Basle 3 - 4 Risky Borrowers

Generali

Road_Hog wrote: »

You have to ask why, if the BOE controls the money supply/printing press, it has to issue gilts (IOUs) and borrow money. Why on earth should the government have to borrow?

Unless of course the BOE was a private institution and they controlled the money supply.

It all depends what you mean by 'the money supply'. The Bank of England has an influence on the money supply through Open Market Operations like acting in the repo markets as Lender of Last Resort, QE, setting reserve levels (very 1970s that one) etc. There isn't a metaphorical dial marked 'money supply' in Threadneedle Street that Merv can dial up or down.

Road_Hog wrote: »

It would be nice to know who the capital/equity shareholders of the BOE are, who are protected by the Official Secrets Act and a Royal Charter.

That would be an amazing conspiracy if it was true. Unfortunately for lovers of conspiracy it isn't:

http://www.bankofengland.co.uk/publications/Pages/foi/disc091106.aspx

'Does the Bank of England have shareholders? If the Bank does have shareholders who are they?'

The Bank of England is the central bank of the whole of the UK and was established as a corporate body by Royal Charter under the Bank of England Act 1694. The Bank was nationalised on 1 March 1946, and gained operational independence to set interest rates in 1997. The Bank is a public sector institution wholly-owned by the government - the entire capital of the Bank is, in fact, held by the Treasury solicitor on behalf of HM Treasury.

Conrad

Thrugelmir wrote: »

UK banks have plenty of problems to deal with.

The skeleton in the cupboard may be commercial property.

Not forgetting interest only mortgage loans either.

My experience day to day is that Banks are converting the bulk of thier int only loans to repayment, or at least ensuring people have robust repayment plans in place. The vast bulk of new mortgages are on repayment basis.

Commerical is an issue I agree but nin my town the council are relaxing rules on useage and planning which is stimulating demand.
I also see large rteail units being converted into smaller units and suites. I'm well aware of the rise of online shopping but somehow I thing high streets are going to adapt, maybe even converting some stock to residental pods and what not. Town space in the end is short so I think we will see an evolution.

Road_Hog

Generali wrote: »

'Does the Bank of England have shareholders? If the Bank does have shareholders who are they?'

"The Bank of England is the central bank of the whole of the UK and was established as a corporate body by Royal Charter under the Bank of England Act 1694. The Bank was nationalised on 1 March 1946, and gained operational independence to set interest rates in 1997. The Bank is a public sector institution wholly-owned by the government - the entire capital of the Bank is, in fact, held by the Treasury solicitor on behalf of HM Treasury."


That would be an amazing conspiracy if it was true. Unfortunately for lovers of conspiracy it isn't:

Let's dig a bit further, but first, why does the government?BOE have to borrow money (issue Gilts) if it can print money?

Now, let's have a look at the BOE.

"In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited (BOEN), a private limited company, with two of its hundred £1 shares issued. According to its Memorandum & Articles of Association, its objectives are:- “To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them....” Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976, because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.” The Bank of England is also protected by its Royal Charter status, and the Official Secrets Act"

So, there is more than one category of shareholder.

We only get told who the nominee holders are, but we know what a nominee is?

2. A person or organization in whose name a security is registered though true ownership is held by another party.

So, who are the equity/capital shareholders of the BOE? If the BOE is owner by the public/government/taxpayer call it what you will, why are the other shareholders hidden and why should there be other shareholders.

grizzly1911

Thrugelmir wrote: »

Security for what?

Generali wrote: »

There aren't many houses on banks' books either because borrowers are repaying their mortgages as promised so banks haven't repossessed.

The BoE takes things like Gilts (UK Govt Bonds) as collateral, not illiquid things like houses.

Collateral/security.

grizzly1911

Road_Hog wrote: »

So, who are the equity/capital shareholders of the BOE? If the BOE is owner by the public/government/taxpayer call it what you will, why are the other shareholders hidden and why should there be other shareholders.

Anything to do with the Rothschilds and the like?

Thrugelmir

Road_Hog wrote: »

Let's dig a bit further, but first, why does the government?BOE have to borrow money (issue Gilts) if it can print money?

Financial stability.

Generali

Road_Hog wrote: »

Let's dig a bit further, but first, why does the government?BOE have to borrow money (issue Gilts) if it can print money?

Now, let's have a look at the BOE.

"In 1977, the Bank set up a wholly owned subsidiary called Bank of England Nominees Limited (BOEN), a private limited company, with two of its hundred £1 shares issued. According to its Memorandum & Articles of Association, its objectives are:- “To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organisation, sovereign, province, authority, or public body, or any group or association of them....” Bank of England Nominees Limited was granted an exemption by Edmund Dell, Secretary of State for Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976, because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.” The Bank of England is also protected by its Royal Charter status, and the Official Secrets Act"

So, there is more than one category of shareholder.

We only get told who the nominee holders are, but we know what a nominee is?

2. A person or organization in whose name a security is registered though true ownership is held by another party.

So, who are the equity/capital shareholders of the BOE? If the BOE is owner by the public/government/taxpayer call it what you will, why are the other shareholders hidden and why should there be other shareholders.

Your link is dead.

If the Bank of England set up a wholly owned subsidiary then it's wholly owned by the Bank of England. The shareholders are the BoE and the shareholders of the BoE are the British Government.

If the Bank of England set up a nominee company its most likely to enable it to conduct open market operations without having to use its own name in the market. The point of a nominee company is to hold assets in a nominee name rather than in your own name, not to hide the owners of the nominee company!

Most or all of the assets in your pension fund are probably held in a nominee name (except for your holdings in BAE which can't be held by a nominee). Your pension fund isn't part of a conspiracy it just has the good grace not to take all of your pension savings in fees.

Thrugelmir

Conrad wrote: »

My experience day to day is that Banks are converting the bulk of thier int only loans to repayment, or at least ensuring people have robust repayment plans in place. The vast bulk of new mortgages are on repayment basis.

Banks and need to deleverage their balance sheets. Net mortgage debt is up since 2008. So we've yet to see any impact from the change in policy. There's a large legacy issue from the hey days of interest only lending that's untouched.

Generali

Thrugelmir wrote: »

Banks and need to deleverage their balance sheets. Net mortgage debt is up since 2008. So we've yet to see any impact from the change in policy. There's a large legacy issue from the hey days of interest only lending that's untouched.

Well the banks' deleveraging in the UK has largely been done from the other side: profits have been retained and reserves have been boosted , albeit with a considerable subsidy from the Government.

The Government needs to deleverage and probably a lot of consumers do too. I have a feeling that the worst of the GFC might well be over now for the UK if nobody screws things up.

Thrugelmir

Generali wrote: »

Well the banks' deleveraging in the UK has largely been done from the other side: profits have been retained and reserves have been boosted , albeit with a considerable subsidy from the Government.

Banks are still far from out of the woods. Currently having to contend with:-

(a) increased regulatory capital requirements
(b) penalties and fines for libor fixing, violation of currency sanctions, energy price fixing ,
(c) additional tax levied on banks
(d) poor quality lending on books
(e) low profit margins on historic lending
(f) PPI provisions
(g) increased FSA levies.


Difficult enviroment to be a bank.

Hardly surprising that Merv is suggesting banks require anything between £5 and £35 billion of new capital. Also that banks will not generate this capital from profit on trading activities.