The agony of RBS

On Wednesday, RBS announced it was settling one of its subprime RMBS lawsuits, for a chunky $5.5bn. The shares plunged to the depths of last Monday on the news, and the market mostly yawned — RBS had provisioned nearly everything, leaving only a £151m earnings charge for Q2.

  • By Owen Sanderson
  • 13 Jul 2017
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But the hapless British bank still has the US Department of Justice to confront, also likely be a multi-billion bill.

RBS illustrates the basic dilemma of bank fines — they are incurred by employees through the damage done to investors, but paid by shareholders (UK taxpayers, in this case) to US taxpayers. The state of New York used funds from the last round of fines to build stables for its annual horse fair.

The management of the bank also has a particularly acute dilemma. Running the bank with high capital levels offers a hugely tempting target for prosecutors eager to extract the biggest figure possible.

BNP Paribas’s $8.9bn sanctions-busting fine in 2014 was a reflection in part of the bank’s financial strength; Deutsche’s $3.1bn cash settlement in December 2016 was a reflection of the solvency panic and deposit outflows that gripped the bank when a provisional $14bn figure leaked in September.

RBS, with 13% CET1 ratio (AFTER £11.6bn of litigation and conduct provisions) is certainly a fat target, but the bank has no choice — Deutsche’s troubles last year show that a litigation-induced deposit run is a real possibility, while the Bank of England bakes in surplus conduct capital, by stress-testing conduct risk as well as asset quality.

So the bank is a sitting duck — it has to risk a bigger fine by running surplus capital... to protect against the risk of a big fine. It’s painful for the bank’s management, and painful for UK taxpayers as well.

  • By Owen Sanderson
  • 13 Jul 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 24 Jul 2017
1 Citi 253,106.92 930 8.89%
2 JPMorgan 230,914.50 1036 8.11%
3 Bank of America Merrill Lynch 221,389.46 762 7.78%
4 Goldman Sachs 171,499.26 554 6.03%
5 Barclays 169,046.60 646 5.94%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 25 Jul 2017
1 HSBC 27,039.93 106 7.36%
2 Deutsche Bank 25,125.19 81 6.84%
3 Bank of America Merrill Lynch 23,128.33 61 6.29%
4 BNP Paribas 19,315.94 110 5.26%
5 Credit Agricole CIB 18,706.93 106 5.09%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 13,488.13 59 8.47%
2 Citi 11,496.21 73 7.22%
3 UBS 11,302.86 45 7.09%
4 Morgan Stanley 10,864.95 59 6.82%
5 Goldman Sachs 10,434.21 54 6.55%