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LLoyd's branch sale collapses
Comments
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Is this purely because the bankrate is low and economy flat? If there were more scope to make profits from a higher bank rate and more demand for borrowing would they be more profitable?
Charges for borrowing are actually pretty high compared with the base rate. Normally you'd expect most mortgages to be around base rate +2 or 2.5% so 2.5-3% at the moment. SVRs are currently well above that I think, maybe more like 4-5%.
This goes to the heart of what I've been saying. The credit boom has meant that there was a whole load of investment in the provision of financial services that simply isn't needed or wanted in normal times.
That means that while normally a recession means there is spare capacity that could be used up if demand can be stoked, atm there isn't much spare capacity in useful areas of the economy. That means that you can have as big a deficit as you want but the economy won't take off. That's because the economy is all set up to provide people with things they don't want rather than the things they do.
In fact, the deficit actually makes things worse because not only is it failing to stoke demand as the supply isn't there, it's also preventing companies from borrowing money to supply what people do want as each pound can only be borrowed once!0 -
Thrugelmir wrote: »The old Lloyds has remained profitable throughout the period.
Just for the record.
Funny that.
Despite the fact they were offering 100% mortgages, reverting to an SVR capped at 2% above base rate for life, and extensively using fast-tracking on their mortgage applications where they didn't see proof of income.
They have "remained profitable throughout".
Because of course it wasn't UK residential mortgage lending which brought down the UK banks.
“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 -
Thrugelmir wrote: »Northern Rock at Peak was worth £5 billion.
RBS £70 billion
HBOS £40 billion
Lloyds £34 billion
When you consider the funding pumped into the banking system by the Government. There's been a huge sum in lost investments.
I am glad I sold my free Halifax shares around 1997 for about £6.40p '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 -
Such is modern business. The premises are rented, the plant is leased, the inventory is kept to a minimum and the assets are all "goodwill" and "brand value".I don't think that is the whole story - I think there was a lot of 'value' from profits that were expected to acrue"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
HAMISH_MCTAVISH wrote: »Funny that.
Despite the fact they were offering 100% mortgages, reverting to an SVR capped at 2% above base rate for life, and extensively using fast-tracking on their mortgage applications where they didn't see proof of income.
They have "remained profitable throughout".
Because of course it wasn't UK residential mortgage lending which brought down the UK banks.
Because they have been propped up by near zero interest rates, cheap liquidity and kid glove forbearance.
Don't worry about all the newbie pensioners who are being shafted into perpetuity by carp annuity rates and near zero savings income.
As long as house prices hold up everything is rosy in Aberdeen."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 -
Charges for borrowing are actually pretty high compared with the base rate. Normally you'd expect most mortgages to be around base rate +2 or 2.5% so 2.5-3% at the moment. SVRs are currently well above that I think, maybe more like 4-5%.
This goes to the heart of what I've been saying. The credit boom has meant that there was a whole load of investment in the provision of financial services that simply isn't needed or wanted in normal times.
That means that while normally a recession means there is spare capacity that could be used up if demand can be stoked, atm there isn't much spare capacity in useful areas of the economy. That means that you can have as big a deficit as you want but the economy won't take off. That's because the economy is all set up to provide people with things they don't want rather than the things they do.
In fact, the deficit actually makes things worse because not only is it failing to stoke demand as the supply isn't there, it's also preventing companies from borrowing money to supply what people do want as each pound can only be borrowed once!
So despite record lending margins customers are no longer profitable because of (1) capital requirements and (2) profits from cross-selling may be clawed back at any time when it is decided that 'consumers' have been overcharged.
(off topic, If I were a utility or a telecoms providor on anyone else who provides a service where benefits arer bundeld and customers are cross-subsidised I would be concerned abot doing busness in the UK right now)
Shame we have invested so much capacity in the banking sector and based our govt expenditure on spending the taxation on what is now a non-existent steam of earnings
If I was a govt minister anxious to pull whatever fiscal lever I could but constrained by an unmanageable debt it would be very tempting to transfer pension assets with a low prospensity to be spent (stored in this case as shareholder value) to young probably indebted consumers who are very likely to spend any 'windfall' they receive. Hence the whole PPI thang, and as I say, if it works for the banks why not do the same for other companies with useful asset values? Top of the hitlist would be telecoms and utilities but the supermarkets and oil companies and may be insurance companies as well would also make great targets if a suitable mechanism could be found...I think....0 -
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Is this purely because the bankrate is low and economy flat?
No, mortgage lending is projected to fall by between £250 billion and £400 billion in the longer term.
This lending forms a sizable part of retail banking profits. So there'll be less business to be shared between the players.0 -
Thrugelmir wrote: »Santander, Barclays, Lloyds, RBS, Nationwide, TSB (Lloyds spin off), Williams & Glyns (RBS spin off)?
There's 7.
You said 6/7 big players.
TSB + Williams & Glyn might be better categorised under medium.0 -
So despite record lending margins customers are no longer profitable because of (1) capital requirements and (2) profits from cross-selling may be clawed back at any time when it is decided that 'consumers' have been overcharged.
Lenders have a huge amount of loss making lending on their books. So new business is only slowly correcting the historic issues.
Cross selling is a thing of the past. The downside for borrowers will be higher costs of borrowing and eventuality the demise of the free current account model.0
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