Perhaps the biggest cultural change since the credit crunch is that the Financial Services Authority (FSA) now takes the long view of financial history and insists that banks prepare for once-in-a-century financial catastrophes - the kind of disasters that regularly happen, but only after memories have dimmed of the preceding one.

So the watchdog's latest financial risk outlook instructs bank to make sure they have sufficient capital to withstand losses generated by the following scenario:

"A further decline in GDP of 2.3% from the end of 2009 to the end of 2011, with gradual recovery thereafter. Alongside this fall in GDP, the scenario includes a rise in unemployment to a peak of 13.3% in 2012, and allows for a 'doubledip' in property prices, with house prices falling by 23% from current levels and commercial property by more than 34%."

Now, for the avoidance of doubt, the FSA is not forecasting that the UK will re-enter recession. In fact its so-called "central" projection (what it thinks most probable) is that there will be a "V" shaped recovery, with GDP growth accelerating this year, to 1.4% in 2010 and 2.2% in 2011.

This "central" projection is no more sophisticated than the mean of professional forecasts. And they have been pretty wide of the mark in recent years.

So a prudent FSA - which wants to avoid a repeat of 2008's near collapse of the banking system - has to make sure that our banks have enough of a buffer of capital to cope with a lot worse than what economists expect.

Do Britain's banks currently have enough capital to absorb additional losses generated by a second recession and further sharp falls in asset prices?

Probably. The FSA insists they hold core tier one capital - which is basically pure equity - equal to a minimum of 4% of loans and other assets weighted according to the Basel Committee's widely criticised rules.

Right now the core tier one ratios of all our biggest banks is more than twice that. Most of them have ratios greater than 10%. Lloyds has the lowest ratio of the pack at 8.1%.

Which is not to say that they are invulnerable.

The FSA, for example, believes that the sharp falls in interest rates engineered by central banks to resuscitate the global economy may be disguising rather than solving the repayment difficulties being experienced by some borrowers: for arithmetic reasons it takes longer when interest rates are at record low levels for any borrower that stops repaying to cross the arrears threshold that sets alarm bells ringing in a bank's head office and at the FSA.

All that said, if the FSA's worst fears materialise and we enter a second recession (which plainly in the light of today's weak industrial production figures is not inconceivable), we should be worrying about other things than the solvency of our banks (although those other things, such as the credit-worthiness of the government and social cohesion, aren't exactly trivial).

Evan Davis asked me on the Today Programme this morning whether the probability that taxpayers would eventually emerge with a profit on Northern Rock implies that it was a mistake to nationalise the Rock at the start of 2008.

That conclusion can't be drawn - because the losses that the Rock has suffered over the past two years of almost £1.7bn in total were massively greater than expected by any of the possible private-sector bidders for the Rock.

All the bidders - including the Rock's own management team - seriously under-estimated the difficulties that the Rock's borrowers would face in keeping up the payments, especially on the so-called "Together" mortgages (where the combined value of a mortgage and personal loan "package" taken out by customers exceeded the value of their respective homes).

So, for example, the Rock's management team put together a bid for the bank in early 2008 based on a forecast that there would be losses of just under £200m in 2008 and then a return to profit.

In the event, the Rock has suffered losses on mortgages and loans going bad in excess of £2bn over the past couple of years - or five times more than the Rock's management and other bidders for the bank expected.

So if the Rock had been kept in the private sector, the capital of the bank would have been wiped out. And nationalisation would have been merely postponed rather than avoided.

What's more, even if there hadn't been a formal transfer of the equity to the public sector, this bank was on life support from taxpayers - with around £30bn of taxpayer loans at the peak and a formal state guarantee against losses covering its entire £100bn balance sheet.

Which means that keeping it in the private sector, in the sense of ownership of the equity, would have been something of an accounting charade

In fact, some would say that if there's eventually a profit for taxpayers from taking full control of the Rock, that would be a vindication of the decision to nationalise - for two reasons.

First, that the business would arguably have haemorrhaged more without the explicit backing of the state.

Second, and more importantly, the nationalisation of the bank has permitted an exceptionally efficient reconstruction of Northern Rock with regard to its additional capital needs.

This reconstruction involved splitting the Rock in two: as of this year, there exists a new smaller retail bank, with just £10bn of mortgages on its books and £19.5bn of retail deposits - making it one of the most prudently financed banks in the world - and an "asset manager" which holds some £50bn of older mortgages.

The retail bank, called Northern Rock, will be privatised, probably later in the year. And the asset manager will stay in the public sector.

That asset manager will no longer take deposits. So it requires less capital to underpin its assets as a cushion against possible future losses.

This is a long-winded way of saying that net new investment by taxpayers in Northern Rock since privatisation will emerge at around £1.6bn in total - which is the amount that taxpayers would have to get back to avoid making a loss on the nationalisation.

Is it conceivable that £1.6bn could be raised from the combination of the privatisation and the repayments over many years of the mortgages held by the nationalised asset manager?

Yes, that is possible - if not inevitable.

But it will be years before we know.

Which is not to say that there are no more difficult decisions on the Rock for whoever forms the next government.

The most tricky will be whether maximising proceeds from privatisation is paramount.

There are plenty of voices - especially in the Rock's North East home - calling for the new Rock to become a mutual once more, a vanguardist for a new generation of conservatively managed building societies.

The appeal of creating a new super-prudent, customer-owned savings-and-loans institution would be obvious to many - except that if the Rock were mutualised rather than sold, taxpayers would probably end up suffering a loss.

Northern Rock, the nationalised bank whose collapse is most closely associated with the onset of the credit crunch, is almost out of hospital.

In formal accounting or statutory terms, it actually made a profit in the second half of 2009.

