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RBS boss apologises over losses
Sir Tom apologised to his shareholders for RBS's troubles
Royal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is "profoundly sorry" for the bank's financial difficulties.
Shareholders have voted by 99% in favour of accepting a £20bn ($29.9bn) government bail-out.
Sir Tom said he was "sorry" about the financial and human cost that the bank's troubles have caused.
Earlier this month, RBS said it expected to report its first full-year loss in its almost 300-year history.
Sir Tom told the meeting he was "sorry" about the financial and human cost that the bank's troubles have caused.
The chairman said the current crisis was the most difficult experience "in over 40 years of my working life".
He said the challenges the bank - and the banking sector - now faced were "unprecedented".
"I, as the chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached," he said.
'Increased vulnerability'
Sir Tom said that RBS's troubles were made worse by its acquisition of the giant Dutch bank ABN Amro, which RBS bought at the height of the boom.
A consortium led by RBS paid 71bn euros ($91bn; £61bn) for ABN Amro in October 2007.
Critics say that the RBS's problems stem from the fact that it over-reached itself.
Sir Tom said the purchase of ABN Amro "increased the short-term vulnerability" of the bank as the financial crisis intensified in September.
The chairman said that RBS found that it did not have the cash reserves necessary to cope with the worsening credit crunch.
"Had we known the severe market dislocation and economic deterioration we would face, we would have built up larger capital reserves earlier," he said.
The shareholders' vote means that the government could end up taking a stake of up to 60% in the troubled bank.
Under the terms of the £20bn capital raising, RBS plans to raise up to £15bn from investors by selling shares at 65.5 pence each. If the shares are not taken up, the government will acquire them.
The government will also directly buy preference shares in the bank - worth a total of £5bn.
Sir Tom is retiring next year, and he is not the only one to leave the bank.
Chief executive Sir Fred Goodwin has resigned, and is being replaced by Stephen Hester who is expected to begin the process of shedding up to 3,000 staff.
On Wednesday, Lloyds TSB shareholders voted overwhelmingly in favour of taking over HBOS as well as accepting government bail-out money.
Source: BBC NEWS | Business | RBS boss apologises over losses
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Robert Preston Blog:
A very sorry banker
It's very rare indeed for a bastion of Britain's corporate establishment to say sorry about anything - let alone say it in a public meeting.
So Sir Tom Mckillop's big sorry to shareholders, customers and employees is a proper event.
Royal Bank has much to be sorry for.
The bank expects to make losses this year. There's a £20bn hole in its balance sheet, which is being filled by capital provided by taxpayers.
It doesn't get much worse - although there's evidence today that for Britain's banks, we're a long way from the end of the bad news.
A part of Northern Rock, called Granite - which packages up mortgages and sells them to investors as bonds - has disclosed that mortgage customers are 90 days or more behind with the payments on more than 2% of £35.5bn of mortgages.
That compares with less than 0.5 per cent of mortgages that were 90 days in arrears in mid 2007.
To translate, it means borrowers are in some difficulty on more than £700m of mortgages.
The Rock disclosed this serious worsening in mortgage arrears when also announcing that in effect it will be winding down Granite - which was the vehicle which financed the Rock's rapid growth over many years.
The demise of Granite is a setback for any recovery in the mortgage-backed securities market.
Such a recovery was always something of an elusive hope.
But if banks can't find any way to raise money for mortgages from wholesale markets, it means Britain's housebuyers will remain starved of loans for some time yet.
Source: BBC NEWS | The Reporters | Robert Peston
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Well, thank you for stating the blindingly obvious to Shareholders. You bought ABN AMRO at top price with toxic debts. You have cost 3000 fellow colleagues their jobs. Thank you and enjoy your retirement. That is what Nattie thinks of it all. I am not a happy with that.
Sir Tom apologised to his shareholders for RBS's troublesRoyal Bank of Scotland (RBS) chairman, Sir Tom McKillop, has said he is "profoundly sorry" for the bank's financial difficulties.
