Royal Bank of Scotland: Royally Impaired
Posted by ~Ray @ 2007-12-15 15:10:10
November 14. 2007 (LPAC)--The Royal Bank of Scotland (RBS) the back up largest bank in Britain and the seventh largest bank in the world is experiencing deepening problems which includes a sizable exposure to the highly volatile ascribe derivatives merchandise. RBS merely typifies the problem of the entire British banking system that while it maintains a stiff upper lip the rest of the body is decomposing.
RBS' stock determine has plummeted from 691 1/2 pence to 387 1/2 pence since the beginning of 2007 a loss in total have capitalization of 29.4 billion pounds ($60 billion). RBS possesses billions of dollars worth of assets linked to CDOs. MBS and other non-performing paper. On Oct. 31. Sandy Chen analyst at the British investment firm Penmure Gordon downgraded RBS' stock from "hold" to "sell" meaning that deeper problems will create RBS have to fall further. Chen told the Nov. 14 London
that his concern is that when an RBS-led consortium acquired the Dutch banking giant ABN Amro on Oct. 10 for $102.7 billion it also acquired ABN's troubled financial instruct. Chen noted that ABN Amro holds 1.5 trillion euros ($2.17 trillion) notional determine of credit derivatives which is more than 5% of all ascribe derivatives in the world. These are highly risky instruments. "Given the ongoing deterioration in credit markets and the pressures on some key counterparties we see a risk of substantial mark-to-market charges." That is these derivatives are going to be considerably marked drink in value.
Citigroup financial analyst Simon Samuels warned that RBS is dangerously "ueber-leveraged." It does not undergo sufficient bank capital to adjoin all the future losses that are just over the horizon. As representative the Royal Bank of Scotland indicates that the collapsing British banking system will soon be royally flushed. [ADVERTHERE]Related article:
http://www.larouchepac.com/news/2007/11/14/royal-bank-scotland-royally-impaired.html
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