Oh dear - Bradford & Bingley nationalisation looks increasingly likely

GustyGardenGalaxy

Thanks very much.

wymondham

I wonder how many schools, hospitals and other useful things have just lost out because of this?

As a tax payer can I expect my share certificate through the post ?

I'm normally fairly laid back about these things, but this continual policy of bailing out failed companies with public money is plain wrong and can't work in a free market.

If it was so vital that a bank cannot fail, as seems to be the case then why where they ever private companies??

Generali

wymondham wrote: »

As a tax payer can I expect my share certificate through the post ?

Share certificates are pretty unusual these days.

I once got into a conversation with a stock broker who claimed that either the West Ham or Southampton share Certificate contained a photo of the 1903 team. No idea if it's true but it's a pretty good story.

Debt_Free_Chick

fatpig wrote: »

Why would they react? The fact is that now it's been nationalised your money is safer in B+B than in ANY other bank bar N Rock.

Rational peeps would agree - but too many savers are not rational

There was no need for the run on NR (albeit, before the Govt bailed it out) - but it still happened

Debt_Free_Chick

fatpig wrote: »

I'd be expecting inflows of cash to B+B not outflows.

Although it seems that the savings bit of B&B will be sold off - so it won't be a "Govt Bank" for savings - just for debt :eek:

Generali

Debt_Free_Chick wrote: »

Although it seems that the savings bit of B&B will be sold off - so it won't be a "Govt Bank" for savings - just for debt :eek:

The savings bit of B&B doesn't really have any value. That's the liability.

Husband_of_a_spendaholic

Generali wrote: »

The savings bit of B&B doesn't really have any value. That's the liability.

Yes, but £20bn of retail deposits means £20bn of funding that doesn't need to be borrowed from the money markets. If B&B's savings balances exceeded it's mortgage balances it wouldn't be in so much trouble now.

So the savings do indeed have quite a lot of value.

Generali

Husband_of_a_spendaholic wrote: »

Yes, but £20bn of retail deposits means £20bn of funding that doesn't need to be borrowed from the money markets. If B&B's savings balances exceeded it's mortgage balances it wouldn't be in so much trouble now.

So the savings do indeed have quite a lot of value.

The only possible value is the value ascribed to the cashflows from the difference between the rate of interest being paid to the savers and the rate of interest being paid by the buying institution in the money markets.

All banks fund from sources other than their depositors apart perhaps from some tiny mutuals.

baby_boomer

Generali wrote: »

The savings bit of B&B doesn't really have any value. That's the liability.

It was amusing on Question Time the other day when Ian Hislop was going so well in bashing the banks and the government and then also mixed up the two sides of the balance sheet when talking about assets. Not that the audience noticed, they were lapping him up, but the CEO of Next had a quiet word.

BUT Generali - Banks are desperate for savings at the moment, aren't they? It's the capital they're short of.

A couple of years before the credit crunch, Britannia BS bought the Bristol & West savings business plus branches for around 3% of the balances. I acknowledge that at the time this was considered pricey by other potential bidders, but Britannia needed the cash for regulatory reasons and so was prepared to pay.

With Morgan Stanley getting Buffett's capital at 10% pa, I would imagine there could be some takers for this part of B&B.

If it was Santander, you can imagine the cost cutting exercise that could follow were they to own Abbey/A&L and B&B. They could make it work for them, add to their short term capital and cherry pick the best branches and staff for their combined network.

fatpig_2

Debt_Free_Chick wrote: »

Rational peeps would agree - but too many savers are not rational

There was no need for the run on NR (albeit, before the Govt bailed it out) - but it still happened

The run on N rock happened BEFORE it was nationalised not afterwards . That's why it was nationalised. So why would you imagine there'd be a run on the B+B AFTER it's been nationalised? Given their interest rates are the best I'd expect massive inflows of cash so they'll probably have to reduce these interst rates to limit this to some extent.