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
  • Today
1 Citi 390,564.78 1474 8.99%
2 JPMorgan 358,442.23 1626 8.25%
3 Bank of America Merrill Lynch 344,395.33 1215 7.93%
4 Goldman Sachs 257,185.44 862 5.92%
5 Barclays 252,851.12 991 5.82%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 36,645.46 176 6.31%
2 Deutsche Bank 36,386.11 128 6.26%
3 Bank of America Merrill Lynch 30,712.91 97 5.28%
4 BNP Paribas 30,600.75 184 5.27%
5 Barclays 30,394.96 86 5.23%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 21,398.51 94 8.81%
2 Morgan Stanley 17,334.42 90 7.14%
3 Citi 16,974.50 104 6.99%
4 UBS 16,643.68 66 6.85%
5 Goldman Sachs 16,184.72 87 6.66%