot worse.

It you are prosecution proof, if anybody is prosecution proof - that is wrong. But in Britain, it is the norm: failure is rewarded truth telling is disregarded and actually punished in some institutions.
And, that is a demonstration of just how far the country has strayed from moral rectitude, Britain, a cesspit of venal pigs in the trough.

Retroactive prosecution, of city bankers is what is needed but the political class would far rather put some patsy Murdoch employees in the dock on trumped up charges of meaningless authenticity. [And when is Huhne coming up I wonder?]

The political class, are covering up, they do not want the electors to know the true scale of the collusion and nefarious back scratching behind the closed [to us] but revolving doors of Westminster, Canary Wharf and the City.

Indeed - the FSA was full of bankers who socialised and soaked up like a sponge, favour and gifts from the banking community.

The relationship between politics and banking in Britain is unhealthy to say the least and in my opinion downright incestuous.

right_writes said...

Oh and further to my bit about mutuality, those "societies" were killed off by the "ever closer union" of government with banks...

...Until finally we got to the real insult... A mutual society "The Trustee Savings Bank", owned by the people, was stolen by the government, sold back to the people as a bank, and then bought by a bank "Lloyds", which then got bailed out, by the people...

...And so on.

Edward Spalton said...

right_write

I couldn't agree with you more about the disgraceful asset stripping of the Trustee Savings Bank and, of course, the demutualisation of many building societies. Only, in their case, the members did get a price for the assets.
That was a decision the members were entitled to make.

Something similar happened when the EU forced the abolition of the Milk Marketing Board (a statutory monopoly which actually worked quite well for the farmers). They tried to reorganise it as a farmers' co-op but private firms were offering very tempting high prices for milk. Farmers were warned that they would be screwed later if they did not stick together. Many were understandably tempted by the immediate high prices - with results we know today.

Michael Peel said...

Get your basics right. Derivatives per se are nothing to do with the Libor price fixing scandal.

It takes a little bit more than scanning the newspapers to understand the real and varied issues behind the several banking scandals. Then trotting out some lightweight bile towards bankers serves no useful purpose.

Edward Spalton said...

Quite right, Michael.

Nothing less than heavyweight bile will do!

Weekend Yachtsman said...

"Until penalties are fixed on the personal assets of those responsible, they are just a laugh."

Yes, that is exactly correct.

Personal liability, down to their last farthing.

It's the only way to avoid the moral hazard.

Edward Spalton said...

Weekend Yachtsman

You just reminded me of an early lesson I had from my father. Whilst I was still in short trousers, he used to take me to Manchester Corn Exchange. He would tell me what the firm needed to buy and who we usually dealt with. So I would go and enquire from three or four people, never forgetting to raise my cap and say "Good morning, Sir". The he would tell me to go and make the deal in the same way.

There came the dread day when he told me what was wanted and that I knew who we dealt with, so I had better go and make the best deal I could. "But remember, whatever you say will bind us to our very last penny". I was terrified!

No contract notes were exchanged. It was all done by word of mouth or, for a big deal, maybe a handshake.

Demetrius said...

Someone told me that Fred was advising Alec Salmond on the quiet about the best way to make Scotland the tax haven to beat all tax havens.

Elpful Arry said...

@Anon 09.30: Huhne appears to have a sooper dooper injunction in place as the media are not even allowed to report that his trial is actually under way. Most peculiarful...

Go to Guido et al if you want updated leaks.

G. Tingey said...

DO NOT BLAME (just) Labour for this ....
The current & previous - especially Major's "friends" are just as culpable ....
I forget his name, but the, erm, "cicil servant" responsible for the Rail privatisation fiasco was promoted for his incompetence - I think it has a knighthood, now.
And THAT has come home to roost in the past 2 days, hasn't it?
Incidentally: "Senior Civil servants have been suspended" is usually code for:
"We think we've caught someone's paws in the till"
Oops.