But there were a couple of big one-off credits that flattered the bank - including a refund of £350m of supposedly penal interest rate charges levied by the Treasury, following approval of the Rock's rescue by the European Commission

In underlying terms, there was a loss of £139m from July to December last year and a loss of £383m for the year as a whole.

Which looks very good compared with the stonking loss for 2008 of £1.3bn.

Costs have been reduced by almost a third, and the confidence of depositors seems to have stopped eroding - even though the Treasury has announced that it will no longer guarantee their savings in a formal sense.

The bank has now been split in two, with some £50bn of mortgages to be retained in state hands and a small retail bank to be put up for sale, probably in the second half of the year.

There's even a fighting chance that, as and when that bank has been sold and the older mortgages have been paid off, taxpayers could end up making a profit on this most fraught of nationalisations.

There is a comprehensive account of the government's diagnosis of what went wrong with the financial system in a speech given last night at the Smith Institute by the City minister, Lord Myners.

It doesn't contain anything particularly new. But, as it happens, I don't recall any minister attempting this kind of overview.

Myners makes three substantive points:

1) Markets are a good mechanism for distributing capital, goods and services, but not a perfect one - so we must recognise that those who worship a deified perfect market are worshipping a false god;

2) It's unfortunate that wholesale and professional lenders to the likes of Royal Bank of Scotland and HBOS, and even providers of putative risk capital, were bailed out by taxpayers - because it proved that these banks could behave irresponsibly and more-or-less get away with it, thus undermining any incentive for them to behave more responsibly;

3) There has been a systemic, long-running failure of institutional investors to exercise their ownership rights over companies in a rational way, to prevent those companies - especially but not exclusively banks - from taking actions that damage the interests of owners.

To most of which - I would guess - there would be a wide degree of assent, from the leaders of the opposition parties and from many of you.

But beyond the bloomin' obvious - such as that banks must be forced to hold considerably more capital to protect against losses and to increase their stocks of genuinely liquid assets as insurance against runs - we are still a long way from consensus on the appropriate prescriptions.

On the issue, for example, of how to make sure that banks don't take crazy speculative risks now that it has been proved beyond doubt that taxpayers will bail them out, Myners makes slightly contradictory suggestions - though it's probably wrong to single him out for criticism, since these contradictions are inherent in most of the remedies suggested by assorted governments.

First he extols the virtues of living wills, or a proposed new obligation on all banks to have detailed, practical plans to hive off their retail operations in a crisis. The aim of such measures is to prove to the world that only those retail bits - which look after the vital interests of households and businesses - would be bailed out by the state in a crisis.

The hope would be that banks' more speculative activities - their investment banking operations in the main - would be seen by their creditors as inherently more risky. And that these creditors would have a powerful motive to prevent those banks taking dangerous risks.

Which is good in theory. Except that if a Goldman Sachs or a Barclays Capital went kaput today, it is inconceivable that it would not cause horrific contagion, both to other financial institutions and to the economy (if for example asset prices collapsed or the rug was pulled from under important non-financial companies).

So unless and until these investment banks can be massively shrunk in respect of size and scope, there would probably still be state protection for the more speculative activities of universal banks such as Barclays or Royal Bank of Scotland.

So Myners and the British government also favour some kind of Obama-style insurance fee to be paid by banks, such that the costs of any bailout would be met by bank and their owners, not by taxpayers.

But there's a problem with creating a blanket insurance scheme of that sort: it would provide an unwelcome new incentive to unscrupulous banks and bankers to take crazy risks in pursuit of short-term profits and bonuses; if the bankers' bets went wrong, the insurance scheme would pick up the tab.

In other words, bank insurance schemes re-import to the banking system more-or-less the same moral hazard problems as the free insurance that has been provided by taxpayers (without our assent or knowledge) to too-big-to-fail institutions such as Royal Bank and HBOS.

And, by the way, the Bank of England has demonstrated the financial benefit of that free insurance to big banks: over an extended period, they were able to borrow more cheaply than smaller banks perceived by creditors not as inherently more likely to fail, but as less likely to be bailed out by taxpayers were they to get into trouble.

As for what the former fund manager Myners has to say about how shareholders can become more diligent and wise stewards of companies, here he makes a point that was largely ignored in the recent furore over Kraft's takeover of Cadbury - which is that it is the acquirer of a company and that bidding company's owners that are more often damaged by a takeover than the target company.

Think RBS and the rump of ABN, which RBS bought in the autumn of 2007. RBS and its shareholders were seriously poisoned by the deal. ABN and its owners should forever be profoundly grateful that RBS's board put aspiration for global domination ahead of commercial common sense.

Here's the relevant nannyng point: Britain's code on takeovers and mergers was created primarily to give protection to shareholders in the biddee not the bidder.

It is designed to ensure that a biddee's shareholders are not prevented from entertaining a full and proper takeover offer by the selfishness of blocs of minority shareholders or the fear of the biddee's management that they'd be out of a job were the deal to go through.

But if in the end it is the bidder which suffers more often than not - through having paid too much in an acquisition or through having bitten of way more than can be chewed and digested - perhaps it is shareholders in the bidding company which deserve a bit more protection.

This of course will be at the forefront of the minds of the Prudential shareholders today, as they agonise over whether to support the Pru management's record-breaking $35.5bn offer to buy AIA.

The prime minister has chosen today's International Women's Day to argue that there's a strong case for obliging private-sector companies to report annually on the progress they're making in promoting women to senior executive and non-executive position.

It is certainly striking how few women are on the boards of the FTSE 100: just one-in-ten board directors are female; which means that companies with as many as two women directors are the exception.

And, of course, female chairs and chief executives are harder to find than even women editors of newspapers or broadcasting "on-air" editors who aren't men (that's a big hello from me).

Now there is a case - which I put last July before it became fashionable to do so (see my note "Why men are to blame for the crunch") - that the absence of women from the top of banks and financial companies meant that the atmosphere of board rooms during the bubble years was heavy with testosterone; and the consequence was a culture of dangerous risk-taking in the macho pursuit of short-term profits and bonuses.

You may dispute that. But even if you do, you surely can't believe that entrepreneurial, wealth creating talents reside exclusively in the Y chromosome. So the dearth of women at the top must surely be depriving the UK of incremental income at a time when we need every penny we can squeeze to pay our way in the world.

But if companies will be forced to produce a report card on their efforts to make their senior management team look a bit more - in a gender sense - like the world rather than a dusty gentlemen's club, it's perfectly reasonable to examine Gordon Brown's record.

I don't mean in respect of the civil service or the cabinet, although both areas of government remain a long way from gender equality.

So if for example you look at the senior positions in the Department for Innovation and Skills, which is co-sponsoring today's "business must be less sexist" initiative, the secretary of state is a man, the permanent secretary is a man, there is one female minister out of ten, and there are just two women among the 11 most senior officials.

BIS's annual report card on promoting women might say "must try harder".

And, before you attempt to turn the tables back on me and the BBC, I should point out that almost all the senior management posts in the bit of the BBC where I work, BBC News, are filled by women - including the top job, Head of News, held by Helen Boaden (who - oh yes - reports to two men, the deputy director general and the director general).

However I'm more interested in how the government has exercised its clout over those bits of the private sector where it can more-or-less instruct boards to do as it says: I'm talking about the government's gender record as 100% owner of Northern Rock, 84% owner of Royal Bank of Scotland and 41% owner of Lloyds.

All of these organisations have seen the departure of their chairmen and many board members since the state took its big ownership stakes in them as part of rescuing them from collapse.

So are these three nationalised or semi-nationalised banks now run by a new generation of female bankers? Are there more women on their boards than at comparable businesses?

No and no.

The new chief executives at the Rock and RBS: men. The new chairs of the Rock, RBS and Lloyds: men. The vast majority of board members of all three organisations: men.

All three banks are playgrounds for ageing white men just like me and the prime minister. The Rock has one woman on a board of eight. RBS has one woman on a board of 12. Lloyds has one woman on a board of 14.

Which is why there are some who are bound to argue that Gordon Brown should get the gender mix in order in his own house, before preaching to the rest of the private sector.

How much will the super-tax on bonuses raise for the Chancellor?

The FT this morning says £2.5bn gross and £1.5bn net; the net figure is the difference between the gross amount and what he would have raised from existing income tax on bonuses that would have been bigger had it not been for the super-tax.

So it's the net figure that matters. And that £1.5bn compares with a forecast of £550m made by the Treasury when it launched the one-off bonus tax in the pre-budget report last November.

Is the FT right?

Based on some calculations I did yesterday, it is plainly in the right ballpark - although the Treasury believes that it is erring on the high side.

The bigger bonus-paying UK banks - HSBC, Barclays and Royal Bank of Scotland - say they will collectively pay £668m (which implies, just to remind you, that their total bonuses to UK resident staff are £1.3bn, or just a fraction of the total bonuses they are paying).

What of the bonus tax being paid by overseas banks with employees based here for tax purposes?

Well I've spoken to executives at JP Morgan, Goldman Sachs, Morgan Stanley, Merrill Lynch, Credit Suisse, UBS and Deutsche. And I come up with an aggregate figure for them of £1.8bn.

Which would take the gross figure to within touching distance of £2.5bn - taking no account of proceeds from smaller banks.

However I don't have the information to assess how much the Treasury would have received from bonuses if it hadn't imposed the tax. We know that some banks have shrunk the bonuses they pay in the UK to reduce their liability to the 50% levy, but we don't know HMRC's original bonus pool forecast.

That said, it is blindingly obvious - as I've been saying almost since the tax was launched - that the Treasury's £550m prediction was ludicrously low.

PS It is something of an open secret in the City that British based bankers who have taken lower bonuses this year to spare the blushes and fiscal pain of their respective employers have been given unambiguous nods and winks that they'll be seen right in the next bonus round.

What a comfort!

The government, the Tories, the Lib Dems and the European Commission all say they want it: that's to build a more competitive banking market in Britain from the devastation wreaked by the bulldozing credit crunch.

What I've learned is that first steps have been taken in this direction with the formal launch by Royal Bank of Scotland of the auction of Williams & Glyn's, the small business and retail bank it is being forced to sell by the Commission.

The sale memorandum has been sent by RBS's financial adviser, UBS, to possible purchasers. And initial bids are due in April, before the most likely date of the general election on 6 May - though completion of the disposal is unlikely till after the election.

In respect of the rehabilitation of wounded Royal Bank, the sale will not be very material. According to bankers, proceeds may be around the book value of what's being sold, or possibly even a bit less, so perhaps a billion pounds or so - which would be a drop in the ocean of RBS's 2009 operating losses of £6.2bn.

But in respect of competition in the banking industry, the deal is potentially more important.

RBS is selling a business with 318 branches, about £20bn of loans and other assets and 2% of Britain's retail banking market - which is not huge, but not irrelevant either.

Perhaps what is most important is that 70% of the assets are loans and credit provided to small and medium size businesses, which is the part of the market where - many would say - competition is particularly inadequate.

The remaining 30% is credit provided to households.

So who is going to bid?

Well the two banks that seem most enthusiastic are Santander and Sir Richard Branson's Virgin Money.

