Friday, February 27, 2009
It seems like another bank has gone down the road. Royal Bank of Scotland (RBS) on thursday had posted a 2008 loss of 24.1 billion pounds. It is a new British corporate record, nothing to be proud of, and said it will ring-fence 325 billion pounds of risky assets in a government insurance scheme. This is the results of misjudegement from business investments such as takeover of Dutch lender ABN Amro and also the credit crisis. It seems to me that many banks directors have taken many risky investments or lend money to high risks businesses without any considerations of whether they have the capital and ability to do so. Banks should take extra precaution when it comes to giving loan to businesses especially the ones with the highest risks eg. financial institutions whose primary role is to trade in stocks and shares of other companies. Sometimes, a business went bankrupt not because it is not profitable in the long run, it has over traded or has expanded too fast without considering whether the company has enough capital to substain over their current period.
what we could have been, 11:38 AM.
