UKH

£977m to the government coffers, hopefully the same next year and the year after that.

Doesn't this prove we need a "national bank" and that contrary to many peoples insistence, nationalised endeavours can be good for the country as a whole?

Why shouldn't we keep RBS out of private hands, we've not gone back to the 70s because of it. We seem to be swimming along quite nicely, thank you very much.

Yes, but we put £45.5bn into RBS, so that rate of return would take 46 years to get it back, ignoring interest and inflation. And all that time has an "opportunity cost" - time when HM Government cant be using that money for other things - investing in infrastructure, reducing national debt payments, creating a sovereign wealth fund etc.

I'm not saying that there isn't a place for some nationalised services, just that this particular one isnt giving a great return on investment.

A 45bn private sector failure is not a good argument against the op's point.

it wasn't an investment. It was a decision to avoid a far greater economic collapse that might not even have happened or might have been catastrophic. Nobody will ever know.

How much would you have to invest in a start up to make £977m a year?

Any examples where that’s been done?

Amazon $50,000 in 1994

Google $100,000 in 1998

Facebook $500,000 in 2004

For a start.

See my edit, it wasn't an investment in any conventional sense. It was a political decision of national significance that with hindsight is generally thought to be probably right. Nobody knew that at the time.

I think private sector failure is a poor argument for the private sector.

Your maths is at fault. Firstly, the £45bn isn't "lost". The capital value of the UK's stake as indicated by the share price has roughly halved, so a loss of £22bn is on the books, which as the share price recovers will shrink. Meanwhile, all things being equal, dividends tend to rise ahead of inflation, so what the non-investor experiences as the slow destructive burn of inflation is, to the investor, a drag on dividend growth, not a backward step. Note that the Royal Bank has only just re-instated its dividend, thanks to the stabilisation of its capital, so it is likely to expand from here.

As for the wider point. I honestly cannot think of a better use for the UK's money in 2009 than to support  a banking system (let's be clear, not bankers) which would have collapsed to such devastating effect on every single inhabitant of the UK that Austerity would have looked like the streets were paved with gold. This is ignored or forgotten too often. And it wasn't even the Tories that made the call!

It wasn't really meant as a particular example, simply a demonstration of a nationalised project that doesn't fall apart or somehow magically transports us back to the 1970s.

I understand why the government took over RBS and the disastrous consequences if they hadn't, part of the £45.5bn was to prevent that fallout if that had happened, so maybe the £45.5bn was a very good investment, and one might say one which has already paid for itself many times over, the £977m is simply jam on top of that.

Amazon made £977m in 1994 in their first year of trading? Wow!

How did they manage that? That’s got to be worth following as a business model, I’m surprised everyone’s not doing it. 

I wonder how many startups have gone bust by comparison.....

RBS is far from a nationalised bank. It's a private enterprise in which the UK takes a share of the risk and reward. The question I ask myself is not should it operate as a nationalised institution, but should the UK act as a long-term investor? Or do we exit when recovery (of the bank and the investment) can be declared? The problem is that the need for funds for other purposes interferes with the investment case.

Note also that the employees still effectively work for a private bank. The only part that is ‘nationalised’ is the board of governors and a majority shareholding.

There’s nothing wrong with the government doing this with every private company that’s doing very well. However, it’s a lot less hassle to just take tax from them. 

I think you'll find that the total capital raised by these companies runs to an average of nearly $1tn each. That's before any debt is taken into consideration!

Just because the first slug was Bezos' building society savings doesn't mean that the fundraising stops there.

£977m from a 45bn investment is about a 2% ROI. Assuming that capital value of the asset hasn't changed (which it probably has but I haven't looked), the gov't could pull out and invest that in housing for a far greater return and potential public benefit.

I say that as someone who's pro Nationalisation.  Who would be at least ambivalent about there being a national bank (for example: if you wanted to stop pay day loans the easier way would have been to introduce a national version capped at X%), but nationalisation is primarily about regulating or excluding markets.

If you aren't trying to reshape the market at the macro level (or create a new one) then it's generally far simpler to regulate and tax. 

Hear hear - they bankrolled Amazon for years with losses until they finally took over the world. 

Looks to me like Tesla is the same - but will that one crash before they get over the hump of up front investment giving decent returns. 

I don't see why there shouldn't be room for both, options are always good, and at least if you're in it you have some leverage to steer the market.

