Which banks, if any, do you think will fail this time around?

LydiaJ

If RBS or Santander or something like that with a big High St presence in the UK went bust, what would it mean in practical terms for people with current accounts and credit cards and things with them? What happened to everyday current account banking in Iceland when Kaupthing and Landsbanki etc went bust? I'm not well enough informed to add to the debate, but I'm interested enough to ask for information.

Radiantsoul

I can't see any major UK or even European bank being allowed to fail.

IronWolf

Impossible to tell tbh.

Banks balance sheets are impossible to comprehend, even for the board of directors, with the vast array of derivatives and other complex financial instruments they are involved in. Thats the main reason I never invest in banks.

Generali

Masomnia wrote: »

Haaaang on. So US treasuries no longer count towards reserves?!

That sounds pretty serious to me.

US Treasuries still count towards reserves. They may count slightly less towards reserves but they are still part of Tier 1 capital. The rules are set by each regulator so the impact will be different in different countries. Most likely it will be somewhere between tiny and nil.

gagahouse

Generali wrote: »

US Treasuries still count towards reserves. They may count slightly less towards reserves but they are still part of Tier 1 capital. The rules are set by each regulator so the impact will be different in different countries. Most likely it will be somewhere between tiny and nil.

The FED has already stated that there won't be any regulatory imposed haircuts due to the downgrade. The market on the other hand may decide to impose one, I don't expect it though.

ChiefGrasscutter

LydiaJ wrote: »

If RBS or Santander or something like that with a big High St presence in the UK went bust, what would it mean in practical terms for people with current accounts and credit cards and things with them? What happened to everyday current account banking in Iceland when Kaupthing and Landsbanki etc went bust? I'm not well enough informed to add to the debate, but I'm interested enough to ask for information.

A major UK clearing bank will not be allowed to go bust.
It would be nationalised at the instant of failure with the bond holders and share holders getting their holdings wiped out.
Its not just the people with current accounts & savings that are the issue to consider, it's the much bigger issue of business accounts.
If a major clearing bank was allowed to close/fail you would see major business failures happening as a domino effect - a matter of hours later as they would be unable to access their accounts for their day to day operations.......things like some of the major supermarkets going bust, petrol stations ceasing to operate, credit cards stopping, airlines failing etc. The whole economy would rapidly collapse in a matter of days.

For this reason major banks in the UK will not be allowed to fail by any UK government.

I can't remember or even know the details about the iceland banks from a local resident perspective to comment.

Thrugelmir

ChiefGrasscutter wrote: »

It would be nationalised at the instant of failure with the bond holders and share holders getting their holdings wiped out.

The UK taxpayer already has invested £40 billion in RBS and Lloyds how would you propose wiping us out?

(Also the taxpayer has lent NRAM £47 billion).

Bullfighter

UniCredit, Dexia and SocGen

As for "British" banks.... depends how many have counterparty risks to the above.

robmatic

Thrugelmir wrote: »

The UK taxpayer already has invested £40 billion in RBS and Lloyds how would you propose wiping us out?

(Also the taxpayer has lent NRAM £47 billion).

Surely full nationalisation now wouldn't be quite as drastic a step for RBS and LBG as it would have been pre-Crunch?

Thrugelmir

robmatic wrote: »

Surely full nationalisation now wouldn't be quite as drastic a step for RBS and LBG as it would have been pre-Crunch?

There was nothing wrong with Lloyds. Llloyds paid the price of bailing out an insolvent HBOS.

Hester has a problem at RBS. Part of his plan was to use the profits generated by the investment banking operation to offset the poor parts of the business. Many staff have left to pastures new after the bonus row. So isn't the business it was.

Don't forget how complex a business RBS is. In 2007 it was number 1 in the world by asset size. Operating 57 countries around the world and was largest in 19 of these. So will take some years to unwind and sell off the positions it holds.