As you may have read, HM Treasury has released full details of the toxic RBS assets being guaranteed under the Asset Protection Scheme.
Annex A of the 100 page report (which was quietly put up on the HM Treasury website on Monday) provides the full breakdown of the £282bn assets being insured.
Click to enlarge:
Probably the most striking thing is that over half the assets (£167bn) are not in the UK, with a quarter estimated to come via the disastrous acquisition of ABN Amro.
Things like, we guess, the £30.6bn Delta derivatives portfolio:
The Delta derivatives portfolio contains £30.6bn of assets (9.6%) of the total APS asset pool.
The portfolio contains derivative exposures including swap products, options and foreign exchange derivatives. The largest derivative product exposures are to Interest rate swaps and Credit Default Swaps.
The £34.1bn Strategic Asset Unit:
The portfolio consists of securities and derivatives, including exposures to monoline insurers in relation to Credit Default Swaps (‘CDSs’) and CDS protection on Collateralised Debt Obligations (‘CDO’) (£22.6bn) together with underlying CDO securities exposures of £6.8bn and Asset Backed Securities of £4.4bn.
And something called Net Portfolio Management:
The GBM Net Portfolio Management portfolio contains £50.4bn of assets (15.9% of the APS asset pool) from a total £357.8bn GBM Net Portfolio Management book.
The portfolio consists of approximately 2,200 loan facilities including term loans, overdrafts, revolving credit facilities, letters of credit and multi-option loans.
Included within the scheme is £20.2bn of undrawn balances as at 31 December 2008.
What is also striking is the amount of dodgy real estate loans extended by RBS.
For example:
The UK Real Estate Finance (‘REF’)/Commercial Real Estate (‘CRE’) portfolio contains £32.1bn of assets (10.1% of the total APS asset pool) from a total £57.2bn UK REF/CRE book.
The portfolio consists of approximately 46,000 loan facilities (predominantly term loans and overdrafts) to some 18,000 different real estate and property clients. Clients are predominantly medium sized Commercial and Corporate borrowers with turnover of £1m to over £25m.
Drawn balances amount to £25.3bn together with £6.8bn of undrawn balances as at 31 December 2008.
Also:
The Global Banking Markets (‘GBM’) Real Estate Finance (‘REF’)/Commercial Real Estate (‘CRE’) portfolio contains £23.5bn of assets (‘CRE’) (7.4% of the total APS asset pool) from a total £38.3bn GBM REF/CRE book.
The portfolio consists of approximately 650 loan facilities to some 375 different real estate and property groups. Products within GBM REF/CRE include senior secured loans, revolving credit facilities, mezzanine bridging loans and unsecured corporate funding to International Corporates.
Included within the scheme is £1.7bn of undrawn balances as at 31 December 2008.
And not forgetting:
The EME Real Estate Finance (‘REF’)/Commercial Real Estate (‘CRE’) portfolio contains £13.0bn of assets (4.1% of the total APS asset pool) from a total £19.7bn EME REF/CRE book.
The portfolio consists of approximately 10,000 loan facilities (predominantly term loans and overdrafts) to almost 4,000 borrowers and approximately 2,300 different real estate and property groups. Clients range from large corporate real estate clients to small private residential property developers.
Included within the scheme is £0.8bn of undrawn balances as at 31 December 2008.
All of which provides a glimpse of how RBS became the world’s biggest bank by assets at the height of the credit crisis.
Now, the good news.
HMT’s “central expectation” is that overall losses on the APS portfolio will not exceed the £60bn first loss borne by RBS.
But that of course, is somewhat academic given that the government (and therefore UK taxpayers) own 84 per cent of the bank and are effectively on the hook for the £60bn anyway.
Related links:
Taking out the trash at RBS – FT Alphaville
Taxpayers insure £170bn of RBS’s toxic assets outside of Britain – The Times
Veto power for body overseeing RBS loans – FT