Comments on: Bad bank of the day, RBS edition A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: RichardSmith Tue, 26 Nov 2013 11:57:42 +0000 Felix, GRG didn’t start doing this in 2008, it started in 1991, and it’s been polishing its game ever since. a-rogue-institution/

E.g. relating to a rip-off set up in 2007: 10CSOH3.html

By: oblivia Tue, 26 Nov 2013 09:57:57 +0000 @FifthDecade There’s no known reason why, in a free market, banks should suffer from raising more equity. It’s only bankers who suffer.

By: JamesNicholls Tue, 26 Nov 2013 09:55:14 +0000 Actually being a bit of an insider on all this, I think that the way GRG treated the customers was neither inevitable because of Basal II or III nor was it a result of the financial crisis – this behaviour has been going for more like 20 years than 5. The financial crisis and the Interest Rate Swaps scandals have just shone a light (not very bright yet) into this murky corner.

It is a lack of ethics and integrity in the leadership of the banks which flows down to every level of what banks do – I am still regularly accosted in my NatWest branch to “up-grade” my account for valueless/pointless inducements – that has led to this. The managers in GRG, and the other banks’ equivalent departments, literally do not see that what they do could be troublesome – they just do not get it.

In addition the whole of the insolvency industry of accountants, lawyers, surveyors and asset based lenders has been complicit in the pillaging by the banks. The whole industry has been “bought off” by the banks.

All that was required for this to happen was for good people to do nothing when they saw wrong.
For more on this see Ian Fraser’s blog and others

By: crocodilechuck Tue, 26 Nov 2013 05:28:10 +0000 @5thD: “This was always going to happen when the effects of Basel II and then Basel III were implemented with their requirements for higher capital ratios”

I think you’ll find that the UK and EuroBanks that adopted Basel II had in fact much lower capital ratios than their US stablemates. Sheila Bair at FDIC, for example. was v negative about FDIC chartered banks going down the Basel II path – not that any of them did, anyway.

“A recent OECD study suggests that bank regulation based on the Basel accords encouraged unconventional business practices and contributed to or even reinforced adverse systemic shocks that materialised during the financial crisis” SOURCE: ystemically-important-banks-and-capital- regulation-challenges_5kg0ps8cq8q6-en

By: FifthDecade Tue, 26 Nov 2013 00:26:35 +0000 In a liquidity crisis restricting liquidity (whichever way you do it) will cause more problems than it solves. Insisting on increased capital ratios for banks in combination with government austerity is clearly not going to boost liquidity, and you have to wonder why on earth the policy makers didn’t see this.

In the case of RBS, instead of going after the speculative investments in US based securities that had been the real bad risks at the bottom of the pile of redistributed and largely worthless mortgage backed securities, RBS appear to have just looked at their own customer base as if that was the root cause of all their problems, when it was prior to 2008 a solid loan book.

By restricting lending to boost reserves, banks, and particularly RBS, cut off funding for the UK commercial sector, which had previously had solid, steady growth for about ten years or so. Suddenly, with fewer buyers, prices fell. This allowed the bank to buy up the properties cheaply – but it was a problem they themselves created, and it seems, profited from.

This was always going to happen when the effects of Basel II and then Basel III were implemented with their requirements for higher capital ratios. The money had to come from somewhere, and unwinding over-stretched positions was always going to be difficult. When it is done in a hurry is will always be the easy targets that suffer before the more complicated core problems are attended to – if they ever really are.