'Run on UK' sees foreign investors pull $1 trillion out of the City

stevetodd

mardatha wrote: »

Ah yes son, but you never answered the question that Stevetodd asked you.... !! you're not by any chance a politician, are you?

Lol yes you are right and I let him get away with it too, see if he comes back with an answer

michaels

Andrew64 wrote: »

So not just a run on the banks, but a run on the country!

http://www.independent.co.uk/news/business/news/run-on-uk-sees-foreign-investors-pull-1-trillion-out-of-the-city-1639413.html

A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London. Some $597.5bn was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5bn haemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter.

No surprise here - London is a major international banking centre. International banks need all their capital at home to satisfy their regulators so have repatriated what they can.

These figures will be skewed by the major outflow in December by banks needing to satisfy capital adequacy ratios at the 31 Dec / 1st Jan - this could be seen be the massive fall in sterling in December to close to parity which was then reversed in January - rather like the porshe - volkswagen short squeeze.