And of the two, Santander can obviously afford to pay more, because it would be able to reap sizeable cost savings from the takeover thanks to its substantial existing presence in the UK.

Virgin, however, would argue that it would increase choice and competition in Britain more than Santander would do - for the obvious reason that it isn't yet a substantial player in British banking.

What's relevant in that context is that Santander was originally on a list produced by the Commission of big banks that would not be acceptable buyers of Williams & Glyn's, because sale to them would not promote competition.

However that draft list was eventually ditched and replaced by a market share threshold for bidders: the combined market share of a bidder and Williams & Glyn's mustn't exceed 15%; and Santander just limbos under that bar.

That said, the natural buyer of Williams & Glyn's in many ways would be National Australia Bank (NAB) because its British branches in Scotland and the North East would dovetail beautifully with Williams & Glyn's in the North West and Scotland.

And if NAB enters the fray that would introduce some tension in the bidding process.

But bankers tell me that NAB may well decide to sell its UK operations, Clydesdale and Northern, possibly to Santander - which would rather stymie Royal Bank's disposal.

Now that we've had the 2009 results from all Britain's banks, it's as well to note that the hierarchy of British banks has been shaken up quite considerably by the credit crunch and worst banking crisis in almost 100 years.

Or at least that's true in respect of their size as measured by the stock market, if not to the same extent their respective revenues and shares of the banking market.

The ranking three years ago and for most of the preceding few years saw HSBC as the biggest bank, Barclays and Royal Bank of Scotland chasing its tail, Lloyds some way behind that and Standard Chartered as the enthusiastic, fast-growing puppy.

Today HSBC isn't just the biggest British bank. Its market value of more than £120bn is more than that of all the other four added together. It's in a league of its own.

So if you're one of those who believe an executive's pay should be correlated with the size of his or her organisation, you can see why HSBC's non-execs want to give its senior directors a pay rise (although most astute owners would say that size isn't everything; return on that investment is rather more important - and there are critics of HSBC who don't believe it's managed or constructed to optimise the return).

The other super soaraway success has been Standard Chartered - which has today produced a set of apparently excellent figures, that show very little evidence of the malaise afflicting the likes of RBS and Lloyds.

How so? Well Standard Chartered has next to nothing in the way of direct exposure to over-borrowed Britain or the bloated, leveraged US.

Its heartlands are Asia, the Middle East and Africa. So in reporting a 13% rise in pre-tax profits to $5.1bn, it also disclosed that five different countries each generated more than $1bn of income for it.

And the respective operating profits of both India and Hong Kong surpassed $1bn.

Thanks to their origins in Britain's colonial past, Standard Chartered and HSBC are fortunate to be located where today's more vigorous economic activity is occurring - and aren't trapped in the inherently lower growth economies of Europe and the US.

This has a double benefit. Most obviously, as China, India and other parts of Asia have weathered the global recession far better than the old West, profits of HSBC and Standard Chartered have proved much more resilient.

But there was a second advantage, which may have been even more important. Growth was on their doorstep. So they didn't have to manufacture it by taking ill-judged risks both in the way they funded themselves and in the way they expanded their assets.

So neither Standard Chartered or HSBC became dependent on flighty wholesale markets or unreliable securitisation to raise finance for lending and investing. And neither of them loaded up with AAA collateralised debt obligations and other spurious investments - which as we now know were pretty good poison - as a way of pretending to their owners that they could grow like the best.

I would have added that these two steered clear of toppy US and UK residential and commercial property markets. But that wasn't true of HSBC, whose American sub-prime exposure was huge (though bearable, for it).

Or to put it another way, they mostly steered clear of the kind of lending and funding risks that has caused so much damage to Royal Bank, HBOS (now part of Lloyds), Lloyds itself (though it would be in better shape today if it hadn't bought HBOS) and (to a lesser though still significant extent) Barclays.

What's the final score?

Today the market value of Standard Chartered, at an almost unbelievable £32bn, is only £2bn less than Lloyds' and £5bn less than Barclays. And it is £11bn more than RBS (although that's to ignore all the "B" shares that RBS has flogged to taxpayers).

There are some lessons here. And I guess the most important one is that we'd have all been much better off - and I do mean all of us, given the taxpayer cost of bailing out the banks - if British banks with largely British operations had been more at ease with what they really are: which is privileged organisations with large market shares in a mature economy; NOT fast-growing financial services groups, motivated to grow profits in a dangerous way as fast as possible.

There's no great secret about why they took these excessive risks. Fast growth in size and profits generates fast growth in executives' pay and bonuses - at least for as long as the growth is sustained.

Which is why the argument that bankers were paid too much for doing the wrong things isn't sour grapes: it's central to any serious debate about how to put the banking system on a firmer footing.

These days, the pay issue is most relevant to Barclays, simply because it owns the biggest investment bank of all the British banks, and pay is most closely aligned to short-term performance for investment bankers.

Now what I find slightly odd in all the hullabaloo about whether Barclays and other so-called universal banks should be broken up - or whether it's healthy for the British and global economies that investment banks and retail banks should be part of a single organisation - is why shareholders haven't weighed in.

Because Barclays share price appears to be deriving almost no benefit from its ownership of one of the world's very biggest investment banks.

Here's the thing. Barclays recently announced pre-tax profits well over £5bn, ignoring the huge gain made on selling its fund management business, Barclays Global Investors.

That profit of more than £5bn compares with a huge loss at Lloyds. But Lloyds' market value is just £3bn less than Barclays'.

What's going on?

Well arguably investors are valuing both Lloyds and Barclays on the basis of their substantial enduring shares of the British retail banking market. These are annuity operations that will yield very substantial, stable profits once interest rates rise a bit and once bad debts subside.

They will be fantastic businesses again when economic conditions are more benign.

It's also plausible to say that Barclays' retail and commercial banking operations are intrinsically more valuable than Lloyds', because they remain profitable (even if profits have tumbled) and they weren't tarnished by being semi-nationalised.

If that's right, then Barclays' share price and market value is deriving very little benefit from the £2.5bn of profit generated last year by its investment bank, Barclays Capital.

So here's what Barclays owners have to ask themselves. Does Barclays own Barclays Capital for the benefit of its shareholders, or for the benefit of its highly-paid executives?

Even as an Arsenal supporter, it's difficult not to feel the pain of Man Utd fans for the supposed devastation wreaked by the Glazers at the club they bought at the end of 2004/5 season.

Let's look at the record of shame and degradation.

Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup.

Let's not beat about the bush: the takeover has been an unmitigated disaster.

Not.

Some might say that the Glazers are entitled to ask why on earth they are detested by fans even more than most owners of clubs (and for reasons that are slightly unclear, football is the probably the last home of explicit class warfare and 1930s socialism, in that fans are rarely enamoured of proprietors).

Of course, the resonant issue about the Glazers is whether the debt they've heaped on the club - some £700m odd through the complicated corporate structure they've created - will curtail its success in the future. This was an issue I raised here back in early January (see Can Man Utd Spend?).

And there's a related question - which has gained considerable traction as a result of the diligent analysis of contractual details in Man Utd's recent £500m bond issue by the Andersred blog - about whether the Glazers are planning to maximise the financial squeeze on the club by draining every last penny of available cash for their own benefit.

The problem for the publicity-hating Glazers is that the principle of "beyond reasonable doubt" simply doesn't apply to their trial on the terraces. In the absence of any public statements by them, it is simply assumed that they are planning to rape the club in a financial sense and leave it destitute.

So what is the verdict of today's authoritative survey of football club finances by the accounting firm Deloitte? Well Man Utd fell from second to third in Deloitte's league table of clubs ranked by revenues.

But there is a slightly spurious element to the gap that has opened between the turnover of Man Utd versus that of Real Madrid and Barcelona - which is that (as you probably noticed) the pound has weakened considerably against the euro in the relevant period, which benefits the Spanish clubs when translating income into a common currency.

All that said, the debt-heavy financial structural of Man Utd does look unfortunate.

In the run-up to the credit crunch of 2007, leveraging up - loading up a business with debt - was the financial structure of choice for all manner of financial organisations.

As readers of this column will be only too aware, the rising leverage of banks, non-financial businesses, households and governments all made their contribution to the worst recession the UK (and the world) has seen since the 1930s.

And it has become something of cliche that we have to start saving more and get the debt down - which will become something of an imperative when central banks cease their emergency help for the global economy and start raising interest rates back to more normal levels.

So many would say that Man Utd, like the British government, would probably be advised to start making plans to reduce its indebtedness.

Which brings me to an initiative by a senior Goldman Sachs partner and one of London's most successful hedge fund managers to rally to the alleged cause of true Man Utd fans and organise a buyout of Man Utd.

This is one of those "you couldn't make it up" moments.

The heroes of the moment, Jim O'Neill of Goldman and Paul Marshall of Marshall Wace, have made colossal personal fortunes over the past few years thanks to their firms' use of leverage or debt.

There are some who believe that the likes of Goldman and Marshall Wace - even when operating on reduced leverage or borrowing ratios - still pose a threat to the stability of the global economy.

But - apparently - it's the leverage ratios of Man Utd and its stability which is rather more important.

It is also worth noting that although they've mooted a price of £1bn to acquire the club, no detail has been provided about how much of that would be funded by debt and how much by equity.

So Man Utd fans should ask to see the small print before rallying to their cause, because there would be no benefit to them of replacing one debt-heavy financial structure for another.

Also, it's incredibly early days for these buyout plans: there's been one meeting of the putative bidders and a barrage of media hysteria.

And, to state the bloomin' obvious, the Glazers don't have to sell and have shown no inclination to do so.

Man Utd is an important business for the UK, generating considerable overseas earnings and international goodwill for this country.

But the Glazers own it. And the last time I checked, the protection of property rights - even at football clubs - was a not unimportant pillar of our capitalist democracy.

PS For more on this and other aspects of football finance, tune in to our live debate at 8pm on Radio 5 Live and the BBC News channel.

Companies that expand by acquisition are what they eat.

And sometimes a company buys something so big that it changes them almost beyond recognition.

Vodafone was transformed from ambitious British upstart into the world's biggest mobile operator with its purchase of Mannesmann a decade ago.

BP was promoted to the premier league of oil companies with its acquisition of Amoco.

And, if anything, the Prudential is attempting an even more radical reconstruction of what it is, with its takeover of AIA, the Asian arm of the battered, US insurance giant, AIG.

The £20bn plus transaction would more than double the size of the Pru and would make it the biggest life insurer in Asia.

The sale has been approved by the US government, which rescued AIG in the autumn of 2008, and by AIG's board: there's likely to be formal confirmation later today.

In the meantime, the Pru has requested that trading in its shares should be suspended. Which, I think, is almost without precedent for a business of the Pru's size and importance.

But the Pru takes the view that it's very hard for investors to value its shares, prior to disclosure of precisely what it is buying and how.

The price for AIA will be around $35bn or well over £20bn.

It will be financed by a rights issue of around that magnitude, which would probably be the biggest ever rights issue of new shares by a British company - and possibly one of the biggest ever rights issues by any company anywhere.

