Britannia Radio

An earlier posting referred to this horrendous loss so the details in  
the first piece below are partly for the record.

Then Robert Peston gets into his stride and spells out just what this  
means for the taxpayer - that’s you and me!    All this has got to be  
paid for,  and at present Gordon Brown is doing and saying absolutely  
nothing about that.  He just ups the borrowing another few notches  
making a difficult and unpleasant task into a nightmare.

The Tories, mwanwhile , are fully aware of this and make it clear  
daily that the future looks grimmer and grimmer.  But right now they  
can do nothing.   Brown should face the voters - SOON!  He’s not been  
elected by the public except in Kirkcaldy and he hasn’t even been  
elected leader of the Labour party.

As one comment on the Peston blog puts it:-
“You have got to hand it to Goodwin he is the textbook on how to look  
after number one, he must be laughing at everyone.

Pay yourself loads whilst the going is good then when it all goes  
wrong and the business is literally going bust the next day (and you  
would loose your mighty pension) get the Government to guarantee the  
gross pension you awarded yourself when times were much better.”
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TELEGRAPH            26.2.08
RBS posts record £40bn pre-tax loss
The Royal Bank of Scotland has reported a £40bn loss before tax - the  
biggest in UK corporate history. Net losses, which come after tax and  
interest and other charges, came in at £24.1bn.

The pre-tax loss in 2008 compares with a £9.8bn pre-tax profit in  
2007 and comes after £32.6bn writedown of assets, mostly related to  
its ill-fated decision to buy ABN Amro for €71bn (£63bn).

Some £16bn of the losses relate to ABN assets bought by Belgian bank  
Fortis that RBS consolidates in its accounts under the terms of the  
2007 acquisition of the Dutch bank by the RBS, Fortis and Spain's  
Santander. Stripping those out, RBS made a £24.1bn loss.

The previous record annual loss for a UK company was £14.9bn.
The bank, already 70pc owned by the state, unveiled a sweeping  
restructuring plan.

This included placing £325bn in assets in a state insurance scheme.  
Under the scheme designed to extent another lifeline to banks, RBS  
will be responsible for the first £19.5bn of losses - or 6pc of the  
asset value.
The taxpayer will bear 90pc of any losses after that, and RBS incur  
the remaining 10pc.

RBS will also shift £240bn of non-core assets to a standalone  
division. These will be sold or run down over five years.

As many as 20,000 jobs could be lost after RBS said it planned to cut  
costs by £2.5bn.

RBS share rose 30pc to 30.5p as details of its participation in the  
asset scheme were revealed. The bank was the biggest riser on the  
FTSE 100 index, which increased 2.4pc to 3942 points in early trading.

News of the bank's huge loss follow the BBC's revelation about the  
scale of former chief executive Sir Fred Goodwin's pension fund, said  
to be worth £16m. His decision to buy ABN Amro has been widely blamed  
for making RBS more vulnerable.

The BBC has learned Sir Fred has begun drawing his £650,000-a-year  
pension.

Treasury Minister Stephen Timms said the government was looking at  
ways of "clawing back" his payments.

RBS's expected 2008 annual loss compares with its £9.9bn profit in  
2007 and £9.2bn profit in 2006.
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BBC Online Blogs - Robert Peston   26.2.09
RBS: big losses, big bailout

Royal Bank of Scotland has not only announced the biggest loss in  
British corporate history - but it's also being shored up in what  
some will see as Britain's biggest ever bailout.

The Treasury has announced that we as taxpayers will provide  
insurance to Royal Bank against future losses on £325bn of loans and  
investments.

First losses of up to £19.5bn on those impaired assets will be taken  
by Royal Bank.

But to prevent the losses wrecking the bank, we as taxpayers will be  
injecting up to £19bn of new capital into it, in the form of non- 
voting shares.

Also, losses greater than £19.5bn will be born by us - by taxpayers.  
In a prolonged severe recession, those losses could be substantial.

What we're getting in return is a £6.5bn fee - in the form of yet  
more of these non-voting shares.

And RBS has given a legally binding commitment to increase lending by  
£25bn in 2009.

We already own 70% of Royal Bank - and that stake could rise to a  
maximum of 75% after today's deal with the Treasury.

So it matters that Royal Bank becomes a profitable bank again.

Its new chief executive, Stephen Hester, announced RBS would be  
reducing its running costs by more than £2.5bn a year.

I put to him on the Today Programme that this would lead to job  
losses around the world of more than 20,000. His non-denial was that  
job cuts would be substantial.

Or to put it another way, in rebuilding this pillar of our economy  
there'll be pain for employees and possibly for taxpayers.
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