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New Republic Report: "G.E.S.A.R.A." -- October 22, 2016

​---------- "G​.​E​.​S​.​A​.​R​.​A​.​" Republic Update Saturday October 22, 2018 ​----------​ ​What is G​.​E​.​S​.​A​.​R​.​A​.​...

Wednesday, July 6, 2016

First Setback for the UK Government After Brexit

Brexit a setback for UK government’s Royal Bank of Scotland sale



LONDON — The British government’s sale of its stake in Royal Bank of Scotland (RBS) has been delayed by at least two years after the UK voted to leave the EU, according to CEO Ross McEwan.

"This will be a setback, let’s be quite honest, I think at least a couple of years we’ll be pushed back because of it," McEwan told LBC radio in an interview on Monday. "You are seeing a slowdown. We’re predicting growth in GDP will slip this year."

A Brexit-induced economic slump is the latest headache for Chancellor of the Exchequer George Osborne, who has planned to raise about £25bn disposing of the UK’s stake in RBS by 2020. The bank has been hampered by billions of pounds of misconduct costs, a delayed spin out of its Williams & Glyn unit and a plunging share price. The UK owns about 72% of the lender, which has made a loss every year since receiving a £45.5bn taxpayer-funded bailout amid the 2008 banking crisis.

RBS gained 1.3% to £1.72 at 10.13am in London trading, paring its retreat this year to 43%. The bank is trading at less than half the government’s £4.07 a share break-even price.

‘Hold back’

McEwan said his economists estimate GDP growth falling to 1.6% this year from a previous estimate of 2%, dropping to 0.8% in 2017.While he does not predict a recession, "until we get certainty in the economy, people will hold back on investments," he said.

"We have been knocked around by interest rates lower for longer, therefore investors are saying ‘your returns won’t be as good’," McEwan said. "This bank will produce a very good return as we go into 2018, we’ll get ourselves up to a 12%-plus return on equity, even though we have got more capital."

McEwan said he "welcomed" the government’s proposal to lower the corporate tax rate to 15% to mitigate the economic impact of Brexit, after the pound lost 11% of its value since the referendum and as other EU nations seek to lure business from the UK.

"One of the key things to me is holding onto passporting," McEwan said,referring to the agreement that lets companies based in London do unrestricted business throughout the single EU market. "If we don’t get passporting it’s inevitable some jobs will disappear, but from our perspective it will only be tens" because the bank is focused on the UK and Ireland, he said.

JPMorgan Chase & Company has said it may have to move as many as 4,000 jobs from the UK after Brexit, while HSBC could transfer up to 1,000 investment bankers to Paris after the decision.


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