Global Bad debt - is our money safe in UK institutions?

teralin

I have money invested in Northern Rock and Chelsea. This morning I heard that Northern Rock was suffering from the global bad debt situation (about 1% of their business involved). It seems that one of Barclays major customers has missed a payment this month but they won't name the institution. Does anyone know anything about the solidity of UK financial institutions and which are stuggling at the moment?

cheerfulcat

From the mention of Chelsea I'm guessing that you have savings with these institutions, rather than being an investor. Deposits are guaranteed up to a certain level, though in the very unlikely event of a large bank going under I suspect that all bets are off...

There is a thread on the Motley Fool which will give you an idea of which banks have exposure to US sub-prime business.

Moorepart

If a bank like this goes under belive me most if not all of them will.

Do you really think the FCSC will be able to afford to pay everybody their money.

I think not

You are all getting very paranoid about something that will not happen BOE or the ECB can not let this happen without causing a complete meltdown of everything

Have you ever heard of a high street bank going down the pan.


NO!!!!!

So stop worrying it will not happen:D

cheerfulcat

Moorepart,

You are all getting very paranoid

One person has asked a perfectly reasonable question and I have attempted to answer it in a reassuring fashion. Hardly evidence of mass paranoia...

influence

Banks actually can go like barrings. While cases like these are rare, it is still possible. Nonetheless, there will always be 'NOISES' around to warn you that your bank will go the next moment and everyone queue up.

While there is always the guarantee from the BOE (I think) on a certain percentage of deposit, I haven't really eyewitness on how they might pay up. SO no comment on that on the other hand.

Ian_W

influence wrote: »

Banks actually can go like barrings. While cases like these are rare, it is still possible. Nonetheless, there will always be 'NOISES' around to warn you that your bank will go the next moment and everyone queue up.

Barings Bank wasn't a High Street Bank, it was an investment bank brought to it's knees by fraud overseas. See WYKY.
How about BCCI? Also not a High Street Bank - see BBC. When it collapsed in had a grand total of 6,500 creditors including 28 local authorities [my local council included] .
It's the FSCS which guarantees, up to certain levels, deposits in all UK High Street Banks and other financial institutions.

I think you've probably more chance of being knocked down whilst out walking on the M25 by Lord Lucan riding Shergar than a major UK High Street bank going bust. Banking is entirely built on the trust that you can deposit your money and when you want it to spend you will get it returned. If one Bank goes bust, why would you trust any bank? I very much doubt there would be any "NOISE" to forewarn you or if you did happen to get any money out that it would be worth anything.

You're talking financial apocalypse and as cheerfulcat says,
in the very unlikely event of a large bank going under I suspect that all bets are off...
And then some, IMO!!

gt94sss2

teralin wrote: »

Does anyone know anything about the solidity of UK financial institutions and which are stuggling at the moment?

Yes, your money is safe.

Northern Rock have announced that just 0.24% (not 1%) of its reported total assets of £113 billion at 30 June 2007 are US Collateralised Debt Obligations (CDOs) and US home equity mortgage backed securities which is what everyone is mainly worried about.

As for Barclays who its rumoured are the ones who borrowed 360 odd million from the Bank of England for 1 day - this happens quite a lot. Normally banks borrow from each other and were supposed to borrow from HSBC this time but sent their request in late, so HSBC couldn't move the funds before the BoE deadline..

Some traders at Barclays probably made some last minute deals and the people who try and balance the books probably just didnt have enough time to do it - plus half of them are probably on holiday!

Regards
Sunil