The Royal Bank of Scotland — the British Government is jumping this sinking ship. It sank once before, in 2008, and was surfaced to see if it could float. Guess not.
First published June 10 2015 on Main Street Gov and updated.
(Note: underlined words/phrases correspond to links.)
The British Government reported it would begin selling its stake in Royal Bank of Scotland, or RBS, acquired during the bailout. (FYI, RBS is a financial institution that’s been designated as “systemically important” by the US Federal Reserve.)
Chancellor of the Exchequer, George Osborne, said Her Majesty’s government would begin selling RBS shares within months, would continue doing so into the foreseeable future, and would likely make a retail offer of stock to the general public as part of the sales plan. (Good luck holding that stock for the long term.)
The stock closed the day at £3.55, 29% below the average price of £5 per share that British taxpayers were forced to buy at, by their government, in its bailout of RBS years ago.
At least one top-tier business news source trumpeted the sale as (quote) “a highly symbolic move to show the country has moved on from the financial crisis.”
Yeah, right!
More like: The British Government has decided it’s time to begin jumping off a sunken ship that was surfaced to see if it could stay afloat, but could not.
(Update: as of Oct 2016, RBS had racked up £52 billion in losses since it was bailed out eight years earlier. How it’s even solvent, is beyond us.
In general, the trajectory of price-to-book ratios for several systemically important financial institutions, or SIFI’s, is telling of something gargantuan coming down the pike. Whether it’s the tangible capital leverage ratio, or any other balance sheet metric, fundamentals are deteriorating sharply at a frightening number of SIFI’s across the globe. We saw all this transpiring in 2007 and now we’re watching it happen all over again, except this time it’s happening on an exponentially more consequential scale. When one of those SIFI’s goes off across the pond, or wherever, it’ll transmit transatlantic, or transpacific, to all of Wall Street in the blink of an eye.
Again, for those unfamiliar with our forensics, the logic for a 2017/2018 timeframe for everything banking-related to detonate is here, here, and here.)
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