The British government is considering breaking up Royal Bank of Scotland Group, the country’s Treasury chief said Wednesday, a potentially radical move that underscores policy makers’ mounting frustration with their inability to arrest a five-year banking crisis. George Osborne, the U.K.’s Chancellor of the Exchequer, said the Treasury “will urgently investigate” the case for splitting RBS—which is 81%-owned by the government following a 2008 bailout—into two separate banks: one housing the lender’s healthy assets and the other containing its hefty pile of troubled loans and securities. “We will see whether it’s right for Britain to, in effect, see RBS broken up,” Mr. Osborne said in his annual speech to London’s financial community, a black-tie affair that has become a regular venue for unveiling major news about government banking policy. [WSJ]
Stephen Hester is in good company. Read more »
Chairman Phillip Hampton will lead a search for a CEO successor and will consider both internal and external candidates, the bank said. It may be difficult to find a replacement given the political interference in how it is run, said Crispin Odey, whose London-based Odey Asset Management LLP oversees $9.5 billion. “The real problem for the government is that they’ve made the job look so unattractive that I can’t imagine who they are going to fill it with,” said Odey, who said he sold his RBS shares because of government meddling in the bank. [Bloomberg, earlier]
When it comes to telling employees to take a long lunch and not come back. Read more »
Once, in 2007, the people who ran RBS though it would be a good idea to buy a Dutch bank with lots and lots of toxic assets. It proved to be not so good an idea, so RBS needed to raise some cash. So it sold £12 billion worth of new stock in June 2008.
In the face of a £28 billion net loss it announced a few months later, that fresh capital evaporated rather quickly, forcing a new share sale to Her Majesty’s Treasury. The people who bought those £12 billion in shares, unsurprisingly, aren’t thrilled about what happened to the value of those shares before and after nationalization. So 12,000+ are suing, seeking several billion pounds from Fred Goodwin & Co., which makes the loss of his knighthood seem rather a bargain. Read more »