I certainly think it's useful to have a nationalised choice for essential services.

Anyhow my point was more about us not being magically transports back in time when nationalisation occurs.

Tend to agree on this one but the view that privitisation is the some sort of gold standard is a flawed concept.

Private companies have one goal - to make money for their shareholders. This and many previous governments appear to think that private companies are going to be benevolent organisations.

The idea that competition will keep prices down doesn't work. Look at the energy companies; they worked so well that the Government had to put a control on the maximum price.

I'm not suggesting nationalisation is great, its not, but it bloody well should be. Given enough desire to make it work a government should be employing talented people in negotiation and management to run nationalised companies well. Then any profit made goes to the Treasury.

Unfortunately many governments have for years been out manoeuvred by private companies who, perfectly understandably, want the biggest profit for the least work. This has led to poorer service and at times a company walking away from a contract and leaving the government to step in and pick up the pieces.

Dave

Is it nationalised? Or is the government just a large stakeholder in an independent company?

I guess the question is, does RBS make operating decisions specifically to support government objectives - that’s what I assume a traditionally ‘nationalised’ government service does. 

Also, assuming it does count as nationalised that on its own doesn’t tell you whether it’s a good idea to pursue a strategy of nationalisation for more services. 

Ps. I am in favour of nationalising some services, I’m really just nitpicking (welcome to the internet) the logic that doing it once in this instance implies it will always be beneficial in other instances. 

Of course this is true, but it also does show, that we haven't been transported back in time, which is usually the argument against nationalising anything.

And yes RBS probably isn't nationalised, but it doesn't mean it couldn't be and still be run as it is now.

If by 'room for both' you mean 'in any given area, it would be fine to have public and private options where there are currently only private options' I basically agree.

However, the work that "primarily" is doing in that sentence is essentially: gov't resources (money, time, people) are finite and it is correctly averse to risk. Therefore there needs to be a reason above 'just because' for intervening in a market. If it's just about money, that's why we have taxes.

In this case, whilst I have no issue with the bank being publicly owned, the right thing to do is to maximise the assets value to the taxpayer and then sell it. That capital would be far more useful elsewhere as it is neither returning a sufficient amount compared to the investment, nor is it reshaping the market.

P.S. I also completely agree that the popular discourse around nationalisation (and obsession with privatisation) in this country has be cartoonishly rendered; the former always bad the latter always better and that clearly isn't true.

Approx $500 of bitcoin bought in 2010, would have netted about $977million in the year 2018

I bought a new rope and several chinese takeways instead. That's why I'm writing this at work. 

I am not sure that any Alpha employees would want to work for a truly nationalised  bank. Can you imagine the fuss over salaries, bonuses. it would be an utter nightmare for both the govt and the bank.

And yes those Alpha employees helped create the mess , but that was then.

They would be of like a shot elsewhere.

What makes you say that.?Public ownership is surely just that.

The government had to buy RBS for £45 billion to keep the banking sector from crashing. If we sell it off now we'll kiss goodbye to £22 billion. If we hold onto it we make a modest return every year. This year it was £1 billion or so but presumably the bank's managers are working hard to increase profitably and share price. That's their job. I'd need to see more long term revenue forecasts before deciding I was a sensible idea to sell it and walk away from £20 billion or so over public money.

Jolly good. Unfortunately all my money was in Lloyds/TSB shares. 

So; as I caveated in that post (which you have ignored) I was running off some numbers quoted in this thread. I don't advocate selling off the bank at a loss; that would be stupid. But we should pull out when it's economically viable, the capital value of the asset changes the threshold of when that's true, not the basic principle.

This is because public ownership is not "just that". The public purse is limited, you have a limited amount of actions you can take. The original purchase of the bank was justified because it was a market intervention (stopping the bank collapsing and the consequent affects), that's fine but it doesn't justify continued ownership in principle.

If you just want to make money; tax things. But government is about a lot more than money and just sitting on an investment for the sake of it is not worth it. You could sell that and invest in the energy market / use a gov't backed competitor to curb some of the excesses of that market, or in housing, alleviating the pressures of that market for both the public benefit and profit, or in infrastructure, making people more economically active and reaping the investment in future tax returns.

I'm not arguing against public ownership / nationalisation; I'm arguing that - given the necessary and unavoidable limits on government action - doing it just for profit is an inefficient use of their limited resources.