In the UK, only the emergency rescue rights issues of Royal Bank of Scotland and Lloyds have come anywhere close in respect of amount of money raised.

What's the point?

Well it would turn the venerable old Pru - a company whose history is woven into the thread of Britain's financial and industrial past - into the market leader in life insurance in Asia.

It is already number two in Asia. And the takeover of AIA would make it the clear number one, with more than 40,000 employees and hundreds of thousands of tied agents.

The Pru believes it would become the HSBC of the life insurance world - viz a company with headquarters in old-economy London, but with the bulk of assets and its prospects in new-economy China, India, South Korea, Singapore and so on.

And the point about being in that region is not just that it is growing fast. It is also that the inhabitants save vastly more than we do here in the UK, even though their living standards on the whole remain much lower than ours.

That said, there are always risks - very substantial risks - in swallowing something bigger than oneself (don't think about that too long, or you'll feel queasy).

The Pru's powers of corporate digestion - and its management - will be seriously tested.

UPDATE, 08:57: I suppose anyone looking for a silver lining for UK companies in the credit crunch that wreaked so much havoc in the City would note that Barclays and now the Pru have taken advantage of others misfortunes to pursue empire-building ambitions.

The resonant and important question - as is always the case with big takeovers - is whether those imperial ambitions are for the benefit of shareholders, the owners, or of managers, the directors.

UPDATE, 11:18: Now that the details have been published, it's quite difficult to argue that the Pru is buying AIA at a fire sale price.

At a purchase price of $35.5bn, the Pru is paying 1.69 times "embedded value" (the conventional measure of life insurers' assets) and 25 times last year's operating profits after tax of $1.4bn.

That profit figure sounds very much like "profit with inconvenient bad bits taken out" - but we'll have to wait for more detailed audited figures to assess that.

And at 25 times, the Pru would initially be making a 4% return on shareholders' money - which isn't fabulous even in the low interest rate world.

But apparently this is what decent Asian insurers cost. And, as I've said, the Pru believes this is a once-in-a-generation (or longer) opportunity.

The Pru's owners, it shareholders, have a good few weeks to evaluate whether they agree, before deciding whether to stump up their share £13bn share of the purchase price in the jumbo rights issue.

That said, the Pru knows it has the money - because the rights issue has been underwritten (which means that other financial institutions will provide the necessary cash, if the Pru's shareholders balk).

The Pru will finance the rest of the deal by borrowing more than £3bn and issuing almost £7bn of new stock to AIG.

That will give AIG a stake in the Pru of almost 11%.

As and when AIG recovers, it'll be interesting to see whether that 11% is a symbol of a fruitful partnership or a Trojan horse.

In a 25-year career of taking an unhealthily close interest in banks, I have very rarely encountered results as appallingly bad as those published by Lloyds this morning.

The bank says the loss was £6.3bn - which it sees as marginally better than the notional loss of £6.7bn that it would have reported in 2008 had it owned HBOS for the whole of that year (it in fact acquired battered HBOS at the turn of 2009).

Arguably, however, the loss for 2009 was almost double the number highlighted by Lloyds at £12.4bn: there is a case for ignoring a £6.1bn credit taken by Lloyds from a revaluation of some of HBOS's assets and liabilities.

But the big horror, of course, was the charge for loans and investments that have gone bad: an awe-inspiring £24bn, up from a merely horrific £15bn in 2008.

Lloyds' implied excuse is that the bulk of these losses stemmed from the insanely-poor loans to companies - especially property companies - that were made by HBOS.

But - to coin a phrase - you are what you eat. And Lloyds did not have to swallow HBOS: the bank, led by the chief executive Eric Daniels, chose to buy it.

Daniels remains chief executive.

And there will be some who may regard the other board members as having taken leave of their collective senses in deciding - in the words of Lloyds chairman, Win Bischoff - that he merited "the full payout under the company's annual bonus scheme because of his significant contribution".

Those critics would perhaps have been placated when Daniels chose to waive his £2.3m bonus entitlement.

But it is difficult to escape the feeling that there is something of a gap between how the world sees Lloyds and how Lloyds sees itself.

Take the issue of support for the British economy - and remember that this is a bank into which we as taxpayers have injected £23bn for a 41% stake, and taxpayers have also provided £157bn of emergency credit through the special liquidity scheme and the credit guarantee scheme.

Bischoff talked of "playing our part in the UK's economic recovery... by extending a significant amount of new lending to businesses and households".

And - by the way - Lloyds has a contractual arrangement with the Treasury to increase lending to UK businesses by £11bn and to home-owners by £3bn both in 2009 and 2010.

Is that in fact what happened? Has it met those lending commitments?

Well, Lloyds' published numbers do not tell that story.

In every segment of Lloyds operations, loans and advances to customers fell: by £6bn in its retail bank, by £43bn in its wholesale bank (which deals with businesses) and by £1bn in its wealth and international division.

Breaking that down further, mortgages on its balance sheet decreased by more than £10bn, credit for transport, distribution and hotels was almost £4bn down and loans to manufacturers dropped by £4bn.

Now, there are perfectly good arguments why Lloyds needs to shrink its balance sheet to strengthen itself.

But that is not necessarily consistent with what's best for stretched British industry or households.

That said, its plainly in the interests of shareholders (who include taxpayers, lest you need reminding) that Lloyds has today increased its forecast of the annual cost savings it can make from integrating HBOS's operations with its own.

These planned cost savings have been increased from £1.5bn to a staggering £2bn.

However, you won't think that's great news if you are a Lloyds employee seen as a duplicated overhead and being made redundant at a time when employment conditions in the UK are dire.

Even so, it must be in the interest of the UK that Lloyds is rehabilitated. With 30 million customers, a weak Lloyds would not be good for shareholders or the economy.

