Cable: RBS sell-off 'five years away’

Vince Cable, the Business Secretary, has signalled that the Royal Bank of Scotland will be in public hands for another five years, increasing the chances it will be broken up before it is re-privatised.

In an interview with The Sunday Telegraph, Mr Cable revealed that he believed there was very little prospect of any sale taking place before the next election and that it is probable the state will retain its 81pc stake in RBS for the majority of the next Parliament as well.

Catherine Carr: Vince cable is the person who made one funny comment in the Commons… and has managed to build a new career on it… This man is so out of his depth its not funny. As for RBS. They should refloat Nat West as a separate entity. That would raise a few pennies for the hard pressed tax payer.  Nat West was always a 'boring' retail bank which is why it featured in the reverse takeover with RBS… It was much bigger then RBS and much better run… As long as RBS havent screwed with it to much it should still be a good bank with just retail at its heart… The rest of it needs to be de-leveraged or closed down… RBS was always a small bank with delusions of grandeur… The same applied to Bank of Scotland. Small banks with a small customer base from the sunny labour heartlands… who thought that they could grow exponentially without the customer base… as I said delusional…

Jason Aris: Not so sure on that (NatWest Capital Markets in the nineties was a disaster which effectively brought the retail bank down and allowed both RBS and HBOS at the time to bid for it, the rest is history).

dalai guevara: Some argue the direct exposure to actual cost (not liabilities) of failing banks incurred by the taxpayer was in the region of £150bn, ie 10% of annual British GDP. If that was the case, what's all the fuss about? Why does it take five plus another five years to clean up this mess? Ten years to clean up £150bn - 0.8% of GDP/pa plus interest? Come on! That's propaganda - the mess is far far larger. How large is it? Will anyone ever report the truth, take your time…

andyholmes: I started reading your comment and thought that you were starting to get it, but by the end I can see that you still have little idea. Firstly, the £150bn is still only a liability. The money was borrowed and the cost is servicing that debt, around £4bn per year. If the government walked away from it's stakes today, that liability would turn into a cost, but that's not going to happen. The time it takes, is to value the proportion of the banks that the Treasury holds, at the same or more than they paid out, meaning no cost to the taxpayer (which is what you want isn't it ?).   "Ten years to clean up £150bn - 0.8% of GDP/pa plus interest?" The maximum liability changes as time goes on and circumstances change. The £1.2tn that you previously considered a cost, was the maximum liability in 2009. This has steadily fallen ever since. By 2011 it fell below £500bn and now stands at around £150bn, which comprises RBS, LLoyds and Northern Rock's bad bank mortgage book. Of course it takes time to unwind all of that and your inaccurate anecdotal "proof" does nothing to contradict that.  

dalai guevara: andyholmes PS addition: Banking liabilities of £1.2tn have not been reduced to a mere £150bn as you claim. PSF11B 2013Q2, Public sector banking groups still exposed to £982bn (it's actually gone up!). source: ONS report page 54 of 55 http://www.ons.gov.uk/ons/dcp171778_318117.pdf

andyholmes: I've just checked and the public sector banking groups have combined assets of around £3.25tn, which puts that armageddon scenario liability into perspective. 

dalai guevara: Liabilities are being 'unwound' over time. The abstraction of what we call capital: the product, or gold for product, or shares in companies generating future product, or yet more abstract: the securitisation of options on shares of companies generating future product, are in the process of being unwound. We gathered that and welcome it. In the meantime, £375bn have been printed officially, with other not quantified interventions, and banks (with their balance sheets) have been nationalised or made to merge. Some countries have gone bankrupt in the process, others are in severe recession because of it. Yet those willing to unwind these truly abstract mechanisms are not found in Anglo-America (where to fun started). They play a game of cover up and continue to do so. Is it surprising that no one in their right mind would continue to put trust into the existing Anglo-American institutions when given a choice? Basel III, the curtailing of the bonus culture, reducing the urge to engage in many (not all) forms of derivative trading WILL produce results. OUR representatives are not in favour of any of them, that is why WE are suspicious.

andyholmes: It's your definitions, and the conclusions that you draw from those false definitions, that are abstract.  Liabilities are worst case scenario snapshots, at a single moment in time. your continual consideration that these figures are factual is wearing really thin. You talk endlessly about the £375bn printed, but never mention the £330bn odd in gilts (at redemption value) that the BoE is holding in return for that funding, or the £14bn each year that the BoE receives in interest payments. This is another thing that will likely end up profitable for the taxpayer, once those gilts are returned to the market.      The rest of your rant makes as little sense as your supposedly factual comment. As to your additional comment, just as you've yet to differentiate between liability and cost, you can't tell the difference between the liability held by the public sector banks, and the liability held by the treasury/taxpayer that holds the stakes in those banks. Basically the liability of a shareholder, is limited to the holding they have in the business. Therefore whatever the liabilites shouldered by the banks, the liability to the treasury is limited to the £150bn invested in them. That said, the level of the liabilities that the banks themselves are still exposed to explains why it may take so long to make them fit to sell. You seem to have found the answer to your own question without even recognising it, although it wasn't the answer you wanted.

