I-like-banks

Royal Bank of Scotland: CEO Deathwatch

<I> Admittedly RBS consolidated the interests of Santander and Fortis in the ABN Amro acquisition – but even net of those minorities RBS remains the biggest balance sheet in the world.</I>

Minorities?

The total size of those 'minority' stakes sums to vastly more than the RBS stake.

<I> The so-what is obvious. In times of a credit crisis – when seemingly safe AAA rated assets are defaulting – big balance sheets are likely to have big problems. They do – and the stock price is telling you. RBS stock is startlingly weak. The company however seem to believe everything is fine – and only miniscule charges have been taken.</I>

You are talking about total balance sheet size without discussing what that balance sheet contains. There are banks even bigger than citigroup whose profits have risen recently. Take HSBC, or of course the 'ABN Amro'-purchasing-curre... Santander whose chief is being hailed as the king of banking this year.

Banks need to operate with gearing. RBS's banking model has brought them from a regional bank to a world superpower in banking terms. >15% dividend growth over >15 years is not to be sniffed at.

If anything, RBS were faster than their competitors in admitting difficulties in the current market, and were first in the UK (and it seems, most successful) to raise cash to allow a gigantic writedown (30bn US$) as provision against possible writeoffs.

The big question, that this article fails to address, is, 'what is on the balance sheet', not 'how big is the balance sheet'?

Disclosure: long RBS, HSBC.