Why is the RBS fine so small?

What is £400m for a bank bailed out to the tune of £45bn?

So, now we know. The guessing game is over and Royal Bank of Scotland (RBS) has been hit with a fine of £400m for its role in the LIBOR-rate rigging scandal.

It may sound a lot but don’t be kidded, don’t be conned. RBS is, after all, a firm with annual revenue of around £30bn. To put the size of the fine in context, it has already set aside £1.7bn (and rising) to cover the cost of claims for mis-sold payment protection insurance (PPI).

What is another £400m between friends for a bank bailed out to the tune of £45bn?

Taxpayers currently have the dubious distinction of holding around 81 per cent of shares in RBS with the government having paid the equivalent of just over £5 per share.

With a current share price of £3.40, the government is sitting on paper losses of just under £15bn.

As Vince Cable has gloomily but accurately forecast, early hope for RBS being re-privatised is no more than a “distant dream.”

There is however one thing that the UK government could do and do quickly. It could stop pussyfooting about over RBS’ US-based subsidiary, Citizens Bank.

Citizens, headquartered in Rhode Island, operates in 12 US states; it is a top 20 US bank with assets of $132bn, around 1,400 branches and a staff of 19,000 employees.

To date, RBS has resisted calls to sell Citizens, despite interest shown in its US unit from a number of banks.

Canada-based Toronto-Dominion and Brazil’s Itau-Unibanco have, from time to time, been linked with an interest in snapping up Citizens. US-based PNC is another potential bidder.

Analysts forecast that if Citizens was on the block, it might fetch around £7.5bn. The party line from RBS has, to date, taken the line that Citizens is a core asset and not for sale. Poppycock.

RBS will, eventually, have to bow to the inevitable and cash in its Citizens chips. It is now time for the government, via UK Financial Investments Limited, the organisation set up immediately after the October 2008 bailouts of Lloyds and RBS, to bear its teeth.

It could start by leaning heavily on RBS to focus on getting its domestic market in order and sell off Citizens.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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