Bradford & Bingley Bailout by the City

m00m00

unlike the others though, HBOS have a lot of deposit business too. This should be enough to save them, although if we are lucky it will mean they can't afford to run those horrible singing adverts any more.

worldtraveller

!!!!!!? wrote: »

Around the time of Northern Rock, Bradford and Bingley and Alliance and Leicester were also thought to be in imminent danger.

Also, HBOS are up to their neck in UK property exposure.

You are of course currently protected up to £35,000 in savings guarantee to any depositor in the U.K. in these banks.

However, think, if one of these banks went belly-up, are you likely to need your money within, say, 6 months?

Can anyone really think that the "system" would sort out any claim in less than 6 months??

I just pulled some more funds from BB, just as a precaution.

IMHO, in the current economic climate absolutely nothing is for certain and I trust nobody, except for my own gut-feeling!

Gorgeous_George

The first £35K is hardly guaranteed. Depending on how big or how many banks go under, the fund that feeds the £35K payouts could soon be exhausted.

GG

worldtraveller

Gorgeous_George wrote: »

The first £35K is hardly guaranteed. Depending on how big or how many banks go under, the fund that feeds the £35K payouts could soon be exhausted.

GG

GG you make a good & fair point and I certainly agree to an extent. The more I look into the current worldwide financial situation, the more nervous I get, because even our Government don't seem to have a clue about what would happen in the worst scenario. However, this worst scenario seems to be getting closer & closer..... The latest I have on this is what Martin Lewis has said:

Quote: The Treasury gave us the following statement

• "In the unlikely event a major bank became insolvent the Government would ensure that the FSCS has access to enough immediate funding to pay out depositors in a timely manner, through borrowing from the Government or Bank of England. The FSCS could then levy up to £4 billion per year from the financial services industry to cover the costs of compensation"

In plain English, this means that in the unlikely event of a bank collapsing and requiring more than £4 billion of compensation, the FSCS would be lent the money to compensate consumers up to £35,000 each, and it would have to pay back to loan in subsequent years, by continuing levies.
So this means, the £35,000 limit is still the prime safety limit to rely on in your planning.

Unquote

Does this make you happier? I'm still nowhere near 100% on this, but, let's be honest, if we get to the stage when this scenario happens, there will probably be rioting in the streets anyway! :eek:

m00m00

if hbos collapsed it would bring down the UK economy, it's not a niche player like B&B or Northern Rock, it's one of the cornerstones of the UK economy. For this reason the government will tinker and not allow HBOS to fall, but may allow a sacrificial lamb such as B&B or A&L to fall.

worldtraveller

m00m00 wrote: »

if hbos collapsed it would bring down the UK economy, it's not a niche player like B&B or Northern Rock, it's one of the cornerstones of the UK economy. For this reason the government will tinker and not allow HBOS to fall, but may allow a sacrificial lamb such as B&B or A&L to fall.

Fair comment m00m00, but if they let just one fall, what's going to prop up the rest after the resultant implosion? We have absolutely no idea to what extent the Government/BOE are currently propping up all of the banks by buying up their extremely dodgy loans in exchange for Government securities. The whole financial sector in is severe risk of implosion due to derivatives unravelling at a hyperbolic rate.

m00m00

banks have 'failed' before (if you can call BCCI an actual bank) usually due to extraordinary factors.

If say B&B died, Broon would just shrug his shoulders on tv and say 'it's BTL innit' and claim it's business as usual for the banking sector as a whole. The other banks would hover like vultures over the corpse of B&B and pick out the vaguely profitable bits for themselves.

worldtraveller

m00m00 wrote: »

banks have 'failed' before (if you can call BCCI an actual bank) usually due to extraordinary factors.

If say B&B died, Broon would just shrug his shoulders on tv and say 'it's BTL innit' and claim it's business as usual for the banking sector as a whole. The other banks would hover like vultures over the corpse of B&B and pick out the vaguely profitable bits for themselves.

With respect, I remember BCCI well and it didn't affect "Joe Public" one iota. Do you think that if a "high street" bank went under that anyone would listen to that idiot Brown? Prudence is now well & truly screwed. What about the general panic that would arise? People are getting very nervous about the whole financial sector anyway and I think that a bank going under would result in, as I said, "riots in the street".

m00m00

rather than outright failing, something like B&B would be taken over by one of the big banks and quietly put to sleep like an old pet. This was what almost happened with NR.

Banderman

m00m00 wrote: »

rather than outright failing, something like B&B would be taken over by one of the big banks and quietly put to sleep like an old pet. This was what almost happened with NR.

What are they waiting for? Does the B+B share price have to go to zero before they step in?