Monday, January 19, 2009

Royal Bank of Scotland=Another "zombie" bank

Another day, another bank "zombified." A week ago, RBS said they were going to sell their stake in Bank of China.

A week ago, you could still get a price for the stock, even when this news hit. The ADR was trading at 15, even after this news hit, when RBS followed Citigroup's footsteps.

Today we see they will have a $37 billion dollar loss. And now RBS shareholders will have a stock price like Citigroup.

On January 7, Bank of America parted with part of their China Construction stock, after buying it in November.

Bank of America's stock price then was 14. Now it's half that.

Goldman Sachs, owns a big chunk of Industrial & Commercial Bank of China, and has "promised" that they won't sell their stake until April 28, 2009. In fact when RBS dumped their stake, Hopu Investment Management Co., a fund run by Goldman Sachs China partner, Fang Fenglei bought 30 percent of RBS' stake. China's sovereign wealth fund has also been buying shares. In other words, they have been trying to "prop up" the share price.

Now Goldman also increased their stake in ICBC in late December, after announcing their first quarterly loss, and after receiving TARP money.

Goldman is supposedly the smartest guys in the room. So why then, are they buying ICBC and letting the whole world know their intentions? Has China now become the patron saints of banking?

I'll answer that question with another question. What was Goldman Sachs doing with sub-prime, when they were selling those mortgages to their clients? Weren't they hedging them while they were selling them?

Do you think it's any different here?

No comments: