(RBS) RBS

No just thinking it may go slightly lower before results.

Glad I got out at 29.41. ? Are you expecting bad results on the 23rd of February ?

Glad I got out at 29.41. Which way does consensus think this will go before results?

You must be looking at the wrong businesses then…

Retail sales for luxurious brands are most certainly up…cars, bags, clothing etc.
Food and coffee industry is performing quite well too.
Oil is up…

Of course, there are ups and downs across all sectors, but don’t focus on the losers, follow the winners

By Interactive Investor News Team | Wed, 08/02/2012 - 12:42
http://bit.ly/zAdhfz

I'm not talking about bank margins..I'm talking about business margins

costs are rising and sales are falling

japan had a credit bubble and property bubble and then reduced interest rates to zero and printed money.They created zombie banks and businesses by propping things up

I think the situation is very comparable to uk/western world

In japan 20 years later their debt is double 1991,property is 40% less than 1991 and stockmarket 75% lower.

in the west they want to inflate away the debt,however,in japan DEFLATION took hold

Comparing Japan to UK would be wrong at the very root of any question that arises.
True, the basics of economy and financial strategies all around the World are very similar.
However, nobody should turn a blind eye on the factors that make the fundaments of every aspect of our lives like culture, history, education etc.
Very important and much bolder, if I can say so, is the Time.
Especially after tsunami that devastated Japan, now almost a year ago, many have changed their perception and view on valuables like property, electronics, gold etc.
Time is needed for people to make their minds with the past and move on into the future, which is what I would expect from Japan quite soon, but not tomorrow.

I would not be confident to view any reports that would compare data from 1990’s.
The gap is just way too wide and we are living in the Time that moves at least five times faster than it did then (Einstein would probably punch me in an eye for this sentence).

What I’m trying to say is that we have evolved since “back then” so much that more important is to understand the impact of every day that makes the Markets behave as they do right now.

In summary - UK is not Japan

margins are collapsing--overdraft rate 18% BOE lending rate .5%=margin of 3600%--------MORE LIKE ROCKETING

This is a non financial sector employee comment!
The whole sector is in turmoil but, as an amateur, RBS has been through the pits, the leadership appears to be more realistic and positive action is leading to a more secure situation. It has a LONG way to go but, unlike other favoured banks, progress is being made.
The favoured banks:
LTSB (currently 47% BUY) it appears, is still trying to find its identity in handling customer issues but is winning, thereby keeping its customer base as times improve.
HSBC appears to still be the most arrogant (apart from GE Money who, it seems to an outsider, to fly in the face of UK law at every possible chance) and may face a big fall. Public opinion is strengthening - last Sunday's papers had articles encouraging the 'public' to remove savings from the 'Casino' banks.
HSBC has been 'casino like' in the way it handles customers who hit difficulties! AND those customers are talking of voting with their feet - moving their accounts. HSBC can survive I guess on its global reputation/profits. I banked with them when overseas - great service BUT ~I never had financial problems thankfully. If I had been treated the way many of their customers are today, I would have been extremely dissatisfied.

RBS appear to treat their customers much better

Is the future going to be a case of 'How are the mighty fallen'? If so, this bodes well for RBS

Interest rates are still low because if they weren't things would be a lot worse and the 'recovery' (what of it there is) would be dead. Prices of goods would soar and we would all be a lot worse off than we are now as would our economy.

I think your scaremongering is ridiculous to say the least, it's all too easy to be negative.

