Still going strong

Published on Sunday 5 July 2009 21:55

COMMENTING on a Banker magazine survey, Hamish Macdonell (your report, 25 June), chose to focus on the massive loss made by RBS. The actual results of the survey, whose aim was to list in order of strength the top 1,000 global banks, barely gets a mention.

In what amounts to no more than an aside, Mr Macdonell points out that JP Morgan came in strongest as the number one global bank in terms of Tier 1 capital. What he fails to mention is that, despite its massive losses, RBS came in fourth strongest and even if the government's capital injection were deducted, it would still rank number seven.

In reporting a record-breaking loss and having had to go cap in hand to the government, one would expect the RBS board to have thrown every possible loss into the pot. Inevitably, in time, some of these loss provisions will be found not to have been needed and will have to be written back, providing an extra uplift to profits.

This makes the 9.6 million package for new RBS chief executive officer Stephen Hester all the more unacceptable. Given the underlying financial strength of the group, his job should not prove difficult and if he fails to meet the modest targets he has been set, then the board will have questions to answer.

If, as seems likely, the government does get its money back and the shareholders see some recovery towards the price they gave for their shares, 9.6 million may seem a small price to have paid, though those who will have lost their jobs may not think so.

DEREK BROCK

Corstorphine Road

Edinburgh