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> Given that many banks are reporting record profits What??? UK banks, including RBS which is the biggest in Scotland - the source of this report - are having

by retube 15y ago

> Given that many banks are reporting record profits What??? UK banks, including RBS which is the biggest in Scotland - the source of this report - are having a disastrous time. They're still reeling from the 2008 meltdown, are facing huge costs re mis-selling of PPI and to cap it all are now suffering from the Eurozone crisis. Their share prices are collapsing and they're sacking 10s of 1000s of people. They do not have money for massive capital infrastructure investment.

arethuza 15y ago
Unfortunately I suspect RBS would simply go to its owners for any additional capital requirements.
mgkimsal 15y ago
I thought of that afterwards. Yes, some banks and having trouble. But... when business was great they didn't do it either. Banks shouldn't even bother mentioning "it's too expensive" because they've proved that even when profits are great, they still won't quickly move away from 60s legacy cobol systems.
- retube 15y ago
  Depends what you mean by "profits are great". When Goldman or Lloyds report profits of $10bn they get slated for massive profiteering. But a profit figure alone is meaningless. The number you're after is profit divided by market cap. Investors want a return on their shareholding: they want dividends. If a company has a market cap of $200bn a $10bn profit is 5% return. And not all that will be paid as dividends, much WILL be re-invested. So maybe the investor earns a return of just 2%. And if investors don't make a return, they'll bail out. Stock will fall, the bank will suffer, jobs will be lost. So it's important a bank does make these "big" profits. It's all very well to wring your hands and demand investment in an area that you think is worthwhile, but that profit has got to feed a lot of mouths. Relatively speaking the profits are NOT that big. Perhaps bank leaders _are_ being short-sighted about this, but it's a whole lot more complex than bankers filling their pockets to get rich in the short term. And from personal experience I can assure you one thing: they will invest wherever they think they'll get the best return. Perhaps that isn't aging IT systems.

by retube 15y ago

arethuza 15y ago

Unfortunately I suspect RBS would simply go to its owners for any additional capital requirements.

mgkimsal 15y ago

I thought of that afterwards. Yes, some banks and having trouble. But... when business was great they didn't do it either. Banks shouldn't even bother mentioning "it's too expensive" because they've proved that even when profits are great, they still won't quickly move away from 60s legacy cobol systems.

retube 15y ago
Depends what you mean by "profits are great". When Goldman or Lloyds report profits of $10bn they get slated for massive profiteering. But a profit figure alone is meaningless. The number you're after is profit divided by market cap. Investors want a return on their shareholding: they want dividends. If a company has a market cap of $200bn a $10bn profit is 5% return. And not all that will be paid as dividends, much WILL be re-invested. So maybe the investor earns a return of just 2%. And if investors don't make a return, they'll bail out. Stock will fall, the bank will suffer, jobs will be lost. So it's important a bank does make these "big" profits. It's all very well to wring your hands and demand investment in an area that you think is worthwhile, but that profit has got to feed a lot of mouths. Relatively speaking the profits are NOT that big. Perhaps bank leaders _are_ being short-sighted about this, but it's a whole lot more complex than bankers filling their pockets to get rich in the short term. And from personal experience I can assure you one thing: they will invest wherever they think they'll get the best return. Perhaps that isn't aging IT systems.