Shareholders have voted by 99% in favour of accepting a £20bn ($29.9bn) government bail-out.
Sir Tom said he was "sorry" about the financial and human cost that the bank's troubles have caused.
Earlier this month, RBS said it expected to report its first full-year loss in its almost 300-year history.
Sir Tom told the meeting he was "sorry" about the financial and human cost that the bank's troubles have caused.
The chairman said the current crisis was the most difficult experience "in over 40 years of my working life".
He said the challenges the bank - and the banking sector - now faced were "unprecedented".
"I, as the chairman of RBS Group, both personally and in the office I hold, am profoundly sorry about the position we have reached," he said.
'Increased vulnerability'
Sir Tom said that RBS's troubles were made worse by its acquisition of the giant Dutch bank ABN Amro, which RBS bought at the height of the boom.
A consortium led by RBS paid 71bn euros ($91bn; £61bn) for ABN Amro in October 2007.
Critics say that the RBS's problems stem from the fact that it over-reached itself.
Sir Tom said the purchase of ABN Amro "increased the short-term vulnerability" of the bank as the financial crisis intensified in September.
The chairman said that RBS found that it did not have the cash reserves necessary to cope with the worsening credit crunch.
"Had we known the severe market dislocation and economic deterioration we would face, we would have built up larger capital reserves earlier," he said.
The shareholders' vote means that the government could end up taking a stake of up to 60% in the troubled bank.
Under the terms of the £20bn capital raising, RBS plans to raise up to £15bn from investors by selling shares at 65.5 pence each. If the shares are not taken up, the government will acquire them.
The government will also directly buy preference shares in the bank - worth a total of £5bn.
Sir Tom is retiring next year, and he is not the only one to leave the bank.
Chief executive Sir Fred Goodwin has resigned, and is being replaced by Stephen Hester who is expected to begin the process of shedding up to 3,000 staff.
On Wednesday, Lloyds TSB shareholders voted overwhelmingly in favour of taking over HBOS as well as accepting government bail-out money.
Source: BBC NEWS | Business | RBS boss apologises over losses
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Robert Preston Blog:
A very sorry banker
- Robert Peston
- 20 Nov 08, 05:55 PM
It's very rare indeed for a bastion of Britain's corporate establishment to say sorry about anything - let alone say it in a public meeting.
So Sir Tom Mckillop's big sorry to shareholders, customers and employees is a proper event.
Royal Bank has much to be sorry for.
The bank expects to make losses this year. There's a £20bn hole in its balance sheet, which is being filled by capital provided by taxpayers.
It doesn't get much worse - although there's evidence today that for Britain's banks, we're a long way from the end of the bad news.
A part of Northern Rock, called Granite - which packages up mortgages and sells them to investors as bonds - has disclosed that mortgage customers are 90 days or more behind with the payments on more than 2% of £35.5bn of mortgages.
That compares with less than 0.5 per cent of mortgages that were 90 days in arrears in mid 2007.
To translate, it means borrowers are in some difficulty on more than £700m of mortgages.
The Rock disclosed this serious worsening in mortgage arrears when also announcing that in effect it will be winding down Granite - which was the vehicle which financed the Rock's rapid growth over many years.
The demise of Granite is a setback for any recovery in the mortgage-backed securities market.
Such a recovery was always something of an elusive hope.
But if banks can't find any way to raise money for mortgages from wholesale markets, it means Britain's housebuyers will remain starved of loans for some time yet.
Source: BBC NEWS | The Reporters | Robert Peston
------------------------------- merged -------------------------------
Well, thank you for stating the blindingly obvious to Shareholders. You bought ABN AMRO at top price with toxic debts. You have cost 3000 fellow colleagues their jobs. Thank you and enjoy your retirement. That is what Nattie thinks of it all. I am not a happy with that.
