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Comment: Banking gloom
Evening Standard8 Aug 2008
Almost exactly a year on from the day the credit crunch went global, the huge loss reported today by the RBS is just the latest sign of the chaos still reigning in the banking sector. RBS lost £691 million in the first half of 2008, the second biggest loss in UK banking history, thanks to £5.9 billion of write-downs. Some of the losses are connected with its ill-advised takeover of Dutch bank ABN Amro last year when the credit crunch was in full swing. Some are due to the ongoing mortgage crisis in the US.
RBS's problems also offer stark proof that to date, none of the remedies advanced by the Government have made much difference. There is still a crisis of liquidity in the money markets. That is felt by mortgage borrowers in the shape of drastically scaledback offers and higher fees, which in turn has contributed to the latest harsh news on house prices, down almost 11 per cent in the year to July.
Against this backdrop, initiatives such as Alistair Darling's mooted deferment of stamp duty look distinctly inadequate. The stamp duty idea, a classic piece of ministerial kite-flying, has now been denied by the Treasury, but not before adding, say estate agents, to the uncertainty in the housing market. It is too late now to undo the chaos in the financial sector. But ministers could at least try to avoid adding to the confusion with new gimmicks.
