Are your savings safe? article discussion

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  • LongTermLurker
    LongTermLurker Posts: 1,996 Forumite
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    JoanWitness wrote: »
    Bradford & Bingley.

    Today ther shares are priced at 18.25 a share,worth £263 million.
    Yet according to the news at the weekend they have mortgage
    assets of 52 Billion.
    EIGHTEEN PENCE PER SHARE?????

    I hadn't been following them - was about to start pumping savings in there but I think I might not do so now.
    You've never seen me, but I've been here all along - watching and learning...:cool:
  • YorkshireBoy
    YorkshireBoy Posts: 31,541 Forumite
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    LongTermLurker wrote: »
    EIGHTEEN PENCE PER SHARE?????

    I hadn't been following them - was about to start pumping savings in there but I think I might not do so now.
    They dipped to 16.5p at one point today.

    It's shares you want with them...not savings!!

    NOT ADVICE! ;)
  • dunstonh
    dunstonh Posts: 116,389 Forumite
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    Their value is now almost pocket change to the big banks. Its only a matter of time surely before HSBC step in. (Lloyds cant, Santander has A&L and Barclays seem more interested in US acquisitions).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • chufferdandridge
    chufferdandridge Posts: 1 Newbie
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    I pay monthly into a 'UK all share tracker' ISA fund held with Legal & General. Is this money protected by the FSCS? If so, is the limit also 35K? Is Legal & General listed as a free standing 'Financial Institution' or is it linked to other banks and companies, as I have savings with a few and am trying to keep things seperated for security.
    Thanks.
  • dunstonh
    dunstonh Posts: 116,389 Forumite
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    I pay monthly into a 'UK all share tracker' ISA fund held with Legal & General. Is this money protected by the FSCS?
    You pay into a medium/high risk fund with loss potential of 50-60% in a 12 month period. What you are worried about FSCS protection? Crazy.

    As it happens, yes there is FSCS protection on the provider of upto £48,000 on first £50,000.
    Is Legal & General listed as a free standing 'Financial Institution' or is it linked to other banks and companies
    Legal & General are an insurance company. However, you dont clarify if L&G is the fund provider only or whether they are the fund house and the administrator.
    as I have savings with a few and am trying to keep things seperated for security.
    Your investing is almost certainly out of sync with your risk profile. The FTSE tracker is capable of losing more than half its value in 12 months yet you are concerned about an event that is almost certainly not going to happen and what FSCS protection you have. I suggest you re-asses your risk proifle and investments as that is far more important than what FSCS protection may or may not exist.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EalingSaver
    EalingSaver Posts: 365 Forumite
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    dunstonh wrote: »
    Their value is now almost pocket change to the big banks. Its only a matter of time surely before HSBC step in. (Lloyds cant, Santander has A&L and Barclays seem more interested in US acquisitions).

    That surely is the biggest point. Their current market capitalisation is now so low, relative to assets/liabilities, that if someone was going to step in (without some government assistance) they would already have made an offer. The fact they haven't makes me think that their mortgage book is just simply considered too risky, and no-one will do it without some injection/underwriting etc. from the government. Or they are waiting to see if the government will blink first so they can get a better deal. But I reckon its a symptom that no-one wants them as they stand. Maybe the fact they have now got out of their obligations on buying up yet more dud mortgages from whoever it was (GCAM???) will make them a tad more desirable.
  • dunstonh
    dunstonh Posts: 116,389 Forumite
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    That surely is the biggest point. Their current market capitalisation is now so low, relative to assets/liabilities, that if someone was going to step in (without some government assistance) they would already have made an offer.

    Perhaps B&B are holding out for a better offer. We know that they have funding in place to see them through to late 2009. So, there is no hurry and they may be hoping to get better value over the current share price.

    B&B certainly have more potential for loss than Northern Rock as they are so heavy on mortgaged buy to lets and if that pack of cards collapses then B&B will suffer big time. B&B seemed to think the same way as most novice buy to let landlords, property always goes up... ;)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • pem2
    pem2 Posts: 134 Forumite
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    dunstonh wrote: »

    B&B seemed to think the same way as most novice buy to let landlords, property always goes up... ;)
    Eventually they always do.
  • ianmr65
    ianmr65 Posts: 596 Forumite
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    JoanWitness wrote: »
    Bradford & Bingley.

    Today ther shares are priced at 18.25 a share,worth £263 million.
    Yet according to the news at the weekend they have mortgage
    assets of 52 Billion.

    Yes, but the mortages, and deposits they hold, don't actually belong to them in any real sense. The deposits belong to the depositors, and the mortage assets only belong to them if the debtor fails keep up payments, on the outstanding loan, and they take the property back, in a repossession.
    They will also hold similar but more complicated securities, bonds or loans, which pay them intrest. Many of which will be worth a great deal less than their national value.
    What they 'own', is the future revenues that accrue as a result of holding these mortgages, and securities, and other loans, As well as the physical infrastructure, intellectual property, goodwill, and so on. (See Below)

    When Lehman Bros went down the bulk of the assets boiled down to some prime new york real estate, and certain 'star' investment teams, which Barclays and Nomura are in the process of buying.

    JoanWitness wrote: »
    Bradford & Bingley.


    Does this mean that another bank could buy them for £263 million.

    Yes
    JoanWitness wrote: »
    Bradford & Bingley.

    If they went bust how much would the Government have to pump in to save them. It cost the Government 25 Billion to bail out Northern Rock.


    (See above) The vast bulk of their assset holdings will have been used as collateral for their own borrowing. In B&B's case this is large.

    The cost of the bail out will depend on how much they owe (lots) set against how much they are worth, (not a lot)

    It's similar to stories you read of companies being sold for a pound.

    This pound normally entitles you to call the companies assets your own. But also saddles you with it's debt. Normally much larger than the asset base.
  • baby_boomer
    baby_boomer Posts: 3,883 Forumite
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    ad44downey wrote: »
    If Lloyds/hbos goes down the last thing you'll have to worry about is money. It won't be worth anything anyway. We''ll be like Zimbabwe.
    I'm not sure about that. When the banks failed in America in the 1930s there was deflation.

    Which'd be OK for people who had money in places other than Lloyds/TSB should it go down the Swannee.
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