Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

RBS Fake Internal Bad Bank For Engineering Artificial Profits Bonuses on Asset Writedown's and Privatisation

Companies / Banksters Nov 01, 2013 - 03:36 PM GMT

By: Nadeem_Walayat

Companies

Today's announcement by the Royal Bank of Scotland (RBS) that has seen its senior staff apparently been sat twiddling their thumbs for the past 5 years whilst collecting bonuses on the basis of fictitious profits are finally to get around to dealing with the banks bad debts by ring fence its worst performing assets / bad debts amounting to £38 billion in an INTERNAL bad bank which on face value goes against the wishes of last governor of the Bank of England who just wanted ALL of the bad toxic sludge to be dumped onto tax payers.


12 Mar 2013 - Bank of England Governor's Last Cunning Plan to Transfer RBS Bad Debts onto Tax Payers

“I think that the whole idea of a bank that is 82pc-owned by the taxpayer but run at arms-length from the Government is a nonsense. It can not make any sense. ”

“I do not believe its beyond the wit of man to devise a plan to restructure RBS [and] divide it into a healthy well-capitalised bank capable of lending to the UK economy... It does mean accepting there are activities that are likely to generate continued losses... In that sense it would a be a good bank bad bank split.”

However today's announcement amounts to a mere smokes and mirrors exercise, much as has been the propaganda that RBS would soon be returning to profits which clearly it is not given the fact that it continues to pay out compensation claims and fines for a litany of past frauds perpetuated on its customers, hence the large Q3 pre-tax loss of £634mln against expectations for a £500mln profit, which comes just as signs of another mega-fraud is breaking as today RBS suspends two of its forex traders as part of investigations into manipulation of the $5 trillion daily foreign exchange markets.

The truth is that RBS remains bankrupt that only continues to exist as a consequence of artificial profitable cannot lose on revenues as a consequence of the tax payer bailouts and the ongoing Bank of England QE money printing programme that currently extends to well over £500 billion without which RBS and many other banks would have ceased to exist some 5 years ago.

Apparently the internal split will magically free up some £10 billion of capital, what smoke and mirrors would allow that to happen if all of the bad assets still remain within RBS itself ?

The answer is that the bad bank will NOT be internal but SEPERATE, where in the first instance that is how the regulators will look on it as two banks and thus allowing RBS to free up capital. Longer term the plan is for an actual separation between RBS Bank and the internal RBS Toxic bad debts Sludge bank that just as was the case with the Northern Rock bank sale to Virgin Money, at the point of privatisation / sale will have become SEPERATED from RBS and likely its assets sold at near 1/5th of that which RBS values the assets on its balance sheets.

In reality we are likely to see large chunks of the soon to be created internal bad bank systemically broken off and sold to the highest bidders so that it virtually ceases to exist as the political plan is clearly towards engineering the privatisation of RBS before the next election that the creation of an internal bad bank plays a critical role towards achieving.

Again RBS's senior staff should have spent the past 5 years of artificial QE money printing profits writing down the bad assets but instead been paying themselves billions in bonuses!

I fear that the internal RBS bad bank will further the fraud on tax payers as assets transferred to the bad bank could be heavily marked down in value which could then be sold at a profit and thus result in further massive bonuses for RBS staff, whilst obviously a heavy loss has been sustained on the GOOD bank! Which means that the Bad bank could out perform the Good bank, in terms of profits! Yes, given RBS and the big banks track record this is likely how the next fraud on tax payers will play out during 2014.

The bottom line is that the tax payers through direct bailouts and the money printing inflation stealth tax consequences continue to pump artificial profits into banks such as RBS. However with the formation of an internal bad bank (some 5years late!) as the bad assets evaporate (get sold off) then the Bank of England will likely reduce its funding of bank profits and thus RBS's revenues will shrink, which means that RBS will also continue to shrink in size long after it has been privatised, so it does not look like a good long-term investment proposition.

Source and Comments: http://www.marketoracle.co.uk/Article42939.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2013 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules