President Obama laying out 7 key principles for transforming the nation's regulatory system on Wed. Feb 26, 2009, in the presence of his economic team and the chairmen and ranking members of the Senate Banking and House Financial Services Committees

Royal Bank of Scotland Group Plc (RBS), the owner of Ulster Bank, which is controlled by the UK government, today said it will insure £325 billion of assets with a new state guarantee programme as the company posted a huge loss loss.

The bank will pay a fee of £6.5 billion in the form of preference shares, it said in a Regulatory News Service statement today. RBS will be responsible for the first £19.5 billion of losses on the insured assets. The bank will cover 10% of any additional losses, with the Treasury responsible for the remainder. The Treasury will also buy £13 billion pounds of the preference shares.

The net loss reported for 2008 was £24.1 billion, or 61 pence a share, compared with a profit of £7.3 billion, or 75.7 pence, in the year-earlier period. The loss is the biggest in UK corporate history.

The bank this month said it plans to cut 2,300 jobs in Britain, in addition to about 2,700 jobs at its global banking and markets unit.

Bloomberg says the bank said it had sought legal advice on the £650,000 annual pension, being paid to the ousted chief executive.

“RBS is taking further legal advice in respect of certain aspects of Sir Fred Goodwin’s contractual arrangements,”and continues to discuss the position with the U.K. Financial Investments Ltd., the agency that holds the government’s bank stakes, RBS spokesman Neil Moorhouse, said late yesterday.

The Treasury has been “vigorously pursuing” ways to claw back “some or all of this pension,” it said in a statement. The bank has agreed to review Goodwin’s entitlement and whether there is a legal basis to challenge it, the Treasury said.

The Ulster Bank group has reported a 76% drop in operating profits in 2008.

The bank said that operating profits fell to £117m sterling (€147m) while total income decreased by 2% to £1.269 billion.

The bank's impairment losses rose to £394m, which is said reflected the impact on credit quality due to the slowdown in the Irish economy.

Last month, Ulster Bank announced that the bank would close the First Active lending business, with the loss of 750 jobs.

The Wall Street Journal says today, that the Obama administration, in unveiling details of its financial-rescue plan, laid out a dark economic scenario it expects banks to be able to withstand, the starting point for what could become a significant new infusion of government cash into the banking system.

To ensure banks can survive even if the unemployment rate rises above 10% and home prices fall by another 25%, the administration will require some institutions to either raise private money or accept a bigger investment from the U.S. government. U.S. officials don't expect the economy to deteriorate that sharply, but they want to be sure banks are prepared nonetheless.

Treasury Dept. Summary

The Dow Jones Industrial Average closed down 80.05 points, or 1.1%, to close at 7270.89. The index has fallen 19.52% from its highest 2009 close of 9034.69, on January 2nd.

The S&P 500 fell 1.1% as did the Nasdaq Composite Index.

.Bank of America gained 9.1% while Citi slipped 3.1%.

Bank of America’s purchases of Merrill Lynch & Co. and mortgage lender Countrywide Financial are paying off as other parts of the company struggle, Chief Executive Officer Kenneth Lewis said on Bloomberg Television.

Lewis, speaking yesterday from his Charlotte, North Carolina, headquarters, said Merrill will be “a thing of beauty” over the long term. Merrill, the New York-based securities firm, posted losses of almost $35 billion during the past two years, including $15.8 billion in the fourth quarter.

“The two stars, the ones that are doing the best are Merrill Lynch and Countrywide,” Lewis said. “This powerful corporate bank, coming together with our investment bank -- and then Merrill Lynch on top of it -- everything we thought is playing out.”

President Obama on Wednesday said it's clear that a lot of factors led the US into the economic crisis, but one of the biggest was that the economy was left exposed by regulations that were out of date and regulators who weren't minding the store.

He set out 7 key principles for transforming the nation's regulatory system. The US must:

1. Enforce strict oversight of financial institutions that pose systemic risks
2. Strengthen markets so they can withstand both system-wide stress and the failure of one or more large institutions
3. Encourage our financial system to be open and transparent, and to speak in plain language investors can understand
4. supervise financial products based on "actual data on how actual people make financial decisions"
5. Hold market players accountable, starting at the top
6. Overhaul our regulations so they are comprehensive and free of gaps
7. Recognize that the challenges we face are global

"I have the utmost confidence that if these outstanding public servants standing beside me are working in concert, if we all do our jobs, if we once again guide the market's invisible hand with a higher principle, our markets will recover," the President said, standing alongside his economic team. "Our economy will once again thrive, and America will once again lead the world in this new century as it did in the last."

He also had some strong words for people who have been misrepresenting this plan: "Let me be clear: The choice we face is not between some oppressive government-run economy or a chaotic and unforgiving capitalism. Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors, and ultimately to keep those financial institutions strong. Not to stifle, but to advance competition, growth and prosperity. And not just to manage crises, but to prevent crises from happening in the first place, by restoring accountability, transparency and trust in our financial markets. These must be the goals of a 21st century regulatory framework that we seek to create."

The MSCI Asia Pacific Index declined 1.1% on Thursday.

The Nikkei 225 closed slightly down at 0.04% and China's CSI 300 Index lost 4.95%.

Asia-Pacific -benchmarks

European markets have risen Thursday in early trading and the Dow Jones Stoxx 600 is up over 1%.

Swiss banking giant UBS, which is the biggest European casualty of the US subprime fallout, today announced the the surprise departure of chief executive Marcel Rohner.

Rohner is being replaced by 65-year-old Oswald Grubel, who had been CEO at Swiss rival Credit Suisse Group until he retired in 2007. Rohner served just two years as CEO.

The share price rose 2.5% in Zurich.

In Dublin, the ISEQ has fallen slightly by 0.01% to 2,053.

BoI is up 3% after the appointment of a new Chief Executive and AIB has risen 2%.

Citi has downgraded both AIB and Bank of Ireland, cutting its recommendation on both banks from hold to sell.

In a research note, Citi said that AIB could require another €1.1 billion of capital in addition to the recently announced €3.5 billion Government capital injection.

It added that Bank of Ireland could need a further €1.8 billion in extra funding.

Bank of Ireland on Wednesday evening announced the appointment of Richie Boucher (50) as Group Chief Executive to succeed Brian Goggin whose retirement was announced in January. Boucher will take up his appointment immediately. He is currently Chief Executive, Retail Financial Services Ireland (RFSI) and will continue to take responsibility for the Retail Division pending an appointment to the divisional CEO position.

Richie Boucher was Chief Executive of Bank of Ireland’s Irish Retail Division since January 2006. He was appointed as a Director of the Group in October 2006. He joined Bank of Ireland in December 2003 as Chief Executive, Corporate Banking from Royal Bank of Scotland where he had been Regional Managing Director - Corporate Banking, London and South East England. Richie had previously held a number of prominent roles with Ulster Bank Group including Head of Corporate and Business Banking and Head of Retail - Republic of Ireland.

Announcing the appointment, the Governor of Bank of Ireland, Richard Burrows, said: “Richie Boucher has a broad range of banking experience and is an outstanding leader. I and my fellow directors are confident that Richie will provide strong leadership to Bank of Ireland Group at this very challenging time.”

Accepting the appointment, Richie Boucher said: “I am honoured to accept the position of Group Chief Executive. In doing so I am very conscious of the current state of the financial services industry, the low opinion in which the general public views banks and the very difficult economic conditions that we face. I fully accept that we have an uphill battle as we work towards restoring the trust and confidence of our customers, stockholders and the general public. It is my commitment that I will work relentlessly with my colleagues in Bank of Ireland to win this confidence.

I am deeply conscious and very appreciative of the commitment of public money to support Bank of Ireland at this time. This support brings additional responsibility which I recognize and accept. We are committed to supporting our customers through these difficult times. I am also confident that Bank of Ireland has an inherently good business that will help us deal with difficult and tough decisions. We can and will rebuild a strong Bank to play a very significant role in the economy and to rebuild the value of the Bank.”