[Assess whether UK banks ought to be nationalised]

by

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation represent my own unaided work, and that the dissertation has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

Abstract

The collapse in UK bank stocks last month reflected more than just fear that others would report results in line with the dire forecast from RBS of up to L28 billion (£39.6 billion) in operating losses and goodwill impairment charges for 2008. The coincidence of that shocking trading update with news that the UK government was converting its high-yielding RBS preference shares into ordinary shares and launching a second banking sector bail-out plan led many investors to conclude that full-blown nationalization of RBS was imminent and might soon follow for Lloyds and maybe others.

Table of Content

Chapter 1: Introduction6

Government's judgement18

Nationalisation fallout19

Chapter 2: Literature Review21

Calls for Nationalization21

Black and blue Monday leaves UK banks staring at nationalization23

Talk of depression and bank nationalization is disservice to all25

Government on wrong track27

Prospect of nationalizing banks weighs on investors28

Who Benefits? Who Controls?30

References34

Chapter 1: Introduction

The coincidence of that alarming dealing revise with report that the UK government was altering its high-yielding RBS fondness portions into commonplace portions and commencing a second banking part bail-out design directed numerous investors to resolve that full-blown nationalization of RBS was imminent and might shortly pursue for Lloyds and perhaps others. John McFall, the Labour seating of the House of Commons Treasury managing assembly, has advised the government to embark with the task of nationalizing the banks as a essential step in the method of cleansing their balance slips and refurbishing their capability to loan (Aalbers, 2005, 33).

In the nonattendance of pressing require to avert outright malfunction, full-scale nationalization is neither required neither desirable. Yes, the share charges of RBS, Lloyds and Barclays have been crushed. The equity markets easily should adapt to banks' decreased status. They have abruptly become an buying into backwater. At the start of 2008, Royal Dutch Shell was the biggest constituent of the FTSE 100 catalogue with a market capitalization of pound(s) 134 billion. Beneath it, six banks graded amidst the top-20-largest businesses in the UK. HSBC was the third-largest constituent, with a market hat of pound(s)99.6 billion; RBS graded seventh at pound(s)44.7 billion; Barclays 14th at pound(s)33 billion; HBOS 17th at pound(s)27.5 billion; Lloyds 18th at pound(s)26.6 billion and Standard Chartered 19th at pound(s)25.8 billion. Fast-forward to January 23 and HSBC stayed the fourth-largest FTSE supply, worth pound(s) 64 billion, behind first-ranked BP, and worth bash 91.8 billion (Aalbers, 2008, 148).

But no other bank graded inside the biggest 20 cited UK companies. The blended market hat of RBS, Barclays and the new Lloyds Banking Group, now integrating HBOS, amounted to just pound(s) ...