If I could just make a small point, one that might in fact be rather important?
Nor will the vastly complex, and vastly expensive, hunt be confined to Britain. To pick just one example, RBS acquired 26 other companies during Sir Fred\’s eight-year reign, leaving it with £250 billion of foreign loans in the more than 50 countries where it has offices. These include Vietnam, Columbia, Uzbekistan and Pakistan, where RBS is the second-largest foreign bank – there are even seven branches in Kazakhstan, all of which are now 70 per cent owned by the British taxpayer.
Many of those loans will be sound, but the investigators must sniff out those that are not. "It will be a very intensive job and we will need to get professional support," one Treasury source says. "It\’s complicated, but if you didn\’t have these complicated problems, there wouldn\’t be a crisis in the first place."
Note that money that has been borrowed by a bank (whether from a depositor or the wholesale markets, a bond issue etc) is a liablility to that bank. Money that has been lent out by that bank is an asset.
The value of such assets and liabilities which are denominated in other currencies when expressed in sterling will depend upon the exchange rate with sterling. Of course.
However, the fall in sterling has meant that those liabilities are greater now when expressed in sterling. However, and this is the minor point, so also are those assets worth more when denominated in sterling. So what matters to us is not so much what is the gross exposure, what are the gross foreign currency liabilities: rather, what are the nett liabilities, after the asset value at this new currency rate has been deducted.
Now, I agree, we\’re not all that likely to believe banks just at the moment, but do we have any evidence at all that they were not balancing the currency books? That they were not hedging any currency movements? That, in fact, they and we are open to huge losses on foreign currency liabilities without there being similarly huge gains on the holdings of foreign currency assets?