It’s amazing now to think that George Osborne ever had hopes of shifting any of the state’s shares in Royal Bank of Scotland during the lifetime of the last parliament.
After yet another quarter dominated by restructuring charges and “conduct and litigation” provisions, RBS is on course for another lossmaking year. That will make eight in a row.
It is, of course, possible to sell shares in lossmaking businesses. But the unwritten rule at RBS has always dictated that the bank should be cleaned up to the point where the profit-and-loss account is free of nasties.
That day will dawn eventually, but two big issues remain unresolved – the level of fines for rigging foreign exchange markets and a legal case concerning the sale of mortgage-backed securities in the US. The book could be closed on the former this year but probably not the latter.
Meanwhile, the restructuring of the investment bank has only just started. The “heavy lifting”, as chief executive Ross McEwan puts it, will be done this year, but it will still be a messy three-year job.
Gamely searching for positives, McEwan points to an improved capital position and a 16% rise in “adjusted” operating profits to £1.6bn. Fair enough – they deserve a mention. It’s also admirable that McEwan publishes customers’ verdicts, in the form of “net promoter scores” for each of RBS’s core business units every quarter. The numbers are improving, but five out of seven are still negative.
“I look forward to the day [when] we can focus on the future rather than on legacy issues,” he says. We all do, Ross, but let’s be realistic. The next government won’t be selling any RBS shares this year, and 2016 may come too soon. We may be looking at 2017, 10 years from when Fred Goodwin and colleagues decided it would be a good idea to outbid Barclays and buy ABN Amro.
Zoopla + uSwitch = ?
If you thought Zoopla was a website that allowed you to look up properties for sale and rent, and to see what the neighbours were paying, you’d be underestimating it, apparently. It’s actually a portal, something far superior. Soon it will be a “Property Portal 3.0”, according to founder and chief executive Alex Chesterman after the “transformational” acquisition of uSwitch.
The justification for the ugly tagline is that punters will now be able to search for homes (1.0), research them (2.0) and now manage them (3.0) from the same place because uSwitch is a price comparison website for energy, broadband, pay-TV contracts and the like.
Well, there’s a link in the sense that people who have just bought a home are more likely to switch energy suppliers. Perhaps a few Zoopla viewers can be encouraged to take a look at uSwitch, boosting its revenues a touch. Chesterman reports that property-search websites in Australia, Germany and the US are also running in this direction.
OK, but in other respects Zoopla and uSwitch are poles apart. The latter’s pitch is that you can save money by using its services. Zoopla, as its viewers understand and accept, is primarily an online advertising site for estate agents. That is how the company makes its money and handsome profit margins.
Describing the marriage as a coming-together of “consumer champions” would be more persuasive if Zoopla was aiming to give those estate agents a good kick by cutting their fat commissions for the benefit of house-buyers. But it’s not. That popular revolution is being left to others to attempt.
Chesterman has built Zoopla in the face of Rightmove’s market leadership, so he’s not to be underestimated. His confidence in seeing off the upstart OnTheMarket may also be well-founded. But the appeal of the uSwitch deal, and the reason Zoopla’s share price rose 16%, is surely the purchase price. It is £160m-£190m, depending on performance, which seems reasonable given that uSwitch is an established 15-year-old business and reliably produces operating profits around the £12m mark.
In other words, Zoopla shouldn’t go far wrong with this deal. But the 3.0 stuff looks like a bad case of estate agent’s topspin.
Rough justice at Woolies
The trade union Usdaw always seemed doomed to fail in its attempt to secure compensation for some former staff of Woolworths and Ethel Austin. Interpretation of the law in this area had been consistent for a long time: employers seeking redundancies don’t have to consult staff collectively unless 20 or more roles are being cut at a single site.
A employment appeal tribunal took a different decision in 2013. Now the European court of justice has backed the old, standard view. The CBI, the employers’ lobby, hailed “a victory for common sense”.
But it’s nothing of the sort in the case of the two retail failures. The bulk of the workers – those in larger stores – received compensation for the administrator’s failure to consult. But 1,200 at Ethel Austin and 3,200 at Woolworths did not because their smaller shops employed fewer than 20 people.
That outcome seems fundamentally unfair. If a whole company is being closed down, and everybody is being laid off, discrimination between staff on the basis of the size of their shop makes no sense. The law should be changed to deal with such situations.
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