Would you feel uplifted if the state sold some shares in Royal Bank of Scotland at a loss ?
Would you ignore the up-front hit and count the long-term blessing of living in a world where ownership of RBS looks more normal? Or would you think the coalition government, ahead of an election in May 2015, is declaring victory prematurely?
There's no doubt about where George Osborne and RBS management stand. The Treasury is beating the drum towards early privatisation and RBS chairman Sir Philip Hampton says a sale prospectus could be drawn up by the middle of next year. Meanwhile, chief executive Stephen Hester trumpets the "psychological" benefit for the nation and his employees if RBS is no longer routinely described as a ward of state.
Before they all get carried away, at least two points should be remembered.
First, we need to decide in what form RBS should be privatised. Almost everyone agrees now that it would have been better if RBS had been nationalised in full in 2008 and split into a good bank and bad bank to protect lending to the economy. Is it too late to pursue the idea? Would it be sensible to do so?
Sir Mervyn King, governor of the Bank of the England, is in favour of a good bank/bad bank split as the best way to return a healthy RBS to the private sector. And Andrew Tyrie's banking standards commission may hold forth when it makes its final report next month.
Let's hear that debate. Would it be more profitable to park the bad assets with the state and allow them to be unwound over time? King has argued this method would minimise losses over the long-term. We should "face up to reality", he argued in March. Osborne disagrees. But where is the Treasury's cost/benefit analysis?
Second, the price at which shares are sold matters. At the moment, the government is proceeding as if a loss of any size can simply be blamed on the last Labour administration, but it's not that simple. Yes, Labour paid too much in the midst of a crisis (it reverse-engineered the numbers during the capital injection so that the state's stake would be 82% and RBS would stay in touch with the stockmarket). But the current government is responsible for choosing the best moment to sell.
Today RBS shares, at 289p, stand 42% below the purchase of 500p; in real money, that's a £19bn loss on the £45bn paid. And the book value is 459p, which is not an irrelevant figure since the hope must be that a fully scrubbed-up bank, making profitable loans, could get closer to a par valuation one day. Each 10p movement in RBS' share price is worth £1bn. We're not talking loose change.
The worry is that the government has decided that privatisation of RBS at any price, and in its current form, is a fine thing and should be done as quickly as possible. It smacks of an attempt to close down debate about the merits of restructuring RBS before its return to the private sector. Uplifted? No.
"Is there anything especially cool about Google's London offices?" asks a "frequently asked question" on Google UK's website. The official answer is antique red telephone boxes, lightshades that look like bowler hats and so on. (Not everybody's idea of office chic, but to each his own).
The unofficial answer is the miracle by which London-based staff who seem to be selling advertising space are actually doing nothing of the sort. It turns out they are merely encouraging a sale that takes place in Ireland. From the point of view of Google Inc, the US parent, that's definitely cool since the Irish subsidiary pays corporation tax at just 12.5%.
A Reuters investigation this week highlighted Google's practice. The newsagency found British customers of Google who thought they were being sold advertising space by Google UK employees; it found London-based Google staff boasting on LinkedIn about their sales prowess; it noted another FAQ that said the 1,500-strong London office focuses on both website engineering and "sales;" and it recorded Google job ads seeking recruits for London with sales expertise. Common sense, then, suggests that a lot of advertising space is sold by the UK operation.
Of course, Google may also be justified in saying "we comply with all the tax rules in the UK". But what that means, we assume, is that it has been able to satisfy the UK tax authorities that there's a difference between the business of facilitating a sale (in London) and making a sale and dispatching the invoice (in Dublin).
Margaret Hodge's public accounts committee should not confine itself to recalling Google executive Matt Brittin to hear his verbal gymnastics again. It should also summon HMRC officials to explain why they seem to have approved an arrangement that defies any normal understanding of where the economic activity takes place.
A lot of activity too: revenue of $18bn (£11.5bn) from 2006 to 2011, says Reuters. Google is a company with high profit margins. If the current tax officials can't see that there's something wrong when all that revenue yields corporation tax of just $16m (£10m), we need new tax officials.
It was the most eye-catching debt issue of the week. No, not the record $17bn offer from Apple at minuscule rates of interest. Rather, it was the £800m issued by fashion chain New Look that best illustrates the frenzied hunt for yield among bond investors.
By conventional yardsticks, New Look, a leveraged buyout from 2004, is still vastly over-borrowed nine years later. Its total debts of £1.1bn tower over top-line operating profits (ie, before interest payments) of £198m. Yet, in a deal that replaces old debt with new debt, the group yesterday said it had secured its £800m by issuing five-year bonds in three tranches at an interest rate of roughly 8%.
That's an astonishingly low rate given the state of the balance sheet and conditions on the high street. Better still for New Look, it has managed to get rid of half the payment-in-kind notes that can prove poisonous if held for too long. These were rolling up at a rate of 10% a year and had reached £746m.
Well done, New Look – it has secured some breathing space. You have to wonder, though, where the corporate bond bubble is leading. It looks dangerous.
So Bob wasn't driven by the money
Remarkable revelations from Bob Diamond. He's only ever owned a 11-year-old Jeep, and he was never in it for the money. Hmm. On the first point, many of us would find it possible not to own a car if we enjoyed the arrangement described in Barclays 2011 annual report: "Executive directors are provided with… the use of a company vehicle or the cash equivalent and the use of a company driver when required for business purposes."
On the money point, it's a shame the former chief executive didn't speak up earlier. There was an almighty row about Diamond's £2.7m bonus in 2011, which was opposed initially by the head of the pay committee, Alison Carnwarth, who belatedly resigned. She thought Diamond should have set an example by taking no bonus in a year of lousy profits. We must conclude other directors strong-armed Diamond into accepting the £2.7m against his will.
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image: © Elliott Brown