Will RBS be the next bank to fail?

! This post hasn't been updated in over a year. A lot can change in a year including my opinion and the amount of naughty words I use. There's a good chance that there's something in what's written below that someone will find objectionable. That's fine, if I tried to please everybody all of the time then I'd be a Lib Dem (remember them?) and I'm certainly not one of those. The point is, I'm not the kind of person to try and alter history in case I said something in the past that someone can use against me in the future but just remember that the person I was then isn't the person I am now nor the person I'll be in a year's time.

Talking to a colleague about the money troubles this morning, I suggested that RBS might be the next big bank to fail in the UK.

Since then RBS shares have lost nearly 40% of their value and they’ve had to issue a statement denying that they’ve asked the Chancellor for a few billion to tide them over.

I worked at NatWest when RBS took them over and it came as a shock to a lot of people. RBS was a relatively small bank at the time but they were cash rich and the money was burning a hole in their pockets so they spent it. Quite a lot of it in fact and they threw in a boat load of shares to sweeten the deal as well. This was their first mistake – trying to absorb a banking group the size of NatWest was never going to be easy and NatWest was a traditional banking group, concentrating on banks and branches, whereas RBS was a more diverse group with distinct brands offering different services. Despite spending millions on rebranding for the last few years, the NatWest brand is still more recognisable and valuable outside of Scotland. Merging RBS into the NatWest brand would have made more sense and built a stronger brand but vanity prevented that from happening.

Their second mistake was over-extending themselves buying the Dutch bank, ABN Amro, with Santander and Fortis. They took on too much too soon after buying NatWest and divesting themselves of profitable non-core assets like Tesco Finance didn’t bring in enough cash so they had to spread themselves even more thinly and issue more shares.

RBS’ problem is that they’re a huge group with a weak brand. They’re quite heavily exposed to the US sub-prime problems – 20% of their turnover comes from the US. They’ve spent too much money and spread themselves too thinly and they’re losing the confidence of institutional investors. Standard & Poors have downgraded RBS’ credit rating which will make it harder and more expensive for them to obtain credit. I don’t know what odds Guido is offering on RBS surviving intact but they won’t be good enough to tempt me to have a flutter.

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  1. axel (1214 comments) says:

    no, they will be bailed out, their HQ is in Big Gay Als costuency, he cant let them fall.

    Do Nat west not exist anymore?

    The HBOS assimilation was not so bad, you can still tell which branches were BOS and which Halifax, certainly up here you can.

  2. wonkotsane (1133 comments) says:

    Nationalisation has got to be the logical outcome – who is in a position to buy the RBS group?

    NatWest still very much exists. It’s now part of RBS group but its brand is so much stronger than RBS. I couldn’t tell you, without looking it up, whether there is an RBS branch in Telford or where it is if there is one. You just don’t see many of them around but NatWest is everywhere. I think the only place they’ve successfully rebranded is with a logo change for Ulster Bank from a bastardised NatWest logo to a bastardised RBS one.

  3. axel (1214 comments) says:

    sorry, thats what i meant, could you go into a nat west branch and i could go into an RBS branch next door to it?

    with HBOS, they all metamorphed into HBOS

  4. Alfie the OK (19 comments) says:

    All the fault of the vainest, most bullying bastard in the world, RBS CEO – Sir Fred Goodwin.

    I had the very dubious honour of personally working for that power mad arsehole for 5 years. I was an outside contractor and was engaged by an English PR man who worked for Goodwin in Glasgow. (It was before he got the RBS job, when he was in charge of the Clydesdale Bank). I did their top end corporate stuff – Annual Reports etc.

    The PR guy was, over a period of a year reduced to a gibbering wreck. Whenever I was in his office and the red phone went – it was Goodwin demanding that this guy drop everything and get to his office double quick. Quite often he would go into shock – a couple of times he actually cried. In the end, the inevitable happened and this guy just had to leave to preserve his sanity….

    Goodwin acquired the title of ‘Fred the Shred’ when he was at Clydesdale because he sacked so many people. He was an utter Stalin…. bloody unbelievable. So when I heard about their problems – and saw his grovelling apology for the first half yearly figures a couple of months ago, I couldn’t help smiling….

    But with all this spivvery going on, surely, surely these so called banking geniuses should be held to account?

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