During the current climate, many are tightening their belts, laying people off, ending their long term leases on commercial property and moving into short term rented offices. Surviving in the cut-throat economy that has been foisted onto us by the banking sector is becoming increasingly difficult.
Let’s cast our minds back a few years to 2008, when the banks first started bleating for our help (our – as in the hard working taxpaying individual of this fair land). The Banker’s Top 1,000 annual survey of 2008 revealed, RBS suffered the greatest losses, with a pre-tax operating loss of $59.3bn, followed by Citigroup, with losses of $53bn.
The sheer depth of RBS’s losses indicated the extent of the challenge that was facing Stephen Hester, the chief executive of RBS. Who is now embroiled in a row over the scale of his £15m pay package.
The ratings agency, then went on to forecast further losses of £130bn for UK banks and building societies in 2009 and 2010, as bad debts rose and pressure built on profitability.
Moody’s, a leading research and analysis organisation, said that during 2008, the UK banking sector had absorbed losses on loans of around £110bn and it raised or arranged around £120bn of new capital by mid-2009.
These losses would reach £250bn in a stressed case scenario, if the UK’s economic performance was worse than expected. Moody’s numbers included in its estimate, the benefit of the government’s asset protection scheme, which ring fenced toxic assets.
The International Monetary Fund stated, the global financial sector faced write-downs of $4.1tn (£2.8tn) from the toxic assets that had crashed in value since the start of the credit crunch.
All this makes very grim reading and we would be forgiven for think that the UK banking sectors would today be in meltdown.
But we need not fear, the banks have been very frugal with our money and although RBS still made a loss of a further 3.6 billion pounds in 2009 they managed to limit their bonuses to a meagre 1.7 billion pounds. A billion is a figure with 9 zeros. Count them 000000000. And this is for making a loss of 3.6 billion. People who did things like this used to go to jail (remember Bearings bank and Nick Leason). But now it seems they earn a fortune instead.
Barclays bank went on to make a profit of £11.6 billion in 2010, on which they paid tax of just £113 million. That equates to less than 1%. What are we all doing paying up to 40%?
The point I am trying to make is this. Whilst the banking sector carries on as normal, other sectors, like the commercial property sector, appear to be the ones paying for the bankers mistakes.
