RBS loses over a billion
Just when you thought the financial crisis in the banks was over, then Royal Bank of Scotland posts a £1.1 billion loss.
While the cause of the loses especially seems linked to the RBS subsidiary Ulster Bank, which has guaranteed 100% mortgages in the Irish Republic, it still shows that the European banking system still faces significant challenges.
We still have issues of denial about the extent of problems in the Irish Republic, not least triggered by the Irish bond crisis. And there are continued policy fights within the European Central Bank as to whether existing securities are enough, or whether a sea-change in fiscal policy is required.
In the meantime, I haven’t forgotten – apparently like everyone else – that Portugal may yet require a bail-out, and if that happens then Spain is almost certainly next as the sovereign bond crisis slowly but surely develops.
While some reports try and cheer the fact that the RBS has cut losses, it still remains a clear and indisputable point that one of the world’s largest banks is still suffering significantly from the fall out from the banking crisis.
And here’s the kicker – if UK property begins to fall in price as all trend indicators suggest they must, then you can expect a new round of financial problems to adversely impact Britain’s banks.
The story is anything but over yet.
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