RBS to Charge Negative Rates on Trading Collateral

The video discusses the implications of negative interest rates, initially affecting collateral trades for a select group of institutional clients. It explores the potential for these rates to impact commercial clients in the UK, although no immediate plans are in place. The discussion highlights the economic challenges faced by UK banks, particularly the Royal Bank of Scotland, due to potential further rate cuts by the Bank of England. Additionally, the video examines the difficulties banks face with illiquid Level 3 assets, which are hard to value and manage, especially for banks with low capital levels.

Discuss the significance of the groundwork set by banks regarding negative rates.

What factors contribute to the profitability challenges faced by RBS?