DCSIMG

Comment: RBS may seal Libor deal but more is to come

George Kerevan

George Kerevan

  • by GEORGE KEREVAN
 

CHRISTMAS is over and it’s back to normal with yet another round in the banking scandal.

Royal Bank of Scotland is bargaining with the City watchdog, the Financial Services Authority (FSA), and US authorities over how big a fine it will have to pay for fiddling Libor rates.

Barclays had to stump up £290 million while UBS was fined £940m, taking the bank into a Q4 loss. Expect the joint UK-US penalty on RBS to be somewhere in between.

No surprise there, of course. The real issue at RBS is who will get their P45 as penance. The particular problem for RBS management is that its traders continued manipulating Libor rates until as late as 2010, two years after Fred Goodwin was replaced by Stephen Hester. The new team claims it was not aware of the scandal until told about it by the regulators. Which means Hester and his senior executives are guilty – at the very least – of the sin of omission.

Firing Hester would be daft given his pivotal role in bringing RBS back from insolvency. But that leaves John Hourican, head of the RBS investment bank, and Peter Nielsen, head of markets, as prime candidates to make the ritual sacrifice.

There is no evidence either man knew what was going on. But ignorance is no defence, especially as the FSA believes RBS traders were ringleaders in the rate-fixing conspiracy.

The latest leak – do I detect news management? – is that RBS will pay the fine by clawing back bonuses from its investment staff. Luckily, the bonuses for 2009 and 2010 were deferred. The bank might even raid its 2012 bonus pot, which would help assuage public opinion.

Hester wants to draw a line under the Libor scandal before the full-year accounts are published on 28 February. RBS shares have responded positively to rumours of a settlement.

But beware: last month the US department of justice indicted two UBS traders on charges related to the Libor affair. US criminal authorities have also approached at least ten senior traders at RBS. This one will run and run.

Local TV platform has missed its opportunity

STV says it is “delighted” to have been awarded the licences to run local television services in Edinburgh and Glasgow, in partnership with Napier and Caledonian universities.

Output will focus on local news and “community” programming, and be available on Freeview starting this October.

Frankly, I doubt if there’s much of an audience for local TV now we have iPads, smart phones and Twitter. It is a platform that has missed its opportunity.

But STV has done well to protect its semi-monopoly on Scottish television advertising. Not that local TV will generate much ad revenue – studies suggest between £15m to £25m across the UK.

Unfortunately, this will come out of the pot available to local newspapers, who do not have the £40m subsidy the BBC has been ordered to hand over to the new city TV operations.

If you want to make money in television, then create and sell content rather than rely on advertising.

ITV has transformed its commercial model since 2010 by making more original programmes. Production revenue is up 20 per cent, with international sales of Come Dine With Me and Downton Abbey raking in cash.

ITV’s share price has doubled in the past year. Even Lord Grantham would approve.

 

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