Removing funds from Barclays

droopzjnr

It is true that Barclays shares have fallen however the market shares have dropped eveywhere, the FTSE has taken a large drop as has Dow Jones, but I wouldn't worry as Barclays share price soon rocketed again after the slump in August.

In terms of the 10Bn debt, that is a false rumour to which Barclays have no issued a statement.

Generali

Alan_M wrote: »

This entire thread and the varying responses highlight why our governments current whim for absolute transparency is at best poor judgement.

The average Joe in the street simply cannot comprehend economics on the scale being discussed openly (in tabloid selling sound bites) in our media.

I take quite an interest in the way economies run and much of it still baffles me, but I understand the basic principals of the money markets and why they exist.

Heaven knows why it's needed to be public knowledge about NR's borrowings. Without that being broadcast it would not have created the spiral of nonsense we're now being faced with. Barclays Bank in trouble? You just have to be kidding me.

A run on any bank is caused by sentiment, the effects of a run (which is an irrational trigger in this day and age) are self perpetuating, in so much as a run started because sentiment was such that people felt uncomfortable about their funds being in a certain financial institution (caused by the media) on an institution that was financially sound, may actually result in the said institution becoming unsound. Ergo, the irrational want to be transparent actually causes the very problem it's trying avoid.

I'm amazed on a daily basis by the snippets of information being broadcast on national media as though most of the country can actually process this information in some meaningful manner. It wouldn't be so bad if the full facts were provided but they simply aren't.

All this whole debacle goes to prove more than anything is that information is the real power, not money.

It's a toughie.

It really isn't helpful to have a run on Barclays because people can't or won't understand a balance sheet and so hear the phrase "Blah Barclays, blah blah loss, blah blah shares suspended" and think "That's it, I'm going to put all my savings under my matress. What could possibly go wrong?"

However, I'd be pretty miffed to buy shares in a bank and then find out a few months later that they were sitting on a load of undeclared losses. As much as anything else, if the bank knows that they've got losses and nobody else does, there's a huge potential for insider trading.

I suspect that the only (imperfect) solution is to let this play out in whatever way it will and to pick up the pieces ad hoc.

abaxas

Alan_M wrote: »

This entire thread and the varying responses highlight why our governments current whim for absolute transparency is at best poor judgement.

The average Joe in the street simply cannot comprehend economics on the scale being discussed openly (in tabloid selling sound bites) in our media.

I take quite an interest in the way economies run and much of it still baffles me, but I understand the basic principals of the money markets and why they exist.

Heaven knows why it's needed to be public knowledge about NR's borrowings. Without that being broadcast it would not have created the spiral of nonsense we're now being faced with. Barclays Bank in trouble? You just have to be kidding me.

A run on any bank is caused by sentiment, the effects of a run (which is an irrational trigger in this day and age) are self perpetuating, in so much as a run started because sentiment was such that people felt uncomfortable about their funds being in a certain financial institution (caused by the media) on an institution that was financially sound, may actually result in the said institution becoming unsound. Ergo, the irrational want to be transparent actually causes the very problem it's trying avoid.

I'm amazed on a daily basis by the snippets of information being broadcast on national media as though most of the country can actually process this information in some meaningful manner. It wouldn't be so bad if the full facts were provided but they simply aren't.

All this whole debacle goes to prove more than anything is that information is the real power, not money.

To quote Merv...

"In the absence of a government guarantee, it was actually rational to queue up and take your money and it would have been dishonest for us to have pretended otherwise,"

Alan_M_2

abaxas wrote: »

To quote Merv...

Which has just highlighted the very point of my post, Merv also explained in a separate interview that the initial panic of people queueing that actually start the run is unfounded, based nothing more on sentiment, however once the run kicks in then his comment is absolutely valid.

What you're missing is, it isn't NR's business model that lead directly to the run (indirectly maybe - but not directly), it was sentiment by irrational people, scared by comments made by the media, backed by the government in some misguided attempt to be transparent.

By quoting Merv's remark you've actually backed up the content of my post.

Merv has also made it clear a number of occasions He wishes He could conduct his business away from the glare of the media, to stop the very nonsense that occurred with NR.

This doesn't mean He wants to be underhand, it just means He would prefer to account for the lending say three months in arrears, when the panic is gone, the tabloids aren't short of a story and the ordinary Joe punter in the street doesn't think the sky is falling in. (which it isn't) but who lets truth get in the way of a good story eh?

Alan_M_2

Generali wrote: »

It's a toughie.

It really isn't helpful to have a run on Barclays because people can't or won't understand a balance sheet and so hear the phrase "Blah Barclays, blah blah loss, blah blah shares suspended" and think "That's it, I'm going to put all my savings under my matress. What could possibly go wrong?"

However, I'd be pretty miffed to buy shares in a bank and then find out a few months later that they were sitting on a load of undeclared losses. As much as anything else, if the bank knows that they've got losses and nobody else does, there's a huge potential for insider trading.

I suspect that the only (imperfect) solution is to let this play out in whatever way it will and to pick up the pieces ad hoc.

