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It wasn't all america's fault, it was the banks.
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It's well established that HBOS' failure was a result of disastrous losses in its corporate lending division (within the BOS bit). I don't know why you lot are bothering to have an argument about it.0
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chewmylegoff wrote: »It's well established that HBOS' failure was a result of disastrous losses in its corporate lending division (within the BOS bit). I don't know why you lot are bothering to have an argument about it.
Cummings (?) also points out that it was retail that were driving the show, without any real banking knowledge, and corporate had to keep up:eek:"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Do you have selective vison?HAMISH_MCTAVISH wrote: »Do you have a reading comprehension problem?
It also says that the HBOS residential mortgage lending book was profitable, of resilient credit quality, has had an estimated default rate of just 1% over the recession,grizzly1911 wrote: »In HBOS's retail division - the mortgage-based business at which Halifax had long been market leader - the damage wasn't nearly as bad. The Commission reckons impairments in the three years after collapse came to £7bn, out of £255bn.
(Note: that's with a more benign residential housing market than in, for instance, commercial property, but the housing market correction probably hasn't ended yet).
7/255 closer to 3% and yet to bottom.
There was the wrong culture: it was brash in pursuit of a "wildly ambitious growth strategy". There was a lack of controls for risk: "The risk function was a cardinal area of weakness," and this was "a matter of design, not accident". No-one stayed long atop the risk management division: instead, ambition took them up the career ladder and off to the moola-making divisions.
There was a lack of controls of different divisions from the centre, and of the necessary banking skills at the top. Andy Hornby came in from retail, having been at Asda; other key figures were from insurance. The top team were "incapable of even understanding the risks that some elements of the business were running, let alone managing them".
http://www.bbc.co.uk/news/uk-scotland-scotland-business-22037950
We note, however, that the Division incurred substantially higher mortgage-related losses than its major competitors, reflecting the bank's strategy of pursuing growth in higher risk non-standard mortgages. We also note that the Division's customer funding gap was a major factor in the Group's overall funding gap, which was a principal immediate cause in the short term of the failure of the bank.
http://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/144/14405.htm#a5
Whatever the level of impairment it would appear the growth strategy in high risk lending wasn't sustainable and under funded."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »We note, however, that the Division incurred substantially higher mortgage-related losses than its major competitors,[
Yep.
As that same report says the HBOS losses were just 1%, and HBOS mortgage lending remained profitable despite those losses, then it just goes to show how incredibly profitable all the other banks were.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Yep.
As that same report says the HBOS losses were just 1%, and HBOS mortgage lending remained profitable despite those losses, then it just goes to show how incredibly profitable all the other banks were.
That same report also suggests £7bn v. £255bn or 3% .
A loss of 7bn on a 255bn book would only take 4 years to recover at 0.7% net profit.
As Lloyds don't break down their provisos /losses by sector/type according to self same report who knows.
Of course banks are profitable otherwise the government wouldn't have bailed them out. The fact that they had to be bailed out suggests they had blown their book. If you can't finance your over trading and no one is prepared to lend to you doesn't matter how profitable your base may or may not be.
PPI was false profit, if it hadn't been "banked" in the good times it wouldn't have underpinned the frenzy and we wouldn't be paying it back now. No different to borrow today pay tomorrow.
Who knows what other rubbish has yet to surface, icebergs come to mind."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »If you can't finance your over trading and no one is prepared to lend to you doesn't matter how profitable your base may or may not be.
More businesses fail due to cashflow issues than underlying profitability.
Making HBOS into a retailer like poundland was doomed to end in failure.0 -
grizzly1911 wrote: »Cummings (?) also points out that it was retail that were driving the show, without any real banking knowledge, and corporate had to keep up:eek:
That's what I would say if I was in charge of the bit that bought the whole thing crashing down! Hardly a useful source!0 -
Graham_Devon wrote: »Stevie, you are just playing a game of try and attack the person now. You are not trying to discuss anything here. Clear what your aim is.
No malicious intent, I thought I was doing you a favour,'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
grizzly1911 wrote: »That same report also suggests £7bn v. £255bn or 3% .
No it doesn't.
I can see where the confusion has come in though.
The original report specifically discusses HBOS mortgage related impairments at around 1%.
It also identifies total retail division losses at around £7bn, which is what the BBC has reported.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »No it doesn't.
I can see where the confusion has come in though.
The original report specifically discusses HBOS mortgage related impairments at around 1%.
It also identifies total retail division losses at around £7bn, which is what the BBC has reported.
It is in the parliamentary report at £7bn not just the BBC. Yes it is retail division but as they conveniently don't publish a split in their accounts we will never know.
As high risk mortgages where a large part of that strategy I would expect a large proportion would be as a result of a mark down on that part of the book. Without near zero interest rates and kid glove forbearance I am also sure it would have been a lot worse."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0
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