Out with the new, in with the old

[David Guyatt]

http://www.independent.co.uk/news/busine...12974.html

Three new banks (two not so new) to open on high street
By Sadie Gray
Sunday, 1 November 2009

Three new high street banks will be formed as Royal Bank of Scotland and Lloyds Banking Group are broken up.

Each of the two Treasury-controlled banking giants will have assets sold off to increase competition between lenders and recoup money for the taxpayer, following last year's bailouts.

Two of the new banks will be familiar names. Trustee Savings Bank (TSB), taken over by Lloyds in 1995, and Williams & Glyn's, owned by RBS, will return to the high street. The third will be formed from the healthier parts of the nationalised Northern Rock, which is likely to be split into "good" and "bad" banks.

Alistair Darling is expected to present the plans to the Commons this week, although no assets are expected to be sold before the next general election.

No one who currently owns a British retail bank will be allowed to take over the new institutions.

All that need now happen is for the other big UK banks to be also broken up into domestic retail banking and their gambling casino operations kept separately - so that when the latter go belly up again they can be binned, discarded and forever lost to history.

[Jan Klimkowski]

I can't be remotely optimistic about any breakup of banks led by governments, advised no doubt by revolving door employees from the likes of Goldman Sachs and JP Morgan.

The big question is what is going to happen to the toxic debt?

No sane buyer will pay face value for it.

If the government puts it up for auction, then it'll become clear that the true market value of the trillions worth of toxic sludge is pennies on the pound. This willl instantly destroy the balance sheets of every bank in the world, and therefore this option won't be taken.

So, if the toxic debt can't be sold, the only outcome I can see is that we taxpayers will be forced to eat it.

[Jan Klimkowski]

Here's the first dumpster full of shite heading the way of taxpayers:

Labour's great bank sell-off could cost taxpayers another £40bn

For the three new players to be spun out, taxpayers will need to put fresh funds into all three banks. The biggest injection will be into RBS, which has been earmarked to receive as much as £26bn in an intricate arrangement that could require the taxpayers' stake to rise from 70% to closer to 85% as result of participating in the government's toxic insurance scheme.

Lloyds Banking Group will need up to £7bn so that the government can maintain its stake in the group at 43% if the bank goes ahead with a plan to issue more shares, raising cash and allowing the bank to avoid buying insurance through the so-called asset protection scheme.

Northern Rock is to be loaned an extra £8bn so that it can be split in two, as sanctioned by the EU last week, and become an active mortgage lender again.

The £40bn estimate is subject to change and will be finalised once the delicate negotiations with the EU are concluded in the coming 24 hours.

Darling made no mention of the extra funds when he told the BBC's Politics Show today that the new-look banking sector would take up to four years to achieve. "I'm determined that because the taxpayer put a lot of money into stabilising the system the taxpayer is entitled to get that money back," he said.

http://www.guardian.co.uk/politics/2009/...yers-money