But rebuilding Lloyds is very much work-in-progress.

In that context, it is significant that Lloyds - which was desperate to avoid an additional injection of support from taxpayers - has the lowest ratio of core tier-one capital to assets (by about two percentage points) of all the big British banks.

Some analysts would argue it needs to raise quite a lot more capital - or shrink its balance a good deal more, which would further constrain its ability to lend.

Also its share price of 53p fell today and remains well below taxpayers' buying-in price of 74p.

Lloyds directors - and Eric Daniels in particular - have some way to go before they can claim to be delivering for their owners or for the country.

PS: Jeremy Hillman, editor of the BBC News business and economics unit, has written a post at The Editors about why we have interviewed RBS but not Lloyds.

The latest results from Royal Bank of Scotland show - perhaps even more than its calamitous 2008 figures - quite what a disaster this bank has been for Britain.

The operating loss of £6.2bn for last year was only a marginal improvement from the £6.9bn loss of the previous period.

But perhaps the most chilling numbers are these: we as taxpayers put in £25.5bn of new equity into this bank last autumn, the second instalment of the £45.5bn we have invested in total; but over the past year, the equity of this bank has increased by less than £16bn to £80bn.

So almost £10bn of the £25.5bn we've only just put into RBS has already been wiped out by losses.

Which, I think, is probably the best measure of the degree to which RBS is still haemorrhaging.

Where is the locus of the disease?

It's RBS's hundreds of billions of pounds of poor loans and investments - as shown by a loss of almost £14bn for so-called impairments (loans that the bank can't get back, or investments that have gone wrong).

This is hair-raising stuff. It speaks to a recklessness or incompetence of the banks' previous management that can make hardened hacks like myself almost weep.

So what are we as taxpayers getting for the fortune we've put into RBS?

What we're not getting is oodles of credit funnelled to businesses vital to the UK's economic recovery.

By its own admission, Royal Bank has flunked the government-set target of providing £16bn of additional loans to "credit-worthy" businesses.

It insists that's not as a result of bad faith on its part.

Royal Bank says the money is there to be lent, but that bankable businesses don't want to borrow - or, at least they don't want to borrow enough.

In fact, there has been a £12.2bn reduction to £151bn during the course of the year in the total volume of loans provided by Royal Bank to companies.

These are disturbing figures - not least in the context of the shocking official statistics released this morning on investment by British business, which showed that in the last three months of 2009 business investment fell almost 6 per cent to a level not seen since 1992.

It looks as though - as per Japan in the 1990s - unconfident British companies are choosing to pay down their debts rather than invest for the future.

But even if companies are horses brought to Royal Bank's water, choosing not to drink, there is still a question about whether Royal Bank could be doing more to encourage them to drink.

Managers at Royal Bank know that it's a board imperative to shrink a bloated balance sheet. So it's highly plausible that they're not doing enough - for the health of the British economy - to seek out viable businesses wishing to borrow.

Which goes to the nub of what the rescue of Royal Bank should have been about.

The private view of Mervyn King and those running the Bank of England has been that Royal Bank should have been turned into an instrument of economic policy, compelled to provide specific quantities of loans to industry and households.

The Treasury, however, decided the imperative was to rebuild Royal Bank as a commercial entity as quickly as possible, in the hope that this would allow taxpayers to get their money back from privatisation.

So it has allowed Royal Bank to operate as a more-or-less autonomous entity - as opposed to a potentially useful arm of the state - even though the state owns 84% of it.

So will the Treasury's strategy succeed in getting us our money back?

Investors in general remain unpersuaded.

Royal Bank's share price rose 6% today, because there is at last a declining trend to the rate at which loans are going bad and there's progress in reconfiguring the bank around a profitable core.

But at 38p, the share price is still well below the 50p price at which taxpayers' stake was acquired - so there's a steep hill to climb before this bank can be privatised to get us back our £45.5bn.

That hill could be even steeper if Mervyn King has his way.

The governor has today told the Future of Banking Commission that it is simply not sustainable for banks like Royal Bank - and Barclays - to run highly profitable investment banking operations on the back of tax-payer protected retail and money-transmission operations.

Which is an argument about how to make the financial system more robust and prevent a recurrence of the 2007/8 all-time worst banking crisis.

But if RBS were bifurcated, arguably the parts would be worth less than the whole - and taxpayers would end up deeply and permanently out of pocket.

Now, that might be a price worth paying for financial stability. But it would be a hefty price.

I have learned that the investment arm of the Treasury has written to Royal Bank of Scotland's board, giving formal approval for the bank to pay £1.3bn in bonuses in relation to its performance in 2009.

The letter from UK Financial Investment has been sent today.

Although the total value of these bonuses is less than half the £2.7bn paid by Barclays, RBS's bonuses are more controversial because the bank is 84% owned by taxpayers.

The Treasury is in effect sanctioning payments to individuals that run to millions of pounds in some cases, even though these bankers can be seen as state employees.

However ministers believe that if they were to veto the bonuses, there would be significant damage to the value of the bank - thereby impairing the prospects for taxpayers to get back the full £45.5bn the Treasury has invested in the bank.

The bonus payments will also infuriate some critics for the separate reason that Royal Bank suffered colossal losses last year.

Ignoring one-off factors, such as gains on Royal Bank's purchases of its downgraded debt, the bank is thought to have made a loss of around £5bn in 2009. The precise loss number will be unveiled tomorrow when the bank publishes its results.

In the previous year, the attributable loss at RBS soared to a UK corporate record of £24bn - due largely to the collapse in value of the rump of the Dutch bank ABN, which Royal Bank had bought.

