RBS 8 Billion Loss

RBS 8 Billion Loss.

State owned and ailing Royal Bank of Scotland has suggested it needs to allocate a just over £3 billion to meet financial services compensation claims and miss-selling fines both in the UK and overseas.

Than bank suggests that it needs to allocate in the order of:

• £2bn for fines in the USA for manipulating markets and miss-selling mortgage notes
• £650, 000 in the UK for PPI miss-selling compensation and
• £500,000 for miss-selling interest rate hedging insurance products to small businesses when they took business loans

In addition, RBS is also allocating nearly £5bn for bad debt and trade losses.  Taking this trading year up to potentially an £8bn loss.

Comment

It is a long and rocky road for RBS.  A bank that technically has a bigger economy than the whole of Scotland combined.  An interesting thought when you think of Scottish independence and the big question as to who will be Scotland’s central bank in an independent Scotland.

Senior executives have waived bonuses, thus avoiding a political row thankfully and this is commendable.

The whole culture in the banking sector needs to change.  We suggest all banks need to stick to banking.  It is successive governments fault that the banking sector has been allowed to financially “rape” consumers and small business over many years yet will still not get their basic culture in order.

For us, simple changes are needed.  Free banking is a joke!  How can any financial regulator or government expect any bank not to cross-sell, miss-sell and oversell products to subsidise free banking.  Miss-selling will not stop and more banking disasters will occur unless a tighter rein is applied.

Why is it that banking groups are still allowed to take full commissions for selling mortgages, pensions and insurance when no advice is given i.e. no liability.  Yet an independent financial advisers must agree a fee when offering advice and charge for their services?  Expect more miss-selling scandals and fines for various banks.