BoE watching UK banks after American tech bank goes under

[Deleted User]

Regulators at the Bank of England are closely monitoring the UK banking sector, after the troubled tech lender Silicon Valley Bank was forced to shut by US regulators.

Regulators in California took control of SVB’s deposits on Friday afternoon, amid fears that turmoil at the bank – which developed quickly over the previous 24 hours – could put customers’ deposits at risk and lead to further contagion across the financial system.
However, those troubles raised broader fears that the recent increases in interest rates have affected the value of other banks’ bond portfolios, which tend to fall in price when interest rates rise.

There were concerns about how that could affect lenders’ capital levels, which are meant to offset riskier parts of banks’ balance sheets.
Those fears prompted a drop in UK banking stocks, which the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), is closely monitoring.
The Guardian understands the PRA is keeping an eye on market movements, and is speaking with firms it supervises – including high street banks such as Barclays, NatWest and Lloyds Banking Group – amid fears there could be further contagion from market jitters over the turmoil affecting SVB.
However, it is understood that the PRA believes that the UK banks it monitors are resilient, given that bond values are usually part of annual stress testing, and that most have seen their income rise as a result of higher interest rates in recent months.

“We don’t believe there is any readacross to the Irish and UK banks,” Cronin said, adding that the “likelihood of forced liquidation of investment securities portfolios in response to deposit flight for Irish and UK banks is pretty much zero”.

The Bank of England decline to comment.
https://www.theguardian.com/business/2023/mar/10/european-markets-spooked-by-us-bank-shares-sell-off

Is this anything to be concerned about? If the banks are so resilient why would they need to monitor. 

diystarter7

Hi
I would not worry at all because when things go belly up, it happens overnight and very quickly.
We always get false dawns but if anyone could predict a crash to the day never mind the hour, they'd be trillionaires.

Thnaks

WillPS

[Deleted User] said:

Regulators at the Bank of England are closely monitoring the UK banking sector, after the troubled tech lender Silicon Valley Bank was forced to shut by US regulators.

Regulators in California took control of SVB’s deposits on Friday afternoon, amid fears that turmoil at the bank – which developed quickly over the previous 24 hours – could put customers’ deposits at risk and lead to further contagion across the financial system.
However, those troubles raised broader fears that the recent increases in interest rates have affected the value of other banks’ bond portfolios, which tend to fall in price when interest rates rise.

There were concerns about how that could affect lenders’ capital levels, which are meant to offset riskier parts of banks’ balance sheets.
Those fears prompted a drop in UK banking stocks, which the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), is closely monitoring.
The Guardian understands the PRA is keeping an eye on market movements, and is speaking with firms it supervises – including high street banks such as Barclays, NatWest and Lloyds Banking Group – amid fears there could be further contagion from market jitters over the turmoil affecting SVB.
However, it is understood that the PRA believes that the UK banks it monitors are resilient, given that bond values are usually part of annual stress testing, and that most have seen their income rise as a result of higher interest rates in recent months.

“We don’t believe there is any readacross to the Irish and UK banks,” Cronin said, adding that the “likelihood of forced liquidation of investment securities portfolios in response to deposit flight for Irish and UK banks is pretty much zero”.

The Bank of England decline to comment.
https://www.theguardian.com/business/2023/mar/10/european-markets-spooked-by-us-bank-shares-sell-off

Is this anything to be concerned about? If the banks are so resilient why would they need to monitor. 

Because it's their job to monitor and oversee. This is the same irrespective of events outside their jurisdiction.

Don't leave more than £85k with any one institution and ensure you have a backup in case your main account stops working (bank failure is one of the less likely reasons this might happen). You have nothing to fear.

[Deleted User]

It looks as if Barclays or HSBC will take over the UK arm of this bank, another American bank is said to be on the brink. I will certainly be watching Bloomberg in the morning!

wmb194

[Deleted User] said:

It looks as if Barclays or HSBC will take over the UK arm of this bank, another American bank is said to be on the brink. I will certainly be watching Bloomberg in the morning!

HSBC has bought it for a pound.

https://www.londonstockexchange.com/news-article/HSBA/hsbc-acquires-silicon-valley-bank-uk/15871682

[Deleted User]

One wonders if the UK will also remove the protection limit for bank accounts as the Americans appear to have done?Although it is surely a fallacy.

How can a government protect every penny in an account. First signature bank has gone under also in the states, first republic is on the watch list, shares down 60%. Two banks gone so far, possibly a third to go soon, I am sure it's nothing to worry about....

DullGreyGuy

wmb194 said:

[Deleted User] said:

It looks as if Barclays or HSBC will take over the UK arm of this bank, another American bank is said to be on the brink. I will certainly be watching Bloomberg in the morning!

HSBC has bought it for a pound.

https://www.londonstockexchange.com/news-article/HSBA/hsbc-acquires-silicon-valley-bank-uk/15871682

Love the "The acquisition will be funded from existing resources."

Can see the frantic hunt in the meeting room to find out who's got a £1 in their pocket. 

Alex9384

Damn, I could have bought it for the £1

dcs34

Alex9384 said:

Damn, I could have bought it for the £1

And when all the customers ask you for their deposits back...? 

diystarter7

Hi

As I said the other night, its all under control

I do however strongly recommend that you are covered by the FSCS and if you have more than 85k in savings in one place move it around. don't  forget some instituions share the FSCS licence and only one lot of 85k will be safe in situations like that if the bank goes bellies up (I started a thread on that today if interested you can see it under my profile

Good luck

[Deleted User]

We now have a bail out in Europe and a woman on the news talking about banking deposits being safe up to 85k. British banks are safe. 

This Swiss deal was shoved through, it doesn’t look good. I don’t think anything will happen to retail banks but for other parts of the banks and the wider economy….. I am investing more in gold and other metals.