British banks are 'technically insolvent'

Andrew64

This is scary considering a bank has said this!

http://www.independent.co.uk/news/business/news/british-banks-are-technically-insolvent-1418229.html

British banks are 'technically insolvent'

"Britains biggest banks are "technically insolvent", Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions.

Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that "the domestic UK banks are technically insolvent on a fully marked-to-market basis"."

Lynt_3

Andrew64 wrote: »

This is scary considering a bank has said this!

http://www.independent.co.uk/news/business/news/british-banks-are-technically-insolvent-1418229.html

British banks are 'technically insolvent'

"Britains biggest banks are "technically insolvent", Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions.

Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that "the domestic UK banks are technically insolvent on a fully marked-to-market basis"."

:eek: I've got all my saving in Egg fixed. :eek:

oldandgrumpy

Eggs hatch....unless they are infertile.

withnell

Further down the same article.....

"The warning does not mean British banks are about to go bust, because the assessment is purely theoretical"

Reaper

Here's a neat wheeze I heard about - it was a verbal conversation so I can't vouch for the details but if you are somebody the bank owes money to but has been slow paying then you have a marvellous court option called a "Winding up order". Basicly you say the bank can't pay their debts and they need to be shut down. It is then up to the bank to prove to the court that they are solvent to prevent them being liquidated. RBS would struggle to prove that since they have already said publicly they are not. I suspect they would come up with whatever money they owe you pretty rapidly to avoid going to court!

So if you're a run a tiny cleaning company and clean bank branches, or you are surveyor they owe money to, or anybody else they owe and have been slow paying now you know how to get them to cough up sharply!

Aegis

Reaper wrote: »

Here's a neat wheeze I heard about - it was a verbal conversation so I can't vouch for the details but if you are somebody the bank owes money to but has been slow paying then you have a marvellous court option called a "Winding up order". Basicly you say the bank can't pay their debts and they need to be shut down. It is then up to the bank to prove to the court that they are solvent to prevent them being liquidated. RBS would struggle to prove that since they have already said publicly they are not. I suspect they would come up with whatever money they owe you pretty rapidly to avoid going to court!

So if you're a run a tiny cleaning company and clean bank branches, or you are surveyor they owe money to, or anybody else they owe and have been slow paying now you know how to get them to cough up sharply!

I seem to recall that one being on the BBC News website some time last year when someone was waiting for bank charges to be repaid after they won a case to get them back. They issued a winding up order and as you've stated, the bank paid up pretty quickly!

Can't remember the bank in question, but it's probably still on the site somewhere.

ManAtHome

A few people have sent the bailiffs in... Think this was the first http://www.thisismoney.co.uk/campaigns/bankcharges/article.html?in_article_id=416671&in_page_id=507 (RBOS) And a more recent one http://news.bbc.co.uk/1/hi/england/nottinghamshire/7789256.stm (Capital One)

john_s_2

I found these on the BBC site, about HBOS last Autumn. Although the attempt failed.

http://news.bbc.co.uk/1/hi/business/7004680.stm

http://news.bbc.co.uk/1/hi/business/7040954.stm

http://news.bbc.co.uk/1/hi/business/7055878.stm

withnell

Reaper wrote: »

Here's a neat wheeze I heard about - it was a verbal conversation so I can't vouch for the details but if you are somebody the bank owes money to but has been slow paying then you have a marvellous court option called a "Winding up order". Basicly you say the bank can't pay their debts and they need to be shut down. It is then up to the bank to prove to the court that they are solvent to prevent them being liquidated

If you are a creditor of the bank (eg they owe you money) you can petition the court on the grounds that the company is unable to pay its debts
- Have to be owed over £750
- Has to be after 21 days after serving written notice of the debt to the bank's head office

Nick_C

If the banks are technically insolvent, does that mean the shares are really worthless?

withnell

In a sense, every bank is technically insolvent, and always has been.

Insolvency is not being able to pay your debts when they fall due. The bank invests most of the deposits for the long term (eg in mortgages) and has a small amount of liquid assets. Because of this if everyone tried to withdraw their cash the bank could not pay all the depositors --> Technically insolvent

This is why runs on banks by half the customers means they go t1tsup!