Crisis-stricken Royal Bank of Scotland took fresh help from the government on Monday and announced that its losses for last year could reach £28 billion (US$41.3 billion) — the biggest ever for a British corporation.
The government raised its stake in RBS from 58 percent to 70 percent in a deal which will save the company 600 million pounds a year in interest charges, but the agreement ignited fears in the market that the bank could soon be fully nationalized. RBS battered shares lost two-thirds of their value in on Monday’s trading.
“Isn’t this nationalization in all but name?” said Vincent Cable, a senior lawmaker from the Liberal Democrat party.
British Prime Minister Gordon Brown, who separately announced a new round of bailouts for Britain’s troubled banks, scolded RBS for what he called irresponsible risk-taking on mortgage-related securities in the US and the expensive takeover of Dutch bank ABN Amro.
The bank said it expected to mark down the value of past acquisitions including the ABN Amro deal by £15 billion to £20 billion, plus posting other losses up to £8 billion after a dismal fourth quarter.
The largest full-year loss previously reported by a British corporation was £15 billion, by Vodafone in 2006.
Royal Bank of Scotland shares, which traded at around £3 a year ago, finished the day down 67 percent at £0.116.
The bank said profits in retail and commercial business in Britain had been wiped out by losses in its global banking and markets division.
The bank said it had reached an agreement with the government, which took a 58 percent stake in the first round of bank bailouts, to convert £5 billion in preference shares held by the government to ordinary shares, saving RBS having to pay some £600 million a year in dividends.
“Yes, I am angry at the Royal Bank of Scotland and what happened,” Brown said at a news conference where he announced a new insurance program to cushion British banks’ exposure to bad assets.
“Almost all their losses are in the subprime markets in America and related to the acquisition of the bank ABN Amro. And these are irresponsible risks which were taken by a bank with people’s money in the United Kingdom,” Brown said.
In 2007 RBS led a consortium including Belgian-Dutch group Fortis and Spain’s Banco Santander in a takeover of ABN Amro at a cost of euro 70.5 billion.
In April, RBS launched a £12 billion rights issue to raise more capital from investors, the largest in British corporate history. Fred Goodwin, who directed the bank’s aggressive expansion, resigned in November last year when the government took a 58 percent stake in RBS in a first round of bailouts.
“The dislocation of credit markets and the global economic downturn continue to hit RBS hard, as with many other banks,” RBS chief executive Stephen Hester said.
“Significant uncertainties and risks inevitably remain. In this context, the support we are receiving from government benefits all our stakeholders and enables us to provide more customer support in return,” he added.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft