I came across this post from Jonathan Crozier. Former technology analyst for various investment banks, now playing golf....and blogging.

I found insightful, given that Lending Club IPO was trading on 50x historic revenues after first day of trading in Dec 2014. Yet RBS on less than 2x revenues. Both firms are loss making. But RBS would therefore seem much better valuation. Not according to Crozier.

http://www.crowknows.co.uk/are-rbs-shares-on-a-dotcom-valuation/

The whole post is worth reading. But if you want to skip to the conclusion:

I have never seen a technology company commanding a £40 billion valuation as a reward for losing £17 billion over 13 years.
The view that huge banks can deliver regular annual returns on capital of more than 10% appears to have been an illusion. Profitable years that subsequently get adjusted away were never profitable years. Banking was once supposed to be dull and low margin. Bankers were supposed to be able to sleep at night. Do we not all profoundly wish to return to this business model? Well, nearly all of us. If you work for UK Financial Investments Ltd, managing the government’s stakes in RBS and Lloyds, you might take a different view.

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