Stress testing of banks

Thrugelmir

mwpt wrote: »

Could someone explain to me how someone like that Wilson character amassed a property empire in such a short time?

Was fortunate enough to catch the real boom of the late 90's. Up until then was probably little more than a steady eddy. Living a modest lifestyle and reinvesting the profits. To be successful in business you often need to do something before other people do.

chucknorris

Thrugelmir wrote: »

Was fortunate enough to catch the real boom of the late 90's. Up until then was probably little more than a steady eddy. Living a modest lifestyle and reinvesting the profits. To be successful in business you often need to do something before other people do.

What I thought was ironic about the Wilsons is that the one of the biggest mistakes that they made (expanding too fast) also actually saved them from the consequences of that error, they became too big to fail, and their lender couldn't pull the trigger. Another big mistake they made was to buy in one small area, that may still have slight repercussions, but lets face it they can drop plenty millions and not even notice. But nobody is perfect, we all make mistakes.

Graham_Devon

cells wrote: »

Even for someone following the Wilson model (which is a lot more dificult now as most lenders limit the number of mortgages. Eg BM-Solution you could get an unlimited number of mortgages with them now its 3 tops) they would still have at least 25% equity and more likely over 30% and both of those are well above the 10% crash we saw in this bad recession.

And more than anything else with internal migration at over 600,000 a year there are plenty of people who need to rent. So rents are at even a lower risk of falling than prices imo (government meddling aside)

Errr, the Wilsons would have failed back in 2008/9.

It was only the fact that if the Wilsons go under, so did their bank that stopped them going under.

Seems the way you talk the business would always have been sound due to the deposits. Absolute fact is it wasn't, and isn't without a knife to the lenders neck.

ging84

Graham_Devon wrote: »

Some forward guidance on something or other.

The stress tests also stress tested the banks should oil fall to $38 a barrel (amongst other scenarios).

It seems a bit of a bizzare stress test. That's just $5 a barrel less than it is today. In many cases a couple of days movement either way.

So things are OK, so long as oil doesn't fall 10% from where it is today.

Some stress test then.

We are even closer than that. 5% drop today, presumably related to today's opec meeting
Presumably when this test was decided on, the oil price was significantly higher.
If this is fairly near where oil prices bottom out, then this makes this stress test absolutely bang on, as they are meant to deal with a realistic worst case, not some crazy unrealistic dooms day scenario

cells

Graham_Devon wrote: »

Errr, the Wilsons would have failed back in 2008/9.

It was only the fact that if the Wilsons go under, so did their bank that stopped them going under.

Seems the way you talk the business would always have been sound due to the deposits. Absolute fact is it wasn't, and isn't without a knife to the lenders neck.

are you the Wilsons accountant?

Thrugelmir

Graham_Devon wrote: »

It was only the fact that if the Wilsons go under, so did their bank that stopped them going under.

Banks often support clients on life support. If there's a business plan in place which turns the situation around. The Wilson's would have cash poor but asset rich. Realising equity from asset sales would have alleviated the situation.

antrobus

Thrugelmir wrote: »

Banks often support clients on life support. If there's a business plan in place which turns the situation around. The Wilson's would have cash poor but asset rich. Realising equity from asset sales would have alleviated the situation.

That's the instability that the BoE are talking about. Cash poor but asset rich BTL investors all trying to realise equity from asset sales at the same time.

wotsthat

Graham_Devon wrote: »

So things are OK, so long as oil doesn't fall 10% from where it is today.

Some stress test then.

Odd. It wasn't that long ago you were starting a thread each time petrol went up by a penny a litre.

Have you found the falling oil price stressful? I haven't.

It would be like stress testing how people would cope in the event of a pay rise.

wotsthat

cells wrote: »

are you the Wilsons accountant?

For all the chat about the Wilsons there's actually very little in the way of real financial information about them in the public domain. Mr. Wilson seems to court media attention but is somewhat coy about releasing data that would allow us to ascertain his position in 2008 or today.

He's just the pantomime BTL owner the media turn to because the vast majority of BTL owners have no interest in being celebrities and the BTL model is actually very very boring.

princeofpounds

He's just the pantomime BTL owner the media turn to because the vast majority of BTL owners have no interest in being celebrities and the BTL model is actually very very boring.

and don't we all love him for it.