The boss of majority state-owned Royal Bank of Scotland urged his staff to "prove the critics wrong" and continue a clean-up that has cost 38 billion pounds ($60 billion) in the past three years.
"RBS is still in its loss making phase, which inevitably gives us communication challenges," RBS Chief Executive Stephen Hester said on Tuesday in a note to staff, seen by Reuters.
"There is no doubt that our position in the spotlight makes the job harder ... but the best way to deal with it is to prove the critics wrong."
Hester last week waived a near 1-million-pound bonus after the potential handout sparked a wave of political and public anger. Two days later former RBS CEO Fred Goodwin was stripped of his knighthood. RBS is 83 percent owned by taxpayers after needing a 45 billion pounds bailout in 2008.
"I am acutely conscious that the way our company has been in the media and political spotlight this last 10 days is discomforting to say the least," Hester said in the note.
He said RBS is still suffering "the costs of 'clean up' from our risky inheritance", estimating loan losses, disposal costs and restructuring charges of 38 billion pounds so far.
"We are ahead of schedule in that clean-up; in fact we have been able to spend money and accelerate it as the outside environment got worse," he said.
RBS is due to report its 2011 results and update on its recovery plan on Feb. 24.

well the only similar model is japan where interest rates are still zero

unfortunately their property prices are still 40% lower than 1991 and their stockmarket is still 75% lower than 1991

same likely here and in the western world

There is no way it could get worse than it has gone.
The only way is up now.
Besides, I believe we all can agree that everybody is tired of the lows we’ve been experiencing in the Markets.
Changes are coming as those who can make the difference and decisions are starting to do more and more.
Not so many sit back and wait for others to act.
“Caution – Wet Floor” signs are slowly being removed

but the credit crunch told us interest rates were too low for too long and debt had become unserviceable

Our answer to this was many multiples of the same which is why the real crunch is yet to happen and 2007 was just a warning

THIS TIME THERE WILL BE NOTHING WE CAN DO

I think your view is slightly hysterical taffychaff. RBS are doing exactly what they should be, streamlining their business and getting rid of the bad parts. They are actually well on track in this sense.

I think Greece will no doubt have an effect on this SP in the not too distant future but for me by the end of the year this will be near enough 50p. I have recently got out with a profit on the back of the latest rise but I expect it to drop again at which point I may get back in.

This share looks a very good medium/long term proposition to me.

7 February 2012
For this Fool, the greatest healer is time.
http://bit.ly/xgUjhT

"margins are collapsing"

Taffy, you previously predicted UK house prices would collapse in 2011. They didn't. So Pessimistic Meg is about as useful as Mystic Meg.

don't be fooled...things out in the real world are really really bad

margins are collapsing at the fastest rate ever for businesses and rbs has massive exposure to them

I fully expect the stockmarket to start reflecting this and test march 2009 lows

nothing has actually got better...thinks are worse than ever.

the problem was too low interest rates for too long and huge debt.....more of the same cannot be the answer

Whatever you are taking can I have some too please?!

I honestly believe that we have turned the corner and the banking factor will get a massive re-rating, and the start of the reorting season on Fridy will prove this. We have a great deal to look forward to this year, Olympics, Diamond Jubilee, and the housing sector back on the up. Goodbye to the double dip recession, hello feel good factor to both us and our buddies in USA.

I absolutely agree.
Whatever has happened is now a textbook to learn from.
However, the percentage and size of the bonuses should not be so high…all under 1M perhaps???...and that is only in a healthy economical environment.

Taffy,

I see your predicted collapse in house prices has been postponed, yet again.

“UK house prices rose 0.6% in January, Halifax says”

Mr Hester has a big job with lots of responsibility and lots of consequences. He should therefore be paid a large salary, certainly the largest at RBS. What has that got to do with Bonuses?

Attaching bonus critera which have anything to do with profitability or shareholder value is completely pointless. He has no control over whether Europe goes bust or whether we enter a recession so why should he be penalised for this effect on the bank? And therefore why should he be rewarded when the opposite occurs.?

He should be paid for the job he has been recruited to do, which is to fix the bank. This may mean making things worse before they get better..

Hester is probably doing a good job in bad circumstances. He is not tidying up the house after leaving the kids in charge. Going to take a while and for the world economy to pick up.

Do you consider Hester is failing?
Which part of what he was asked to do has he not delivered?

Nobody has an issue with bonuses for results but paying huge bonuses for failure is a culture we can't afford.

