And the cupboard was bare

British banks start to pass round the begging bowl

EVER since the emperor bought new clothes, there have been few instances of self-delusion quite as stark as that of cavalier British bankers at the start of 2008. Just as rivals in America and other parts of Europe were writing down billions on their investments in dodgy mortgage loans and frantically raising money, the bosses of Britain?s biggest banks were instead blithely increasing their dividends in a blustery display of financial strength. Just how hollow it was became apparent on Friday April 18th when it emerged that Royal Bank of Scotland, the country?s second biggest bank, might have to raise money to satisfy bank regulators.

The amount will not be trivial, not will be its impact on shareholders. Analysts reckon that Royal Bank may have to raise between GBP10 billion ($19.9 billion) and GBP13 billion, about a third of its current market value of GBP37 billion. It is expected to do so through a share sale which will probably be announced at its annual shareholders? meeting on April 23rd. ...


[Source: The Economist: News analysis -

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