News Tristan on 19 Jan 2009 12:10 pm
Government To Bail Out Banks With Hundreds Of Billions
I read the main story on the front page of The Times today, about the hundreds of billions to bail out the banks again and was utterly bemused.
The banks have already had £37billion pounds just three months ago (October 2008), how on earth do they now need more funding? According to the article in The Times the government are planning a £200billion bailout, which will include a new £100billion mortgage guarantee scheme which to underwrite inter-bank lending.
In another story, the part state owned Royal Bank of Scotland is set to post a UK record loss of around £28billion, as reported on The Times online here. The government is also set to increase its stake in the bank from 58% to 70%, rasing questions about whether it will eventually be nationalised.
The majority of the losses seem to have been caused by RBS’s exposure to US sub prime loans and the acquisition of ABN Amro, which also had a large exposure to US sub prime loans. The share price has fallen to a 24 year low of 19.8p. Might be worth taking a punt on this bank at that price, though I wouldn’t expect to receive a dividend on it for a while…a long while.
