RBS (RBS) reportedly plans to restart paying dividends in late 2014, but predicts it will take ten years for it to become fully re-privatized. The government will give the bank time to boost its balance sheet before selling its 82% stake in four offerings that would each amount to over £10B. That compares with RBS's market cap of £33.5B.
UBS (UBS) is reportedly nearing an agreement with U.K. and U.S. authorities to pay over $450M to settle allegations that it manipulated global inter-bank interest rates, including Libor. The amount would top the $450M that Barclays paid to settle accusations over its role in the rate rigging, and could increase the possibility that other banks such as RBS (RBS) and Deutsche Bank (DB) will face large fines as well.
Unable to find a buyer for its Indian banking business, RBS will instead wind the business down. The bank thought it had a deal with HSBC, but the terms of the agreement couldn't be satisfied, according to HSBC. RBS had originally hoped to get a premium to the business' £59M book value.
The Bank of England's Financial Policy Committee accuses British banks of possibly misleading investors about the health of their finances. In its semi-annual report, the panel says banks may be overstating capital levels by not recognizing potential losses on loans and playing down risks. Banks may also not have made enough provisions to cover the costs of compensating customers for the mis-selling of certain financial products.
The pendulum continues to swing towards too much capital for banks as the Fed considers forcing U.S. units of foreign lenders to house the businesses in regulated holding companies. It makes sense from the Fed point of view - the U.S. unit of, say, Barclays, could be more easily wound down in a crisis. For the banks, it's another hit to ROE.
The Fed is reportedly considering forcing foreign banks to combine their U.S. operations into American holding companies, which would require the units to meet minimum capital standards regardless of the resources of the parent firms. The move could increase costs, force foreign banks to inject billions of dollars into their U.S. ops, limit the movement of capital and even hurt lending.
Royal Bank of Scotland (RBS) is upgraded to Buy at UBS, which believes Mark Carney's appointment to head the Bank of England signals a more conciliatory regulatory environment for U.K. banks. Gerard Lane of Shore Capital disagrees: "He strikes us as a hardliner." Citigroup notes average bank core tier 1 capital ratios are lower in Canada than in the U.K.
RBS (RBS) is reportedly attracting much interest for 316 branches that it has to sell by 2014 as part of the £45.5B bailout it received in 2008-2009. Potential suitors include P-E firm AnaCap and U.S. investor JC Flowers. RBS is also considering asking the EU, which is forcing the sale, for an extension, and it's mulling an IPO for the outlets. Santander had agreed to buy them for £1.7B, but pulled out of the deal last month.
Managements at RBS and Lloyds (LYG) aren't expecting the government to begin selling its stakes (82% of RBS, 40% of Lloyds) for at least 2 more years. With an election scheduled for 2015, the government may be uninterested in booking large losses on its holdings. Dividend resumption? Also not likely for at least 2 more years.
Arrests by U.K. authorities of former traders at Barclays (BCS), RBS, and UBS in conjunction with the Libor issue are near, according to a source with knowledge of the investigation. The arrests don't necessarily mean charges will be filed, but instead allow prosecutors to more closely question those involved.
An Australian judge has ruled that S&P (MHP) was "misleading and deceptive" in assigning AAA ratings to two ABN Amro (RBS) structured debt issues in 2006, which plummeted in value during the financial crisis and caused losses of over 90% to 12 municipal investors that brought a lawsuit against the firm. The ruling represents the first time a ratings agency has been held liable for its opinion in this way.
More on RBS (RBS) Q3: Net loss includes £1.46B accounting loss on fair value of RBS's debt. "Economic pressures are restraining customer activity levels and as a result banks are running hard to stand still," says CEO Stephen Hester. Bank says may face "material fines" over Libor manipulation and expects to start talks with authorities soon. Shares +1.45% in London.
RBS (RBS):Q3 operating profit £1.05B vs £2M last year and consensus of £714M; net loss of £1.38B vs £1.23B profit last year and vs consensus of £276M, with earnings hurt by an extra £400M provision for the mis-selling of loan insurance. Brings to £1.7B the amount RBS has set aside. "I can’t say there won’t be further" provisions, says the finance director. (PR)
No more light-touch regulation in the U.K.: the Financial Services Authority is forcing banks to hold £150B of "Pillar 2 buffer" capital on top of the £186B needed under Basel rules. The additional amount is much higher than the £20B required prior to the financial crisis. The FSA's Andrew Bailey tells the FT that the extra cushion allows regulators to experiment with ideas to encourage lending.
British government officials and the Financial Services Authority are pressuring RBS (RBS) to sell its RBS Citizens unit in the U.S. as part of a strategy of refocusing on the U.K. and increasing the bank's cash reserves, the WSJ reports. However, RBS management, led by CEO Stephen Hester, don't want to sell Citizens, which analysts estimate could be worth £6.6B.
EU leaders agree to a deal that will give the ECB oversight of eurozone banks starting from next year, a critical step that will allow the ESM to begin recapitalizing troubled institutions and that will lead to the creation of banking union. The ECB will begin by supervising banks that received state aid and then large cross-border firms, with all of the eurozone's 6,000 banks set to come under its aegis by 2014.
Royal Bank of Scotland Group (The) PLC is an international banking and financial services company. The Company through its subsidiaries provides banking products and services to personal, commercial and large corporate and institutional customers.