It's what bonuses reward which is the problem. For example Halifax had Andy Hornby as chief exec. His previous experience was doing BOGOF deals with asda. He would be looking to encourage loads of sales. Unlike selling beans loan sales can go bad. Give out big bonuses for sales and people will sell. They will probably not be too bothered about the quality of the deal as it's all about the bonus in their pocket.

uk has got to decide whether they want to continue to be a financial centre--Zurich or New York dont mind big bonuses--best thing the gov can do is leave this alone and they will get our money back quicker---but i understand Cameron position with Milly Bland making capital on this

Well said.

The Top 5 Ways to Find Bargain Stocks in any Market
Friday, Feb 03 2012 by Ben Hobson
http://bit.ly/xuEj81

As well as ii, I have my portfolio on ft.com and looking at the information about RBS under the heading of "forecast" there are analysts forecasts (currently the median forecast for the share price is 30p) but under that there is a bar chart of past and forecast dividends. Obviously there is nothing for 2009, 2010 or 2011 but there is just the slightest hint of a tiny dividend for this year. Am I reading too much into this?

Comments please.

M

Nest egg - I think your argument has one (major) flaw. That bonuses are only related to risk and maximising income. Most bonus schemes have a balanced set of objectives against which the bonus amount is measured. Hester wasnt recruited with a view to taking risks and growing profits he has been asked to turn around a massive organisation that made multi billion pound losses. To do this he has had to identify the real risks within the business, drive out unnecessary risks, sell off bits of the business that do not fit with the future strategy of a safer bank, lay off many staff and change a culture of a bank that was hurtling towards a cliff. AND he had to do that with the govt continually putting in their two peneth worth and a tide of public opinion against him and an European financial crisis that is having a major impact on all banks not just RBS. That was what he was asked to do and that would have been what his bonus agreements would have covered.
Which bits of our tax payers money do you think he has gambled with?
He was asked to do a job, is doing it! He should get the package he was offered when he took the job.
When you talk about reasonable salaries, how do you equate the fact that most Premiership footballers earn more than Hester?
PS just in case you were wondering I am not a fat cat - I am an ex NatWest employee who through loyalty and a bit of stupidity held far too many RBS shares through SAYE schemes etc and has been totally stuffed by RBS. I just want Hester and his team to get the bank back on track so that we can pay back the govt and start doing what (NatWest) did best - be a bank and not a casino.

£50bn to be pumped into the economy
With a double-dip recession looming, the Bank of England launches more quantitative easing
RUSSELL LYNCH SUNDAY 05 FEBRUARY 2012
http://ind.pn/z5Zh2q

Cash injection of £50bn aims to avert slump
Bank of England will hold interest rates at 0.5%.
By Scott Reid
Sunday 5 February 2012 00:00
http://bit.ly/w1NZ42

or do they? what is the best banker? a banker who takes risks in order to maximise profits so they can obtain ever increasing multimillion pound bonuses, with no responsibility if the risk(s) go wrong or is a good bankers socially responsible lending to SME's and individuals to better society whilst underatking good risk management practices whilst making a reasonable profit over a long period of time. I think banks, particularly the ones part owned by HMG should get back to the old fashion boring bank.

With RBS 83% owned by the government, do they/we really want to pay big bonuses to attract bankers who have the expertise to make big profits but could also make large losses.

Do the government really want to be associated with a bank which participates in -what Vince Cable calls - casino banking, or do they want to be associated with a bank which is their to provide a facility for the social good, providing loans to SME's and individuals so that companies can grow and people can get on the property ladder.

Would the government soon enough pay a large salary to a risk manager which protects goevrnment shareholding, rather than big bonuses to a risk taker?

So many times these big bonuses have been justified by the board by saying that they need to attract the best bankers, but are they really the best bankers or the greatest risk takers? A they get greedy and want ever increasing bonuses they will take more and more risk with tax payers equity surely ..... are these the bankers that we really won't at RBS.