The loss in 2009 would have been significantly greater if RBS hadn't generated colossal revenues in its global banking and markets division - where the bulk of bankers work who'll receive the biggest bonuses.

The chancellor demanded the right of explicit approval over bonuses to be paid by Royal Bank when he agreed to insure the bank against losses on its poorer quality loans under the asset protection scheme.

RBS's directors were deeply concerned about his involvement in what they see as a commercial decision that should have been kept out of politics.

As I disclosed last year, the directors were given legal advice that they would have to resign if the chancellor forced a pay policy on them which they thought would damage the business.

He has chosen not to countermand UKFI's judgement that the £1.3bn in bonuses proposed by Royal Bank is reasonable.

On Sunday, Royal Bank's chief executive, Stephen Hester, waived his entitlement to a bonus for 2009.

The government's decision to withdraw the guarantee that no saver in Northern Rock could lose even a penny if the bank went kaput has wide implications.

The least important is that the reconstructed nationalised bank - with the bad bits taken out - is well on the way to being privatised.

More important is what it means for the security of savings at other banks.

Because while Northern Rock's savers benefited from a formal guarantee from the government, the Treasury was also in effect promising that no saver in any British bank or building sociey risked losing a penny.

So in withdrawing the Rock guarantee, the chancellor is in effect restoring an element of caveat emptor to the entire banking market.

To be clear, the banks' insurance scheme - the Financial Services Compensation Scheme - provides cover up to £50,000 per customer.

But if you have more than that in a single bank, well that increment is at risk. You can lose money if your bank has insufficient assets to meet its liabilities.

How would you know whether your bank is prudently managed or not?

There's the rub. Millions of us wouldn't have a clue how to make that judgement.

But most of us instinctively - and correctly - know that some banks are too big and important to fail, that they would always be bailed out by government were they to run into difficulties.

So those banks have an unfair competitive advantage: they attract more funds and at a lower interest rates than the smaller banks and building societies that are less important to the economy and can't be sure that they would always be protected by the Treasury from falling over.

Which is why it matters so much that those too-big-to-fail banks (you know who they are) don't abuse the protection given to them by the state - by us, by taxpayers - to take excessive risks in pursuit of incremental profit and bonuses.

Goldman Sachs' statement on its financial deals with Greece, which made the debt of this financially stretched nation seem smaller than it actually was, will not - I think - silence the many critics of the world's most successful investment bank.

In a series of deals, Goldman did two things for Greece.

During December 2000 and January 2001, it "swapped" some of Greece's Yen and Dollar debts into euros, using a "historical implied foreign exchange" rate rather than the market rate. In other words, it used invented exchange rates, rather than market rates, whose effect was to make it seem that Greece's liabilities in its own currency were less than was actually the case.

Second, Goldman took on responsibility for paying the coupon - or fixed rate of interest - on a newly issued Greek bond, and received "cash flows based on variable interest rates". Now, this is a rather opaque statement, but it implies that Greece sacrificed the certainty and comfort of fixed rate interest payments for variable ones.

So what was the effect of all of this?

Well Goldman say the deals "reduced Greece's foreign denominated debt in euro terms by €2.367bn and - in turn - decreased Greece's debt as a percentage of GDP by just 1.6 per cent, from 105.3 per cent to 103.7 per cent".

Okay, so far, so factual.

What are Goldman's justifications for entering into transactions whose primary purpose was to make it look as though Greece's indebtedness was smaller than it actually was?

Well, there seem to be three.

First, it suggests that everyone was at it. Goldman says "Greece entered into a series of hedging agreements designed to transform foreign debt into euro, a common practice by many European member states with foreign debt outstanding".

Why single out Goldman and Greece, if loads of other banks and EU countries were playing the same game, or a similar one?

Second, Goldman says that "the Greek government has stated (and we agree) that these transactions were consistent with the Eurostat principles governing their use and application at the time". Or to put it another way, they did not breach the European Union's accounting rules of the time.

And third, the deals "had a minimal effect on the country's overall fiscal situation". As Goldman points out, in 2001 Greece's debt to GDP ratio was 103.7 per cent of GDP with a value of $131bn. In 2008, Greece's national debt was 99 per cent of GDP with a value of $357bn.

In that context, deals that reduced the appearance of Greece's debt by €2.367bn - or $3.2bn at current exchange rates (as opposed to "historical implied" ones) - seems a drop in the ocean, neither here nor there.

However, there does seem to me to be a gap in Goldman's explanations and justifications - which is that they do not address the question of whether the deals were the right thing for a firm of its size and reputation to be doing.

Yesterday, one of Goldman's managing directors, Gerald Corrigan - the former president of the New York Fed - told British MPs that "with the benefit of hindsight . . . the standards of transparency could have been and probably should have been higher", in respect of such transactions.

But that seems to shift the blame to regulators who created a loophole; it's not an examination of Goldman's corporate conscience.

And here, I think, is what will concern those politicians and regulators who are currently wrestling not only with the narrow question of how to ensure that European countries borrow only what's prudent, but are also contemplating a redesign of the financial system to prevent a repetition of the kind of banking crisis we saw in the autumn of 2008.

Goldman's Greek defence carries the following momentous implication (albeit one that many will say is blindingly obvious): Goldman is in effect saying that banks will always go for the seemingly profitable deal, unless they are formally prohibited from doing so; and that it's naive to expect them to do the "right thing", in a nebulous ethical sense, unless they are obliged to do that right thing.

Which may reinforce the case of those - like the US president - who argue that the only safe bank is one that is subject to the tightest possible constraints on what it can do and has been cut down to a safe size.

But don't expect Goldman to say three cheers for that.