Daily Archives: August 2, 2012

Kiran Stacey

David Cameron and George OsbornePrime ministers aren’t supposed to engage in reshuffle speculation. Once they answer one question about a reshuffle, not only have they admitted it is going to happen, they invite a whole load of others.

But David Cameron seems to have been sufficiently spooked by recent speculation surrounding his chancellor that he felt moved to say the following to Sky’s Kay Burley:

KB: The economy will pick up, and George Osborne, his job will be safe?

DC: George Osborne is doing an excellent job in very difficult circumstances and he has my full support in going on and doing that job.

KB: And he’ll still be the chancellor at the next election?

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Kiran Stacey

 

Stephen Hester, RBS CEO

Stephen Hester, chief executive of RBS

We reported this morning on high-level discussions in the government about the possibility of buying out the remaining 18 per cent of RBS that taxpayers do not already own.

The argument for doing so runs like this: we are already exposed to the vast majority of the bank’s hugely damaged balance sheet, and the losses only look like getting worse as we find out more about its distressed debt.

Given that, would it not be better to take advantage of our holding and actually use the bank to pump some credit into our stagnating economy?

At the moment, the problem with doing this is that it means making loans the bank does not currently consider commercially viable. That would be a dereliction of duty to the remaining private shareholders, who would have every reason to sue. The answer therefore is simply to buy them out, and actually use the government’s stake to achieve what it is trying to do. Read more