Vodafone India: First Spain, then Turkey, now India. The subcontinent is the mobile operator’s latest problem area. Vodafone faces a price war, a $2 billion tax claim, and the exercise of a put option by local partner, the Essar Group. The extra costs of the 2007 deal which bought Vodafone the “crown jewel” of its global portfolio are now emerging.

Vodafone is India’s third largest operator with 70 million subscribers, and has tried to position itself as a premium brand. But it will find it hard to command premium pricing. Competitive pressure is bearing down on call charges, and this is likely to weigh on third-quarter results due on November 10. The major players have been using aggressive price cuts in a battle to grab market share before the arrival of new entrants awarded 3G licences by the Indian government. Results from Vodafone’s larger Indian rivals, Bharti Airtel and Reliance Communications, have shown the scars.

The pressure is unlikely to abate any time soon. India has 40 per cent mobile penetration and the market is gaining roughly 14 million subscribers a month. But the field is highly contested, with just 30 million subscribers between the second and sixth largest players. Vodafone’s ebitda margins are already low relative to peers as it is investing in its network.

Against that backdrop, Vodafone could do without some other big distractions. For starters, India is chasing Vodafone for $2 billion of unpaid taxes on its $11.2 billion acquisition of a 67 per cent stake in Hutchinson Essar. Vodafone says it is exempt from the charge as the stake sale took place between two off-shore entities. But the dispute threatens to drag on for three years. Investors may be nervous that Vodafone has not made a provision for the claim or any penalty fine, which could double the hit.

Then there’s the option that Vodafone gave Essar to sell its entire 33 per cent stake for $5 billion, or any amount between $1 billion and $5 billion at an independently appraised fair market trading value, in the twelve months running from May 2010. If Essar exercises the option, it could see Vodafone up its stake to the maximum 74 per cent threshold allowed for foreign operators. But the valuation is out of Vodafone’s hands.

Vodafone’s foray into India was by no means a mistake. And its problems there aren’t yet as bad as the difficulties it has suffered in Spain and Turkey — both relatively more mature markets where poor management or bad positioning cost Vodafone customers and led to impairment charges. Spain contributes 18 per cent of group ebitda, while India generates only 4 per cent. Investors will be hoping that the considerable management time being put into India will eventually pay off.

UK banks: Nine months is a long time in UK banking. When Royal Bank of Scotland and Lloyds Banking Group signed up for state insurance on a combined £585 billion of their suspect loans in February, each was assumed to be a basket case. Now the full details of the insurance scheme and enforced state aid disposals are public, it's clear that RBS is in the worse shape. Both banks are trying to wriggle out of the state’s embrace, but RBS hasn’t got very far. Lloyds, in contrast, is well on the way to independence.

UK banks: Nine months is a long time in UK banking. When Royal Bank of Scotland and Lloyds Banking Group signed up for state insurance on a combined £585 billion of their suspect loans in February, each was assumed to be a basket case. Now the full details of the insurance scheme and enforced state aid disposals are public, it's clear that RBS is in the worse shape. Both banks are trying to wriggle out of the state’s embrace, but RBS hasn’t got very far. Lloyds, in contrast, is well on the way to independence.

RBS has managed to cut its reliance on the government’s asset protection scheme. It is buying insurance on £280 billion of bad assets rather than £325 billion. It will also absorb the first £38.7 billion of losses on these loans – double the original idea. All this means that it doesn’t have to pay an upfront fee of around £17 billion.

Unfortunately, there are no free lunches. In order to withstand the extra risk that RBS is taking onto its own balance sheet, it will have to raise more capital. And there is only one buyer: the state. RBS will issue it with £25.5 billion of non-voting B-shares.

And because the authorities don’t think even that’s bullet proof, the government has promised to inject a further £8 billion if its core Tier 1 falls below 5 per cent. That will cost it £320 million a year. What’s more, the government’s stake, already 70 per cent, will rise to 84 per cent — and even more if the £8 billion is called upon.

Lloyds, by contrast, sidesteps state insurance entirely. It, too, needs to strengthen its balance sheet. But it is largely tapping the market, rather than the government, to achieve this. £13.5 billion will come via a rights issue, to which the state will contribute. Another £7.5 billion in core Tier 1 capital will come by swapping hybrid bonds into a new instrument that automatically converts into equity if Lloyds’ core Tier 1 ratio falls below 5 per cent.

Under the original plan, the government’s stake in Lloyds was slated to rise from 43 per cent to 60 per cent. Under the new one, it could even fall – if the new £7.5 billion instruments convert to equity. Moreover, the bank is only paying an extra £90 million a year to the hybrid holders to get its contingent capital — less than a third of what RBS is paying the government.

The long-term implications are also strikingly different. Lloyds’ core Tier 1 ratio rises to just over 8.6 per cent, excluding the contingent capital. That suggests the Financial Services Authority believes Lloyds’ assertion that impairments have peaked.

RBS, by contrast, will have a core Tier 1 ratio of 12.5 per cent without the contingent capital. When you add in the fact that it has access to the asset protection scheme, it looks like the regulator thinks belts and braces are still very much needed.

The coup de grace is Brussels. The European Commission will force RBS to sell its insurance arm and its commodities trading arm on top of reducing its small business lending by five percentage points. That may not hurt shareholders, as it has four years to dispose of the assets. But because Lloyds will take no further state aid, it can simply sell what it wanted to sell anyway – and still hold dominant 25 per cent market shares in personal current accounts and mortgages.

It may not be long before Lloyds resembles a normal bank. But RBS could well be a ward of the state for years to come.