Boomberg: "british Banks May Face Insolvency"

[Flapman]

The paras below are extracted from Money Morning's email circular of 4 Sep by David Stevenson, entitled: "Why Britain's in a bigger mess than the rest"

What to do, move out of GBP altogether (not easy!)?

What's the best (legal!) way to move from GBP to gold?

Any insights most welcome.

Flapman

"Why we may be heading for another banking crisis

But back to the banks and their borrowing…that’s a different matter entirely. “Troubled UK lenders may have tapped the Bank of England’s emergency funding scheme as much as £200bn, double the previous most aggressive estimates”, says the Telegraph. And the real problem is that the bailout scheme is set to end in October.

Bloomberg yesterday reported that it’s so serious that several banks may even face insolvency unless Bank governor Mervyn King gets a new system in place by then, according to analysts at UBS. At the very least, British banks would have £200bn of “exploding funding” to refinance within the next three years and would be forced to cut back on lending and shrink their assets, said UBS’s Alistair Ryan, meaning house prices could plunge 40%.

And who are the main addicts? It seems that Britain's No. 1 mortgage lender HBOS may be the biggest SLS user, ahead of Lloyds TSB, Barclays and Royal Bank of Scotland, says Alex Potter at Collins Stewart, who reckons that UK lenders have a £285bn “funding gap”, i.e. the difference between lending commitments and deposit funding. Apparently, though, the asset swaps under SLS are unlikely to total that much – because the UK banks have been borrowing from the European Central Bank as well.

Somehow I’m not sure that last bit provides too much solace.

The official line, as usual, is ‘no comment’, though of course the UK authorities will be straining every sinew to make sure that there’s no repeat of Northern Rock. But I’m starting to feel that it’s all getting very scary. And that it could turn very nasty."

[bkkjames]

The paras below are extracted from Money Morning's email circular of 4 Sep by David Stevenson, entitled: "Why Britain's in a bigger mess than the rest"

What to do, move out of GBP altogether (not easy!)?

What's the best (legal!) way to move from GBP to gold?

Any insights most welcome.

Flapman

"Why we may be heading for another banking crisis

But back to the banks and their borrowing…that’s a different matter entirely. “Troubled UK lenders may have tapped the Bank of England’s emergency funding scheme as much as £200bn, double the previous most aggressive estimates”, says the Telegraph. And the real problem is that the bailout scheme is set to end in October.

Bloomberg yesterday reported that it’s so serious that several banks may even face insolvency unless Bank governor Mervyn King gets a new system in place by then, according to analysts at UBS. At the very least, British banks would have £200bn of “exploding funding” to refinance within the next three years and would be forced to cut back on lending and shrink their assets, said UBS’s Alistair Ryan, meaning house prices could plunge 40%.

And who are the main addicts? It seems that Britain's No. 1 mortgage lender HBOS may be the biggest SLS user, ahead of Lloyds TSB, Barclays and Royal Bank of Scotland, says Alex Potter at Collins Stewart, who reckons that UK lenders have a £285bn “funding gap”, i.e. the difference between lending commitments and deposit funding. Apparently, though, the asset swaps under SLS are unlikely to total that much – because the UK banks have been borrowing from the European Central Bank as well.

Somehow I’m not sure that last bit provides too much solace.

The official line, as usual, is ‘no comment’, though of course the UK authorities will be straining every sinew to make sure that there’s no repeat of Northern Rock. But I’m starting to feel that it’s all getting very scary. And that it could turn very nasty."

Beside a few brit expats here, how is this related to Thailand? Or it that it?

[joskydive]

Well, this British Expat IS VERY interested since my money is in their Banks!!!

[bkkjames]

Well, this British Expat IS VERY interested since my money is in their Banks!!!

Well, good on ya mate. I am not one but read the online versions of the UK papers daily - must admit, its usually only for the football gossip.

[Flapman]

Beside a few brit expats here, how is this related to Thailand? Or it that it?

bkkjames, you have a point. I guess most expats in LoS all have some interest in how to manage external stacks of the folding stuff so as to be able to live here. How many bank UK/UK offshore - who knows? A few thousand, maybe?

But ... not too may posts on this thread so far!

[philstone]

Well, this British Expat IS VERY interested since my money is in their Banks!!!

