LIBOR still dropping...

michaels

Surely they only become insolvent if the cost of funds goes above the amount of interest they can claim from their borrowers - if they are willing to push the rate to borrowers up to meet the increased cost of funds then aren't they are covered?

opinions4u wrote: »

It's not a competitive market. There is a severe shortage of funds and no appetite for risk.

The theory is fine. The reality is that many of the banks and other mortgage lenders can't raise finance beyond 12 months at all. If the wholesale funders pulled the short term funds as well, what you propose is a recipe for a bank becoming insolvent and collapsing.

scrounger_2

inspector_monkfish wrote: »

LIBORs 28th August

3mth 0.69 (up 0.03 :eek:)
6mth 0.90688 (down 1/2pt)
12mth 1.22625 (down 1/2pt)

WHAT!!!!!! I had to read that twice!. It better not start that game:eek:

inspector_monkfish

scrounger wrote: »

WHAT!!!!!! I had to read that twice!. It better not start that game:eek:

just a month end blip.
many banks have alot of 3mth loan fixings on their books, that are based against libor - so they will keep their 3mth libor a little higher to maximise profits on those loans. very sneaky!

inspector_monkfish

LIBORs 1st Sep

3mth 0.68
6mth 0.8925
12mth 1.21625

all down 1pt

inspector_monkfish

who is Paul Griffiths ?
he's doing alright....

http://fantasyfootball.skysports.com/

scrounger_2

inspector_monkfish wrote: »

just a month end blip.
many banks have alot of 3mth loan fixings on their books, that are based against libor - so they will keep their 3mth libor a little higher to maximise profits on those loans. very sneaky!

Crafty B`s I thought they had all got sacked and now deal on e-bay!

inspector_monkfish

LIBORs 2nd Sep

3mth 0.675
6mth 0.8875
12mth 1.20875

(all down between 1/2 and 1pt)

inspector_monkfish

LIBORs 3rd Sep

3mth 0.67
6mth 0.8825
12mth 1.205

(all down around 1/2pt)

opinions4u

michaels wrote: »

Surely they only become insolvent if the cost of funds goes above the amount of interest they can claim from their borrowers - if they are willing to push the rate to borrowers up to meet the increased cost of funds then aren't they are covered?

If a bank has, for example, £1m lent in mortgages (assets) and £1m in a mix of wholesale funds and savings (liabilities), it is solvent.

If £200k of that wholesale funding or savings is removed (e.g. not renewed or withdrawn) then the bank collapses (or gets propped up by HM Government!!).

It is possible for a profitable bank to fail.

inspector_monkfish

LIBORs 4th Sep

3mth 0.665
6mth 0.87625
12mth 1.19625

(all down 1/2 to 1pt)