Ouch ! After reporting yesterday on the German bailout of HSH Nordbank to the tune of €13 billion, I didn’t expect to be reporting on another bank bailout quite so soon. Must be a full moon or something.
The Royal Bank of Scotland confirmed it lost £24.1 billion last year – the largest loss in British corporate history. This has led the British government to agree to inject another £25 billion into the bank, bringing the total up to £45 billion. On top of that they are also going to guarantee a further £325 billion using their “toxic debt insurance program.” Excuse me, but this looks like another £325 billion of losses waiting to happen.
Prices for luxury homes in London are directly linked to the state of the financial services sector, and prices fell around 25% last year. Back in November 2008, Savills predicted luxury property prices in London would fall 14% this year, so I suspect they may be readjusting that estimate after this latest piece of bad news.
Still, Sir Fred Goodwin, the man responsible for overseeing these losses has already begun drawing the £650,000 a year pension he is apparently entitled to. Athough UK Financial Investments, the government body responsible for overseeing it’s “investments,” in the banks are looking at ways of clawing some of the £16 million pension fund back. No worries, Sir Fred is only 50 – I am sure he can get another job. Back in 2004, Mr. Goodwin was knighted for “services to banking,” so I would think it was about time he fell on his sword, or whatever it is disgraced knights do to make amends.
He did apologise for his role in the crisis before a Treasury Select Committee meeting earlier this month. When asked by the Committee about his pension, Sir Fred said: “My pension is the same as everyone else in the bank who is in a defined benefit pension scheme. It is determined in the same way as anyone else.” No comment.