Do HMG want a quick buck from investment bankers gambling to make greater profits at the detriment of SME's and people applying for mortgages or HMG/we want a boring bank with no investment division, but an old fashion business model which serves the community as a whole whilst makes a safe and relatively modest profit.

I for one would prefer the later. I actually think paying bonuses to senior management is counter active to what HMG want to achieve in the economy and society as a whole.

So I would say do away with bonuses, pay a reasonable salary (£1.2m is more than reasonable for a RBS CEO) and lets have a boring bank which is socially responsible and does not gamble with tax payers money so that individuals can award themselves multi-million pound bonuses.

thanks for this great article

Expecting the gov to curb the pay of bankers is pure wishful thinking though. to paraphrase Cameron catch phrase " We ( the gov and bankers) are all in it together. "

Once the government departments start to clean up their act stop fritting money away on quangoes and false expense claims , their influence is limited and are in no position to point the finger.

It's now more clear that it's the few at the top who have enormous greed and massive egos and really delude themselves that they have some divine right and all who oppose them are plebs and to be got rid of. Look at any business or operation and if the service su cks at the customers delivery level,it;s a 100% guarantee it's allowed to continue because the board are out of touch, corrupt and self serving., whether it's political at national or local level , or a business or school - all arises from the thinking and action of those in charge. Shareholders are dismissed as irrelevant because the individaul investor is divorced from power - we've allowed our shares to be held in nominee form and use by the pension funds managers (another scary bunch) to control our future plans and actually sell the shares into the market to 3rd parties so that they collect a small commission and let the professional shorters (hedge funds) play havoc with the value of compamies. When it all goes wrong. the hedgies still collect the ir bloated fees , and reward the fund managers with joint holidays on board yacths in exotic places. As star guest, they expect the occasional politican to join them to join them for cocktails and them collude in more greasing of wheels. One might scoff at the sheer brazenness of eastern dictators, the only difference is that we can see and be appalled at the extent of this happening . while we here in the West allow the same carry on and do sod all about it.

US expects Israel to attack Iran
Donald Macintyre: Evidence is mounting that Washington believes an Israeli attack on Iran is now only a matter of time.
Oh dear me!!
http://www.independent.co.uk/

http://www.independent.co.uk/news/world/middle-east/drums-of-war-beat-louder-as-iran-and-israel-step-up-rhetoric-6358873.html

Don’t be distracted by Goodwin’s dishonour

By Ben Chu
Eagle Eye - Breaking views from Independent commentators -, Econoblog
Thursday, 2 February 2012 at 5:47 pm

Political distraction. That’s my basic view on the dishonouring of Fred Goodwin. The purpose is to divert public attention from the fact that ministers have failed to do anything about the scandal of the wholly undeserved pay of our too-big-to-fail bankers.

The Government’s humiliation over the Stephen Hester bonus affair was total. Despite big talk earlier this very month about encouraging shareholders to be more activist over executive pay, when it came to reining in the bonus of the chief executive of a bank that was majority-owned by the taxpayer, our ministers simply sat on their hands. It was only when Labour said they would force a House of Commons vote on the subject, that the Royal Bank of Scotland boss himself backed down. Everyone knows that the Government had been resigned to letting Mr Hester pocket his remuneration package. And having demonstrated their impotence over Mr Hester, the chances of the Government now curbing the rewards of the equally overpaid traders and executives of the likes of Barclays and HSBC are negligible.

The pay of bankers at large financial institutions – and not only those majority-owned by the taxpayer – represents a market failure of gargantuan proportions. When profits at these institutions were up in the boom, the bankers paid themselves a king’s ransom. When profits collapsed in the bust, they continued to enjoy lavish bonuses. And now that the share prices of their institutions are bouncing along the bottom, these same bankers are still in line for unfeasibly large rewards. There is no observable link between pay and performance here, and certainly none between employee remuneration and shareholder value. The only way to make money out of a big bank these days is to work for one.

