Safest Bank in the event of a property crash

purch

So whats the news with HBOS? Why are they in such a bad position?!

....and they are still happily giving away 15 month interest free Credit Cards to all and sundry :eek:

....Looks like no one's told them there is a 'credit crunch' out there !!!!!

qwerty007

Well the property crash is now on us, and as the US has so adequately demonstrated, no institution, however large is immune. The quasi-governmental mortgage giants Freddie and Fanny are beleaguered, IndyMac, a huge California based bank bit the dust recently, and lest we forget Bear Stearns, and then of course Countrywide the biggest mortgage company in the US. These are very big players. If it can happen to them it seems reasonable to assume, it can happen to just about anyone. Bail outs are the order of the day, but the questions arises as to where the money will come from and what effect it will have on the economy.

With estimates of the housing market crisis possibly not even half way through yet, you have to ask the question whether there are more casualties in the pipe line. I agree that banks with a big exposure to mortgages is more risky. A ratio used in the past to determine banks riskiness was non-performing loans divided by equity capital and loan loss reserves. Anything more than 1:1 or 100% was considered a red flag.

I would think most retail banks, with household names have been exposed to the crisis, but it is very difficult to know who, and by how much? Banks will claim liquidity or solvency right up to the last minute in an effort to stave off a "run on the bank'. There are numerous listings which claim to show the safest banks, and weakest, but how they arrive at these conclusions I don't know. Ratings agencies may have done their homework, but they must base there data on historical data so it is always out of date. I think possibly smaller independent banks in Europe may be the safest bet. Banks whose core business is outside residential (and perhaps commercial ) real estate, or where tight regulatory lending practices exist. Banks that seem to make money out of thin air, are perhaps best to avoid.

HSBC has recently been offering a high rate on the dollar, and this always seems to me to be an indication of raising money to cover loans. It got bitten quite early on in the US. A few websites list Rabobank as having triple A ratings. I believe there is a branch in London.