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London
26 February 2009
World markets were mixed Thursday due to investor concerns over the U.S. stimulus plan and more gloomy corporate news. In Britain, the Royal Bank of Scotland, or RBS, has posted the largest annual loss in U.K. corporate history with a $34 billion shortfall for 2008.
Investors in Asia say more specifics about the U.S. government's financial rescue plan are required to change market sentiment there.
On Thursday, most Asian indices were down. Only markets in Australia and Taiwan rose.
In Europe, the picture was more upbeat as investors welcomed a British plan that will allow struggling banks to access government insurance against future losses.
In the case of the Royal Bank of Scotland, hundreds of billions of dollars worth of debt will now be covered by the taxpayer-funded asset protection program.
Because of this, British taxpayers now hold an 84 percent stake in the bank. Treasury Secretary Alistair Darling maintains the move is necessary.
"We are putting in additional support to RBS to help it get through this recession and in addition to that we are offering insurance about 325 billion pounds of assets, these are things like commercial loans or mortgages which are worth less now then they were perhaps a few months ago but which we hope will increase in value as we get through this recession," Darling said.
The asset insurance announcement came on the same day as the bank disclosed the highest-ever annual corporate loss in British history of $34 billion.
Despite the huge sums, Darling promises when this global downturn is finally over, the taxpayer will see the money currently being pumped into institutions like RBS, returned to the public coffers.
"Because the majority shareholding is owned by the taxpayer, when we are able to return RBS to normal, private ownership in the commercial sector, then of course those shares will be sold and that money will come back to the taxpayer," he said.
Meanwhile, there is widespread anger in the country with the disclosure that the former chief executive of RBS has started to collect a $930,000 a year pension from the bank that is now being supported by public funds.
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| British Prime Minister Gordon Brown (file photo) |
Prime Minister Gordon Brown says the matter is being looked at.
"What we are trying to do whether it is with the bonus culture, the remuneration culture, the pensions culture or with the vast sponsorships of some of these companies is clean up the banking system so that it does the job it was intended to do, what people used to trust the banks to do," the prime minister said. "And that is, to lend money to ordinary citizens and keep the deposits safe and that is what we will continue to do, to make that clean up comprehensive."
Other institutions such as the Lloyds banking group are said to be looking into participating in the government's asset-protection plan.
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