A bear lesson for the UK. How safe are British banks?

ianmr65

Last night the US fed, and central bank rescused Bear stearns, with the help of JP Morgan.
Over the space of a weekend, it extended emergency credit, and fire sold the striken bank, with £30bn as a guarentee.
The shareholders lost pretty much 95% of there holings, but bear's counterparty credit positions are stable, thus preventing a crash on the credit derivatives markets, and it's bond holders, and creditors have not lost all there money, and won't, if the take over is approved. Not an ideal result esp in the moral hazzard light. But a desisive move.

Last september the Bank of England, the treasury, and the FSA procrastinated, ditthered, and fudged over much smaller deal, with a much smaller bank. Northern rock - Lloyds TSB were prepared to act as a white knight, but the goverment did not want to provide any gaurentees.

Instead we had a 4 month protracted shambles, which ended up in the bank being nationalised, and the tax payer having to fork out a decidely risky £30bn, and skewed the market as NRK, is now a branch of national savings,

Now HBOS and A&L are looking decidely risky. There share prices are plummetting, in the wake of the bear stearns crisis, they have high exposure to the mortgage market, poor liquidity and depend on credit markets for there funding.

I think that if HBOS results are, as is likely, very bad. Confidence may well be lost in that bank. No matter how many Howard the grinning loon adverts Halifax put out.
If it collapses do we trust the gang of three, to effect a rescue? And what will be the impact on the Uk economy, and confidence in the banking system if a major UK bank does collapse, if that is what happens.
Clearly the first £35k on deposit will be safe, under the FSA scheme, but there is a lot more to HBOS than just a deposit house.
Credit card holders, Mortgage holders, and a vast number of finacial product holders could be serverly and adversly effected.
Any thoughts?

maninthestreet

Thanks for cheering us all up.

neverdespairgirl

ianmr65 wrote: »

Instead we had a 4 month protracted shambles, which ended up in the bank being nationalised,

Dear me, "nationalised" is such a nasty 1970s word. The Dear Leader didn't nationalise it, it was "taken into temporary public ownership".....

:rotfl:

Leeds_Fella

Chaps
Why do you think HBOS is at risk? They only posted post tax profits of over £4 or £5 Billion a couple of weeks ago.
Wouldn't they be able to 'dip' into the profits?
I also hear they are one of the banks who are cash rich?

I sold my house back in Oct and have all my equity in a HBOS savings acount - should I be worried or start spreading this out with many other banks?