RBS chief gets off scot-free
CNNMoney.com
(Fortune) -- Even in the pathetic pantheon of subprime mortgage losers, Royal Bank of Scotland stands out.
The Edinburgh, Scotland-based bank joined three other titans of global finance - Citi (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) of the United States and Swiss bank UBS (UBS) - in being forced to raise costly new capital after reporting mortgage-related losses reaching into the double-digit billions of dollars. RBS (RBS) said Monday that its latest quarter would reflect nearly $12 billion in writedowns tied to the global credit crunch. Following the script written by its struggling rivals, Royal Bank of Scotland then went out and raised a huge slug of new capital - $23.9 billion worth - at prices far below even the bank's steeply depressed trading price.
But in a bizarre break with the Merrill-Citi-UBS model, in which top execs who oversaw disastrous mortgage investments were forced to resign, Royal Bank of Scotland is standing behind the management team that led the firm into this morass. This despite the fact that the writedowns come just two months after RBS chief Fred Goodwin told investors he didn't expect to have to raise new capital this year through share issuances. Indeed, the board rebuffed Goodwin's offer to resign ......The bank's RBS Greenwich Capital unit, acquired back in 2000 when RBS gobbled up U.K. banker Natwest, spent the middle years of this decade beefing up its issuance of collateralized debt obligations...
...Now, Goodwin is planning to sell the firm's insurance business in a bid to raise even more money and narrow the Royal Bank's focus. And even in the wake of the massive writedowns and humbling capital-raising terms, he insisted on a conference call this week that he's playing a strong hand. "There won't be a fire-sale," he said.
But as RBS shareholders know all too well, Fred Goodwin has been wrong before.
Please see:
RBS: Colonial opinions.
by Henry Cave Devine
The thieves at the trading unit, RBS Greenwich, kept mum on the markings to enrich their compensation at the expense of the shareholders. As far as I am concerned RBS management has no credibility or integrity. ...
My Telegraph : Henry Cave Devine - http://my.telegraph.co.uk/henry_cave_devine/
Almost 11,000 Connecticut Working Families Have Lost Their Homes Since New Years Day.
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