Did you know that by assets, RBS is the world’s largest company?
Shares in the bank were trading at 11p apiece on Monday afternoon. Down 68.8 per cent on the day.
Makes you think.
Naturally, the UK government is rather keen RBS does not fail. And indeed, it has gone all out. Just about every conceivable measure has now been thrown down to stave off disaster for the UK banking system: recapitalisation, asset guarantees, commercial paper guarantees, liquidity backstops, quantitative and qualitative easing and subversion of Basel II risk weightings.
The hope is that they will work. Clearly RBS’s shareholders don’t believe so. It would seem that they are discounting for the effect of the one policy option remaining: Nationalisation.
Nearly matching RBS’ £1.9 trillion of assets, RBS has £1.8 trillion of liabilities.
To put that into perspective with regard to the (small) risk of nationalisation: inclusive of the Northern Rock nationalisation, the UK public debt, defined by the ONS, is currently only £650bn. Nationalising RBS would increase UK public debt 369 per cent.
So surely nationalisation is off the cards…? UK CDS are certainly not considering it yet (click to enlarge graph - from Markit):
A couple of other pieces of info for UK Plc: the world’s third largest organisation by assets is Barclays. And the fourth is HSBC.
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