Why is it almost always the politicians who have never had another job, never worked in the private sector, never owned a business etc.. that seem to think if they were in office they could do a better job of running a business as state owned, than those who have done it all their lives? 

Well I think you're arguing that the money may be better invested elsewhere which is fair enough. It might be better invested elsewhere but so far I haven't seen where that money would be invested.

Of course you aren't able to name the dozens of start ups that sank without trace taking their investors cash with them. A silicon valley guy once told me that investors expect something like one in twenty of their investments to make any return.

Here we go again.

Its nothing to do with who runs the business; its about ownership, and the benefits of ownership. 

given where you live, i would have thought this was a topic you would be slightly better informed on - https://www.government.se/government-policy/state-owned-enterprises/

Yes and do you think that the likes of McDonnell and McCluskey aren't going to want to have a little more say and control?

Yes and as I have highlighted on other threads there are private and state trains here. The state ones are out of date and delayed more, generally in need of funding. But with a government under spending pressure, investment is limited and that's with a population who understand if you pay more in tax you can have better services. 

You really think the UK are willing to fund services through taxation properly? 

Plus it's a very different game when you have to buy back a company compared to one already in state control. 

McLuskey already has more than enough control, thank you very much. McDonnel - not so sure; he's a lefty alright, but has his head screwed on a bit better than most. Anyway, slightly facetiously, to appear to be doing better, the transport secretary would only have to perform better than Grayling. Not really a challenge, is it?

Anyway, a large percentage of our rail network is already state owned; just not by the British state. And that system seems to work for those owners. And when under state "control", the east coast min line franchise worked significantly better than when in private hands. 

Nope, not in a million years. I'm not sure how we change that in this country; we seem to be either complaining that we get rubbish services, or that we pay too much tax; or both. Everyone knows that to have better services costs more; we are just unwilling to pay for them.

Agreed. Its much easier. We could buy back the shares in the same way they were bought by the current holders, and the same way businesses are bought and sold all the time.

This is silly rhetoric. There is no reason for the politicians to run the company. The idea is to recruit suitable professionals. (I can't actually think of many politicians in this country who then ran nationalised companies. Richard Marsh ran British Rail for a while - he's the only one that springs to mind at the moment.)

You have missed my point. The people or mps who claim it would work are the ones with least normal job / business experience. How can they be so sure. 

At least 30 years of being sold a lie and voting for those tax cuts. 

It's a question of funding them. You'd still have to charge the public high prices to fund the buying and investment. Nothing is for free, it's just a different means of paying for it.

Yes but what about those evil shareholders taking all the profits... most of them are also a fair proportion of the UK populations pension fund. 

Obviously I'm sure you also dismiss the opinions of anyone who hasn't spent a substantial period of time working in public sector management?

You didn’t make your point very clearly then. You  talked about doing a better job of running the company when you might have said something like ‘seem to think they are better able to judge who should run a company than those...’ etc., which it seems is what you meant. 

Unless I've missed some major news RBS hasn't been nationalised?

It was taken into public ownership about ten years ago.

That is nationalisation. It doesn't need to be run like the NHS. Think more like Deutsche Bundes Bahn, the German railways.

Are you sure I'm sure that I've bought and sold RBS shares since then, I thought it was only party publicly owned?

The government originally bought about 85% of the shares. It currently owns 62.4% so is still the majority shareholder.

As a shareholder yourself, do regard holding RBS shares as a good long term investment?

I bought for less than a quarter of the price that the government paid and they've already been sold.

Who knows whether they are a good long term investment but I believed that there were better returns to be made elsewhere.

Well, so far they took mostly the risks.

BTW, I predict that RBS will do very well indeed in the next decade (provided Brexit goes ok). You can be sure the state will have sold its position well before that happens.

as an aside, did anybody notice that the RBS logo represents a sphincter, or 4 dicks (depending on how you look at it).

Do you need Alpha employees to run a bank? Surely, Beta employees are good enough, so long as the bank survives and provides good service and remains solvent.

I like how you dismiss the mistakes to easily and yet any talk of nationalisation, and we're all going back to the 1970s.

Agree on both counts. To be successful today, banks need to much more streamlined in terms of business lines and RBS has stripped right down. And the state will have some cash shortfall that needs to be filled well before the RBS holding reaches a mature profit.