Sure, but buying shares and being a saver in an institution are poles apart.

The shareholders more than anyone should understand the need for the BoE to be able to lend without having to phone the Sun and The Daily Mail to inform them.

A little knowledge is a dangerous thing, the public do not need to know these activities take place and they are fundamentally damaging the economy.

Insider trading takes place daily, sure the stiff laws are in place to stop it, but lets be honest, it happens. The BoE's lending policy (or the transparency of the same) isn't going to change a lot is it.

SickStu

caveatvenditor wrote: »

Got the money moved. I have to queue for 2 hours but its now winging its way to the halifax.

For all those that may protest I have only one thing to say:

Its MY money not Barclays and I won't put it at risk needlessly - and I lose nothing by moving it.


Simple really.

Well, you lost 2 hours of your life and a couple of days interest on your money but gained a nice warm feeling by not being exposed to Barclays. If you feel it was worth it then great.
After reading the Sundays, I won't be following suit but then I could afford to wait to get my money back from the FSA in the very remote event of Barclays going under.

SquatNow

I warned about Barclays a while back.

They've been to the BoE for an overnighter twice this year.

In addition, analysts reckon Barclays to the lions share of that €90bn the ECB lent out a while back. (Explains why the pounds been so strong, with Barclays converting €90bn to £s)

Most recently they tried to borrow $15bn from the fed.

Then the BoE suddenly starts making noises asking for permission to lend IN SECRET to UK banks... when there is only 1 UK bank wandering around looking for money.

The whole thing stinks. Come december they are going to have to pay that €90bn back to the ECB... if they are going around with a charity tin NOW where the hell are going to find €90bn from?

There is a good rule of thumb for this: If you're going to Panic, panic EARLY.

Edit to Add: The rules of the FSA compensation sceme are supprisingly simple... theres no money put aside. If a bank goes bust all the other banks have to have a whip-round and find £2bn between them. (Goes up for £4bn next year.) That money then get used to compensate the depositors, upto around £35k each depending on what day of the week it is and if Darling/Brown have changed their pants lately. Once that £2bn is gone then it's gone. If there isn't enough to to around then the customers only get some of their £35k. If a second bank goes bust a week later their customers get jack. Also, if a bank has multiple subsidiaries, customer only get one set of £35k. If you have £33k in Halifax, £33k in Sainsburys and £33k in BankOfScotland you don't get £35k for each bank... £100k overall, because they are part of the same chain... you only get £35k... £11.5k per bank.

NSR2

I moved my money from Barclays to Nationwide.
The reasons:
1) My Barclays account is a simple account, 0.1% interest.
2) Barclays always tried to sell me more stuff whenever I went in. Frankly it's annoying.
3) I only have 1 current account, so if Barclays did go belly up I wouldn't even be able to buy bread!
4) I've had experiences trying to get money from the government. They are utterly utterly useless. So I'm not prepaired to wait for compensation. Also where will the government get the money from?
5) Barclays has had to borrow money from the BOE a couple of times before. Why?
6)The £10B loss is propably a rumour, but why haven't they just come clean and mention their losses? (HSBC did and they are still ok)

Generali

It's easy to get too hung up on this thing about borrowing from the BoE.

Many years ago, I used to work in the Treasury department of Big Clearing Bank. They would regularly borrow overnight from the Bank of England for all sorts of reasons, usually due to minor back office mistakes (either made by us or counterparties) that would lead to us being short of cash overnight at the last moment. The amount of loans like this would be very large sums, of the sort that people seem to be panicking about.

To us and the BoE this was just a normal part of doing business. Having to go to the BoE to borrow overnight was no better or worse than sitting on large amounts of cash overnight due to a mistake that left us long cash rather than short.

Barclays aren't about to go bust. Changing your account because it's a rubbish account is an excellent reason to moving. Changing your account because Barclays has had to borrow some money off the Central Bank as Lender of Last Resort is not.

SquatNow

NSR2 wrote: »

I moved my money from Barclays to Nationwide.
4) I've had experiences trying to get money from the government. They are utterly utterly useless. So I'm not prepaired to wait for compensation. Also where will the government get the money from?

In the event of a bank going bust the remaining banks have to pass a hat round, fish out their change jars, look down the back of the sofa etc to come up with the money.

Generali wrote: »

Many years ago, I used to work in the Treasury department of Big Clearing Bank. They would regularly borrow overnight from the Bank of England for all sorts of reasons, usually due to minor back office mistakes (either made by us or counterparties) that would lead to us being short of cash overnight at the last moment. The amount of loans like this would be very large sums, of the sort that people seem to be panicking about.

In the ye-olde days that may be true, but in the modern computer age it simply shouldn't be possible for it to happen. The only reason it might happen is if the other banks don't trust the bank enough to lend it money.

So, to sum up: The other banks don't trust Barclays to pay them back.

My friends and I are off to queue outside Barclays at lunchtime. We don't actually HAVE any money in Barclays... Anyone want to join us?