dalai guevara: So now it's not the figures, but the conflation you criticise, again. We've been through this: liabilities become cost when the IOU is called in. The IOU has been called in. At Fanny At Freddie At RBS At HBOS At Coutts At Northern Rock In Cyprus In Greece In select Spanish banks In select German Banks In select Dutch banks Do I really need to continue? Here, where the facts are, and backed by ONS statistics, the public exposure to government owned banks is £981,700,000,000 It went up last quarter, not down. Here, where the facts are, our reporting does NOT comply with European reporting standards, and our actual PSND is not as reported £1.202tn, or 74.9% of GDP, but £2.232tn or 140% approx of GDP as 'temporary effects' (what TF is that?) and financial intervention require to be included. Here, where the facts are, it is not me who is 'conflating things', but British banking and the governmental reporting of it. So there we have it - the conclusion is: WE no longer trust YOU.

andyholmes: "We've been through this: liabilities become cost when the IOU is called in." That's what you continue to claim, despite it being repeatedly debunked. The Treasury bought stakes in RBS and LLoyds with borrowed money and the taxpayer is paying the interest payments on that debt. It doesn't matter how big the banking liability is, the taxpayer can only lose the £150bn invested.    That £982bn is a figure, NOT A FACT. You're deliberately conflating the liabiliies of the banks with the liabilities of the taxpayer to invent a fact.  "Here, where the facts are, our reporting does NOT comply with European reporting standards, and our actual PSND is not as reported £1.202tn, or 74.9% of GDP, but £2,232tn or 140% approx of GDP" What are you talking about NOW ???? As I've explained at length, financial interventions are liabilities not debt, so to include it as such, makes a mockery of the concept. It may suit your purposes to massage the figures, but I prefer mine to be accurate. If you wish to include the 6 year old bailout liabilities that don't exist anymore, you should also include the £1.5tn in public sector pension liabilities, which is an IOU that is far more certain to be called in. If you spent 1/10th of the diligence you're currently expending, researching the amount spent providing everyday public services compared to the amount raised from taxpayers, you'll quickly see where the debt is really coming from, but that's of no interest to you. You prefer to waste your time creating fantasies using misreperesented figures, to scapegoat the banks for unaffordable social spending. 

dalai guevara: Ah - I get it now. The eternal dualism between public spending sprees obfuscating -what shall I call it to please you- 'banking errors'? For the second time, after the supposed left/right fault line which I explained did not interest me, you again play one against the other. Where did I state public debts/spending were not a worry? Where did I oppose a view that public expenditure was not far too high? I didn't. And with regards to your brief pension debt argument (again, I don't think you really believe it yourself): it's equally shallow and has been discussed ad nauseam. Future pension expenditure, although no asset is held in return, is covered by future taxation - just like future salaries of teachers, or bin collections. It would be utterly nonsensical to add pension liabilities to a debt pot, as you would potentially be adding 30y worth of 'expenditure' to a debt pile which is a snapshot in time. The future is the future, and pensions will be what can be afforded, just like the number of teachers employed by the state, or the frequency of bin collections.

andyholmes: I really wish you did get it, but you don't, because you don't want to get it. The problem is that you've learned about this subject from people that know no more about it than you do. They can tell a good tale, sometimes to deliberately mislead, sometimes through ignorance, and the gullible lap it up because they want it to be true. However, it doesn't matter how many times you repeat a myth, it won't make it any truer, and the urban myths that you regurgitate qualify in that category.  I don't believe for a minute that you've researched European accounting standards or ONS reports. You're repeating propaganda that you've read from another fiscally illiterate commentator, and fool yourself into believing they are facts. I've not mentioned Labour or the left. However if you look at the ever increasing bills for everyday public spending over the last couple of years, it's inescapable where the extra debt is coming from (and it's not the banks). "Where did I state public debts/spending were not a worry? " You've continually complained about debt levels and tried everything you can possibly imagine (imagine being the operative word) to blame the banks for it, without a single murmur over public spending. That's where. Your continual denial over the very real and documented public sector pension liability, that dwarfs even the most pessimistic assessment of the risk from the banking system to the taxpayer, is yet another clear statement that your only interest is bashing the banks. Reality means nothing to you. "Future pension expenditure, although no asset is held in return, is covered by future taxation" Well if that's not the definition of a taxpayer liability, I don't know what is. If I claimed that future banking failures is covered by future taxation, you'd quite rightly pull me up on it. More evidence of dual standards. The ponzi scheme of public sector pensions relies on the current workforce funding the current pension bill and the future workforce funding the pensions of today's public sector workers. It needs an exponentially increase in the workforce to avoid unaffordable increases in contributions.  If any private company, bank or insurance company proposed such a system it would be called a con, but because the taxpayer is expected to fund the difference, everything's supposed to be OK. Until public sector workers fund their own pensions, this black hole (taxpayer liability) will continue to grow. "It would be utterly nonsensical to add pension liabilities to a debt pot, as you would potentially be adding 30y worth of 'expenditure' to a debt pile which is a snapshot in time. " It's even more nonsensical to include a scheme of financial interventions that has and is being repaid by the banks themselves, and be no burden to the taxpayer. Yet you believe it should happen.

