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News

Royal Bank of Scotland in trouble

50 replies

flubdub · 15/09/2008 14:43

here.
Iv read somewhere else that RBS are in serious trouble. Cant find it now though. If they go down, what would happen to peoples money? And peoples debts with them?

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sameagain · 15/09/2008 14:56

That article is from 8 August!!!

As under the financial services compensation scheme, 100% of your savings, up to £35,000 are entirely safe. Stop scaremongering.

MadameCastafiore · 15/09/2008 14:58

RBS stuffed up buying ABN too!

flubdub · 15/09/2008 14:59

MrsPink 13th September, 2008

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twinsetandpearls · 15/09/2008 15:00

thanks for the voice of reason sameagain.

flubdub · 15/09/2008 15:00

Im not scaremongering. I didnt notice they date! And its only a month ago!

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flubdub · 15/09/2008 15:01

And, in fact, I posted because, like I said in my op, I wanted to know what would happen to peoples debts with them, if they went down.

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twinsetandpearls · 15/09/2008 15:02

I think it was me scaremongerinf tbh.

littlelapin · 15/09/2008 15:03

This reply has been deleted

Message withdrawn at poster's request.

flubdub · 15/09/2008 15:06

LL - you're so clever
Your posts are always sensible.

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littlelapin · 15/09/2008 15:11

This reply has been deleted

Message withdrawn at poster's request.

GrimmaTheNome · 15/09/2008 15:15

To answer the original question - as sameagain said, savings are insured. (the
issue of not having more than 35K in one institution is worth remembering with all the mergers going on, if you or your elderly relatives are fortunate to have savings at that level.)

Debts are the banks assets. They would be sold on to mitigate the losses. You would still have the same debt but with a different lender.

flubdub · 15/09/2008 15:17

Wow, just read that. V interesting. Why has nobody (except you, and Martin Lewis) made this more widely known. Are they trying to dupe more money?

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flubdub · 15/09/2008 15:19

Oh right Grimma, thanks. What if nobody took the bank over? who would you owe then?

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ruddynorah · 15/09/2008 15:19

it was brought to most people's attention wen northern rock got into trouble.

flubdub · 15/09/2008 15:22

ruddy - I knew about the £35,000, but I didnt know about the one institution thing.
Eg, I didnt know the AA, and RBS were one.

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cestlavie · 15/09/2008 15:33

And in answer to people's concerns, one thing which Northern Rock, Bear Stearns and Lehmans all had in common was that they had no (or a very small) deposit base. What that effectively means is they did not have a large stack of money which people had given them to look after in the way that RBS, HBOS, Barclays, HSBC, JMorgan Chase, Citibank etc. all have as a result of their retail banking operations. They were solely investment banks. RBS, for example, has just under £600 billion of its own capital in the form of retail deposit accounts.

What brought down the banks above was not the losses on so-called 'toxic' assets. The majority of these are only paper losses, i.e. theoretical losses, not losses which they have to pay for. What absolutely did bring them down was that other banks stopped lending to them which created a vicious circle leading to insolvency.

i.e. Banks start getting concerned that Lehman might get into financial difficulties -> people reduce lending to Lehman -> Lehman finds it harder to settle the obligations which it does have -> banks get even more concerned that Lehman might get into financial difficulties.

Ultimately, with banks refusing to lend money to these institutions they had no money to settle the outstanding obligations which they did have, and they were forced into administration. In the case of the banks with big retail operations, however, they have their own large pool of liquidity to draw upon so they're not exposed in the same way which Lehman and co were.

Plus, and equally importantly, because the US institutions did not have a retail deposit base the direct fall out from the failure of these banks is the institution itself and other financial institutions not the man in the street. If they did, it's very likely that the government will step in to protect the consumer, as they did with Northern Rock - be it directly through nationalising or indirectly by requiring that other institutions support it/ providing central funding etc. I really wouldn't be worrying about the guys like HSBC and RBS at the moment.

LIZS · 15/09/2008 15:33

That's very old news - afaik not as bad as this thread is making out. RBS have a number of different arms as do most banks these days.

MlleFingeot · 15/09/2008 15:45

I've just had a letter from Natwest increasing my overdraft by some ridiculous amount that I do not need and did not ask for.

They can't be in that much trouble then

flubdub · 15/09/2008 15:47

cestlavie - thats very helpful, and reassuring.

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poppy34 · 15/09/2008 15:48

agree with cestlavie...the likes of rbs/hsbc very different animals with much bigger deposit base plus the effect on electorate of letting a retail bank fail will galvanise a government in the way it wouldnt with an investment bank like lehmans

Janos · 15/09/2008 16:58

I bank with RBS and have been given an overdraft of £1500 so not panicking just yet!

Janos · 15/09/2008 16:58

I daren't go anywhere NEAR my limit though.

SpandexIsMyEnemy · 16/09/2008 09:57

natwest can't go under - that's who I bank with. & have small (laughable) savings with. it's who the family are with in general.

StealthPolarBear · 16/09/2008 09:58

oh *T%

StealthPolarBear · 16/09/2008 10:01

Thanks LL

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