UK News
Insights from the UK and beyond
from Breakingviews:
RBS has tough fight to put value in wholesale arm
By Margaret Doyle
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Royal Bank of Scotland, the state-owned UK lender, is cutting its investment bank, again, and is merging it with its international payments unit. The new division aims to make more than the 12 percent groupwide cost of capital. It must do at least that to have any value. But it is a big ask given regulatory and political headwinds.
The cash equities business was never a strength for RBS - not even after the purchase of Hoare Govett which came with the disastrous ABN Amro acquisition of 2007. The fixed income business is stronger. Indeed Greenwich Capital Markets, acquired with NatWest, is something of a jewel in what is otherwise a pretty tarnished crown. Helped by Greenwich, America contributes the largest share of RBS’ investment bank revenues, almost one-third of the total. It also earned a healthy 24 percent return on equity in 2010.
Sadly, the strengths are shrinking. Greenwich was a big player in now-diminished U.S. mortgage trading and returns will come under further pressure because Basel regulations require RBS to assign more capital to fixed income. Moreover, new UK rules that will ring-fence retail banks from riskier wholesale arms raises the latter’s cost of funding. Analysts at Credit Suisse forecast that, without restructuring, return on equity at the investment bank would have shrunk to 6 percent.
from Breakingviews:
Tesco’s ambitions earthed by UK retail reality
By Edward Hadas
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
When Philip Clarke took over from the Sir Terry Leahy as Tesco’s chief executive in March 2011, he seemed to have one of the sweetest corporate inheritances around. The company was strong in its British home market and growing well elsewhere, although the U.S. expansion remained a work in progress.
from John Lloyd:
No Union, please, we’re English
The opinions expressed are his own.
In France, it is les Anglais. In Germany, die Engländer. In Italy, gli Inglesi. In Russia, Anglichane.
The peoples of the United Kingdom, for most other peoples, are habitually “English.”
from Breakingviews:
The real UK plan B: protecting against euro chaos
By Hugo Dixon and George Hay
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
Pundits say Britain needs a plan B to boost growth. What it really needs is a contingency scheme to handle a euro explosion. The central planks should be for the government to keep adequate fiscal firepower in reserve to handle a crisis and to shore up the country’s banks.
Measuring up the Tartan curtain
Visiting Scotland this week to see Alex Salmond sworn in as first minister, the newspapers were full of talk about “independence lite”. The idea was that an independent Scotland would be free to choose as from a menu, selecting which issues to manage itself and which ones to pool with the rest of Britain.
Listening to Salmond in Holyrood and speaking to him afterwards in his official residence in Bute House, there was little sign of soft-pedalling.
Should Scotland become independent?
As Scotland prepares to celebrate 10 years of devolution on July 1, the question of whether the nation should gain full independence from the Union refuses to go away.
An opinion poll has found that 58 percent of Scots support the Scottish government’s wish to hold a referendum on independence in 2010.
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The Wall