dalai guevara: Now hang on a minute, Mr accountant chap - I have not researched European accounting standards? I have not given you the exact line of a 55 pages document issued by the ONS that is relevant here? It is you who cannot deny reality, and you don't (because you couldn't. I like that)! I add the 'oracle of truth' again, for your convenience (page 54 PSF11B, line 2), right at the end, hidden away, out of site out of mind, yet worth a TRILLION quid (!): http://www.ons.gov.uk/ons/dcp171778_318117.pdf It is you who boasts about how all these large numbers appear to make no difference whatsoever. 'They don't matter, a £982bn liability, pffft. Who cares? It doesn't really exist.' You're right in a way, none of the all this, -even the dosh in your hand- actually exists. It's a representation of value which, until 1971, was backed by gold (at least we were made to believe it was). Now, it's backed by what? It's not backed at all, the value of the piece of paper sporting a portrait of our Monarch (in England) is not 'backed' by anything. Hot air. It doesn't really exist, like the £982,000,000,000 public liability of government-owned financial institutions. Yet, these large figures that do not really exist: - kill jobs - bankrupt people, councils, concerns and entire states - stop SME from lending and thus expanding - buy you your next Hirst after bonus season. I will stop here as I trust I have undoubedly made myself clear.

andyholmes: I don't consider for a single minute, that you read those 55 pages and discovered this figure, without some prompting from another source.  In any case this figure is what you call an abstract concept. A potential, worst case scenario calculation, yet you consider that it's already written in stone as a cold hard certainty. Secondly, I repeat yet again it's not a liability on the Treasury or taxpayer, so completely irrelevant to the cost of bnk bailouts. It's a spurious figure that you've introduced to try and prove your false hypothesis.    "It doesn't really exist, like the £982,000,000,000 public liability of government-owned financial institutions." Here you make another false leap. The Treasury (not government) don't OWN RBS or Lloyds. They didn't nationalise them. They bought stakes in them. They are the largest shareholder but not the owner. Maybe this is why you are unable to differentiate between company liability and shareholder liability. "I will stop here as I trust I have undoubedly made myself clear." Clear as mud, as usual. Just because I understand finance, you assume that I MUST be "one of them". I wish, but no. I've just ensured that I educated myself from reliable sources. not from cybersources than know no better than me.

dalai guevara: No other source has prompted me to look where I looked. I'll tell you how I did it, since you asked nicely, please do try to fully engage with my elaborations, be mindful, FEEL them (I'll do it in list form, accountants love lists): 1- you can hang out on the NIESR or OBR websites all day if you felt like it ;-), but 2- why not just visit the GOD website, the ONS? 3- once you've found it, type in the search term 'financial institutions debt' (what we've been talking about here) 4- pop, there are the reports, absolutely nothing, surprise, surprise, on 'financial institutions debt', but everything on PSND. 5- curious, me thinks, scrolls through with his apparently far superior skills in Excel-ery, and 6- BOooOOmM. A trillion quid hidden away in one line on page 54 of a 55 page document. 'A trillion quid don't matter.' Sir, may I admit you have made my day, now getting lost in details of finance speak. In the real world, when a few grand don't return to their rightful owner within terms agreed, the *cricket bat* comes out (delete cricket, insert baseball in the US). Fun and games.

andyholmes: "once you've found it, type in the search term 'financial institutions debt' (what we've been talking about here)" Your original comment referred to taxpayer liability. Since your "discovery", you've started to conflate backwards and forwards with financial institution's debt, as it suits your argument. However you can't just add up disparate figures and pretend they mean something different.  I've never denied that the banks will need time to repair their balance sheets, but taking a worst case scenario as a cold hard certainty is ridiculous, as is passing it off as a taxpayer liability like pensions and PFI undoubtedly are. Taking an extremely generous 10% default rate brings that banking  liability down to under £100bn, which they can and are, continuing to make adequate provision for. Hence the overtones that RBS is unlikely to be fit to sell, under the timescale preferred by No. 10. 

fawstengayle: Well here goes the anti business secretary again! Does he have some kind of hold on Clegg and Cameron? There has to be some reason he is still in post.

GreyPower: He is an utter pain in the arse and would so be in any team he was part of  (ask Shell, who dumped him after a year), but he is less harmful inside the tent than outside - so far.

RPrior: Cable is worse for the country than any of the delinquent banks. Need a programme to break him into small component parts - even before RBS. As a manager of a NatWest Risk management team prior to Treasury investment mistakes, I assert that the most sophisticated control systems are ineffective against the misjudgments of managers of Group Treasuries.

yoyoegg: Funny, Gideon sacked Hester for saying the same thing.

freddythreepwood: As the LibDems are toast at the next election anyway, it makes no difference what Cable says.  He should be booking his place on Strictly Come Dancing.

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