I am sorry to write you British's ex pats but I have heard from people in high places that the Rothschild's shall take over the Bank of England. And the Next King of England shall be A Rothschild I forgot his name but that the married to a Dubai Princess

[froggshw]

I am interested whats happening with brit banks too..do you think HSBC/First Direct are at risk.? How would one find out.? They are not exactly going to shout it from the rooftops that they are in dire straights.

As for you bkkjames,being as I am in Thailand and am interested what potentially could happen to my money,could you possibly go police another useless thread here on Thaivisa,there are many to keep your reporting button smoking for days.

Froggs

[Flapman]

I am interested whats happening with brit banks too..do you think HSBC/First Direct are at risk.? How would one find out.? They are not exactly going to shout it from the rooftops that they are in dire straights.

As for you bkkjames,being as I am in Thailand and am interested what potentially could happen to my money,could you possibly go police another useless thread here on Thaivisa,there are many to keep your reporting button smoking for days.

Froggs

Keep and eye on the CDS rating (Credit Default Swap) for the bank you are concerned about. That gives a measure as to how risky other banks think it is to lend your bank money. Having said that, wholesale credit markets have all but seized up at present from what I read in the online "Torygraph".

It's hard to know what's what with a bank if they have a load of hidden off-balance sheet debt such as HBOS's Grampian.

My earlier pre-emptive on HBOS seems to be less of a worry now that the news is out that FLloyds Tee Ess Bee is in talks with HBOS.

Good luck to us all as this financial Tsunami roars through.

[Flapman]

Well, this British Expat IS VERY interested since my money is in their Banks!!!

I am sorry to write you British's ex pats but I have heard from people in high places that the Rothschild's shall take over the Bank of England. And the Next King of England shall be A Rothschild I forgot his name but that the married to a Dubai Princess

Off topic! After Lehman Brothers and AIG, what's the next big US financial institution set to fall? Some analysts predict multiple US bank failures. Back to OP - who reading this thread is pessimistic enough to hold more than, say, 50% of their financial assets in gold?

[churchill]

Re investing in Gold - Try Blackstock Gold and General Fund , invests mostly in Gold mining Companies .

[lannarebirth]

If I were looking, which I'm not really, this is what I would watch:

http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND

http://en.wikipedia.org/wiki/TED_spread

[VegasVic]

The paras below are extracted from Money Morning's email circular of 4 Sep by David Stevenson, entitled: "Why Britain's in a bigger mess than the rest"

What to do, move out of GBP altogether (not easy!)?

What's the best (legal!) way to move from GBP to gold?

Any insights most welcome.

Flapman

"Why we may be heading for another banking crisis

But back to the banks and their borrowing…that’s a different matter entirely. “Troubled UK lenders may have tapped the Bank of England’s emergency funding scheme as much as £200bn, double the previous most aggressive estimates”, says the Telegraph. And the real problem is that the bailout scheme is set to end in October.

Bloomberg yesterday reported that it’s so serious that several banks may even face insolvency unless Bank governor Mervyn King gets a new system in place by then, according to analysts at UBS. At the very least, British banks would have £200bn of “exploding funding” to refinance within the next three years and would be forced to cut back on lending and shrink their assets, said UBS’s Alistair Ryan, meaning house prices could plunge 40%.

And who are the main addicts? It seems that Britain's No. 1 mortgage lender HBOS may be the biggest SLS user, ahead of Lloyds TSB, Barclays and Royal Bank of Scotland, says Alex Potter at Collins Stewart, who reckons that UK lenders have a £285bn “funding gap”, i.e. the difference between lending commitments and deposit funding. Apparently, though, the asset swaps under SLS are unlikely to total that much – because the UK banks have been borrowing from the European Central Bank as well.

Somehow I’m not sure that last bit provides too much solace.

The official line, as usual, is ‘no comment’, though of course the UK authorities will be straining every sinew to make sure that there’s no repeat of Northern Rock. But I’m starting to feel that it’s all getting very scary. And that it could turn very nasty."

Considering that this thread was started over two weeks ago it is scary the foreshaowing of things to come that has occured. The current bailout plan that the U.S. lawmakers and regulators are working on so feverishly this weekend will only cover U.S. institutions. So even though most of these CDS, and CDO's were originated in the states, the banks overseas that are holding a good portion of these will be "on their own" so to speak. In the long run the U.S. bailout plan will likely create a much more liquid market for these instuments, but in the short run banks like RBS, UBS and HSBC among others will have some very tough times and hopefully the BOE and the ECB will be there to help them weather the upcoming storm!