To end this racket, the Government would have to be brave. It would need to ignore all the hysterical threats about an economically crippling exodus of “talent”, and dare to interfere in the remuneration of the executives and employees of Britain’s giant banks. There are perfectly sensible ways of doing this which will not ruin the City of London. Andy Haldane, of the Bank of England, has suggested that remuneration packages should be linked to a bank’s “return on assets”, rather than “return on equity” (something that allows bankers to make large profits by holding a dangerously small amount of capital).

But there is, sadly, no sign of the Government exploring any of this serious agenda. Instead, it has made a bid for short-term popularity by stripping an already discredited banker of his worthless gong. The public should not be fooled. We will know that the Government is serious about reforming the culture of reckless and overpaid finance when it stands up to a banker who still has some power.

Tagged in: banks, Fred Goodwin, pay, pay Andy Haldane, remuneration, Stephen Hester

Gold: The best money

By Bill Bonner
Baltimore, Maryland

Dow down slightly yesterday. The FTSE was flat. Oil falling further below $100. And gold still going up.

What is most interesting is the movement in the price of gold. It seems to be heading up again – almost no matter what else is happening.

So, let’s look at what might be going on...

If investors sensed a recovery... they would expect banks to lend more freely... people to shop more freely... and prices to rise.

This would raise consumer prices; the price of gold should go up.

But if the market sees growth and inflation ahead, why is oil slipping? And why is the Baltic Dry Index – which measures shipping prices – at a 25-year low? And how come last month’s US employment figures were disappointing? And why aren’t stock market prices going up?

Most important, if the economy is really recovering, why is the ten-year note yielding only 1.82%? And what about the long bond? Shouldn’t it be trading at a yield higher than 3%?

And how come house prices fell over the last year... and the last month?

And how come incomes are falling?

Or, to look at it from the opposite point of view, how is it possible for a real recovery to take root in the hard, barren soil of falling house prices and slipping consumer earnings?

But if the economy is not improving... then there should be no increase in inflation... and no pressure on the price of gold, right?

Maybe investors don’t anticipate a recovery at all. Maybe they’re buying gold because they see the economy getting worse, not better. We associate a rise in the price of gold with inflation. But gold is much more versatile than we think. It protects your wealth when paper money loses its value. It also protects your wealth when paper money gains in value. It protects you when you are right... and when you are wrong.

How so?
During the Great Depression, for example, the price of gold rose... against dollars... even though the prices of food, clothing and other consumer items...as well as the prices of investment assets ... were falling in dollar terms. Why? Because money gains value – relative to things – in a depression. Gold is money. It is the best money. It is the only money that has stood the test of time.

Besides, there is more going on. In a financial crisis... or a depression... investors begin to doubt that their counterparties will make good. Banks fail. Investors go broke. You own a mortgage, and then you discover that the homeowner has left town... and the house has lost half its value. You own a note, and then you discover than the payer is bankrupt; your note is worthless. You own shares in a company; and then the company goes out of business.

When you are in a de-leveraging phase, you discover that many of the assets of the previous credit bubble are not assets at all. And while you’re waiting to find out, the best thing to have in your safe is gold.

As uncertainty rises; so does the price of gold.

The price of gold also rises when the return on other assets declines. At 1.82%, the real return on a ten-year T-note is negative. Consumer prices are rising faster. So, the reward for lending to the government is less than zero.

Normally, holding gold costs you money. You give up the return you could get from ‘risk free’ investments (Treasury debt). Now, you give up the risk from reward-free investments.

Gold goes nowhere. It produces no yield. It pays no dividends. It makes no profits. You can’t live in it. You can’t drive it. You can’t hang it on your wall and admire it.

But when the return on Treasury debt is negative, what do you give up by owning gold? You give up a loss!

You also give up the risk of a much bigger loss. The Fed is bound and determined to bring up the inflation rate. Ben Bernanke has suggested that he might set the inflation target higher than 2%. He has announced that he will keep the Fed’s key lending rate near zero for the next three ye