Good news - RBS is about to become more like a proper bank

[AtW]

"RBS planning closure of half of its investment arm

Managers at RBS have submitted plans to the bank’s board that could lead to the rapid reduction of the Global Banking and Markets (GBM) balance sheet from about £450bn to less than £200bn and the closure of businesses, including equities and corporate advisory.

Consultants from McKinsey & Co are advising on the restructuring, details of which were last week discussed at a meeting of the bank’s board. A final decision is expected in the next two months and a formal announcement will come no later than the bank’s full-year results in February. GBM’s 18,900 staff have already been warned to prepare for large-scale redundancies on top of those already announced over the summer.

UK Financial Investments, the body charged with managing the taxpayers’ 83pc holding in the bank, has been briefed on the plans, and Stephen Hester, the bank’s chief executive, has also met several other major institutional investors to discuss the changes.

Proposals put forward by business heads envisage a wide range of options from major changes to the way divisions operate to the sale or liquidation of operations. In the equities business, nine different scenarios have been presented to the board, and similar plans have been put together by all the bank’s other main business lines.

The decision to effectively give up on its commitment to retain a full-scale global investment banking operation and opt for a version of Lloyds Banking Group’s much more limited corporates and markets business follows a dismal set of third quarter results. In the three months to the end of September, investment banking made an operating profit of just £80m, compared to £483m in the previous quarter. (AtW's comment: so shareholders - taxpayers who funded bailout are getting fook all profits, yet how much was paid out as bonuses in the same year? Add hefty salaries to this and it's obvious that shareholders get shafted.)"

More from the source: RBS planning closure of half of its investment arm - Telegraph

------------

How much of that £450 bln balance sheet was invested into Scotland or even UK?

RBS bonus pool - £500 mln - http://www.independent.co.uk/news/bu...t-6271794.html

Profit (operating) for last quater is £80 mln but bonuses are £500 mln WTF! Here is more:

"This is less than RBS paid out last year. Despite announcing a £1.1bn loss in 2010, the bonus pool was £950m"

Is there any other industry where staff awards themselves massive salaries and bonuses as if they owned the business completely?!?!

I can't think of any industry sector where it happens so frequently as it does in "banking".

[Jeff Maginty]

..

[AtW]

Here is another example:

"By rights, those shareholders should be hopping mad when they appreciate the contrast in fortunes: they are carrying a far greater share of the financial pain. Why on earth, they may ask, does chief executive Lloyd Blankfein think he can keep 44% of revenues for himself and his staff? Last year, the ratio was 39.3% and in 2009 it was 35.8%."

Source: Time for Goldman Sachs shareholders to get real on bonuses | Business | The Guardian

If banks are such high cost labour intensive operations then the job of their directors should be every year to cut costs whilst doing same job (supposedly good).

What would have happened if banks actually worked in the interest of shareholders? Profits would have been much higher and staff would have a LOT less motivation to make crazy deals to get their bonus and then leave. High profits would have meant that bank can have more capital to withstand bigger risks where as now most of money just paid to staff and the bank is left bear to suffer hefty losses.

[Freamon]

Considering the banking industry in general in the UK, I've often thought it's shocking how much of a banks "profit" gets paid out in bonuses to their staff, compared with how much gets paid in dividends. Since when were mere employees entitled to such a large share of the profits? In any other business it would be the owners that are highly rewarded and not the employees (except for maybe one or two exceptionally successful sales staff who brought in huge deals that the firm would otherwise not have gained). You know, Owners - those people who put up the capital that got the business started and keeps it going. Lets face it, the big-shot traders in banks would not be able to generate such high (short-term) profits if they only had their own money to gamble with (sorry, "invest").

If you think publicly listed companies are run for the benefit of their shareholders you are deluded.

[Jeff Maginty]

..

[AtW]

If you think publicly listed companies are run for the benefit of their shareholders you are deluded.

I was under the impression that it was legal responsibility for a Director to run a company in the best interests of shareholders.

Companies in many sectors have to do just that, it just seems that banks consider themselves above the law.

[Jeff Maginty]

..

[Moscow Mule]

I would love it if the banker scum got sued and had to pay back their ill-gotten gains.

What about Sue in accounts payable?

[Freamon]

I was under the impression that it was legal responsibility for a Director to run a company in the best interests of shareholders.

Drivers also have a legal responsibility to drive at a maximum 70mph on a motorway.

[AtW]

Drivers also have a legal responsibility to drive at a maximum 70mph on a motorway.

Yes, but the difference is that drivers who exceed 70mph will get 3-12points on their license where as directors who in theory don't act in the best interest of shareholders will probably get away with a very large bonus.