RBS find extra £20 billion for SMEs

After a review by independent examiners, the taxpayer-owned bank confirms that there is more they can do to assist the UK business borrower.

Less than a month after Stephen Hester’s surprise announcement that he would be stepping down before the bank was able to refloat itself, RBS have come out with another shocker. Some time ago the bank brought in external management consultants to assess their lending policies and procedures; the review has unearthed an extra £20 billion that the bank could lend.

This has been found as a result of a reassessment of risk parameters in the small business lending department. Unsurprisingly the policies were tightened up following some of the more optimistic lending decisions taken before the financial crisis, and the ratios between cash on deposit from small and medium enterprises (SME) and the amount lent out to SME’s has aggressively shifted. Prior to 2009 the ratio was roughly 1:1.3; it currently stands at 1:0.8.

If the bank was to lend this extra £20 billion to SME’s then how would that extra risk be perceived by the markets? If, as is widely assumed, the government push for the bank to be refloated before a 2014 general election, how much damage would this extra risk do to the team trying to raise investor interest? All of this raises further questions about Mr Hestor’s departure and, regardless of how much the RBS board deny it, how much control over decision-making is held by politicians as opposed to bankers? I for one am finding it very difficult not to be just a little cynical.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.