Of the Big Four UK high street banks, which will be first to go kaput?
Barclays? Lloyds? HSBC? Royal Bank of Scotland? (owns NatWest)
My guess is the Royal Bank of Scotland.
After them, probably Barclays or Lloyds. HSBC see to be doing well, often beating the overall market in the current turmoil.
Drawing money out of RBS (or Barclays or Lloyds) and opening an account at HSBC seems sensible. Much better than watching the telly every few hours to see what 'paternalistic' politicians and regulators say.
A run on the banks is called for. Just make sure you're near the front of the queue. Go into your branch as soon as possible to book the cash for as soon as possible, e.g. tomorrow.
I know Barclays has been lending rotten money left right and centre, but it's a massive organisation...not sure how it will be affected. Maybe it can afford to absorb the losses.
I bought a ticket for the Euromillions the other day, and the thought did cross my mind...if I won, even 100k, what would I do with the money?!
I dont think a 'run on the bank' is really the problem, as it only requires the Treasury to underwrite the deposits, a greater concern is a panic by the shareholders.
Well at least you might do a little research and get your facts right!
RBS does not "own" NW!
Both the Royal Bank of Scotland and Nat West are part of the RBS group which is not the same thing. Neither is a subsidiary of the other.
Both banks remain as totally separate and independent entities and in the extremely unlikely event of either becoming insolvent the other could continue unaffected.
A run on the banks is the last thing that would benefit anybody and would be totally unnecessary.
Provided your deposit with any bank does not exceed £35000 then it is guaranteed in full by the FSA.
It therefore does make some sense to the ultra cautious to spread bank savings above this amount across the sector and/or for couples to make full use of each other's guarantee. Conventional wisdom in any case dictates that you should not carry all your eggs in one basket.
^FTSE A few minutes ago, the changes in share price were -1%, 0%, +1%, and
-5% (Barclays, Lloyds, HSBC, RBS). This sort of pattern has been pretty typical over the past week. RBS has been standing out. Barclays and Lloyds have been about average for their sector; HSBC has been beating the sector and usually the index. Which one of the four would you go after if you were a bear, able to speculate big-time against one of them, contributing to precipitating a collapse and making oodles in the process? (The 'news' about a ban on short selling is just misdirectional pap).
Things can change fast. How long will it take to withdraw whatever amount you 'get'? And with high inflation, how much will any 'compensation' be worth? The idea that bank deposits are as safe as houses (although many people will lose those) is itself going to collapse. Banks thrive on public relations underlining strength and security.
Government is supposed to, to the tune of ?100,000, but this can change, and many are already fearing that the compensation might depend on having to prove legitimacy to the tax authorities, which many can't. Turmoil like this is a heist. Would you recommend opening an account at Anglo?
It's always the small guys who lose out most. The government is there for the City.
"only"!!! A run on the bank is what the govt, on behalf of the bankers, are trying damn hard to avoid. Northern Rock times 10 or 100 or 1000. But it will come. And it's a rational choice (if one can use that word in such irrational times) by punters. Just as when the govt says 'don't hoard food', it's usually sensible to hoard food.
Far fewer shares are owned by small players than is often made out.
I posted that a few minutes ago. The latest figures from Yahoo (subject to 20 minutes delay) are: -2%, -3%, 0%, -19%.
See what I mean about RBS?
Any RBS account holders reading this should watch the COMPARATIVE performance of RBS Group shares, relative to Barclays/Lloyds/HSBC. And if they know what's good for them, GET DOWN YOUR BRANCH QUICK AND GET YOUR MONEY OUT.
Either a) book cash for withdrawal tomorrow, or b) open an account with HSBC and transfer most of your money there.
'Streamed' prices (still with 20 minute delay) can be followed here:
Does anyone have definitive information that the FSCS would actually work in all crcumstances?
Unless the basis of funding has been altered, FSCS can raise about £4bn per annum from a levy on all member financial institutions (presumably less if the big players fail). A couple of TV news bulletins mentioned that, for Bradford & Bingley, the UK government was having to underwrite the FSCS by guaranteeing an additional £15bn, eventually to be recovered by the FSCS bank levy.
As far as I can see the FSCS only has funding to cover relatively minor players and doesn't provide for major multiple failure. Saving deposits in NR were £20+bn, in B&B £20+bn and in HBOS £250+bn. That i s not, of course what would have to be paid - it would depend on the real shortfall in funds when the bank goes under. But, is it also the case that many of the commercial loans to banks are preference loans which leaves ordinary savers' money lower in the pecking order?
I expect the limits of the scheme would have become only too obvious if Northern Rock had been allowed to fail. Is there any guarantee that the government can/will underwrite the scheme and guarantee deposits in all circumstances?
You are right but seem not to appreciate the advantages a grouping as opposed to amalgamating companies.
RBS Group plc owns 100% of the share capital of both RBS and NW. RBS Group shares, as you rightly say, are publicly traded.
However, grouping, amongst other advantages, allows and extra tier of security. If one component of the group fails, it can be put into administration and the group itself can walk away with the other parts intact. NW can't bring down RSB or vice versa.
Further if some bean counter in the future comes to the conclusion that the sum of the parts is worth more than the overall group the it's a relatively simple matter, with the structures of the parts still intact, to break up the group and float it as separate companies to the benefit of the group shareholders.
Correct hence my qualified advice below:
That's silliness I'm afraid!
For starters if you keep your money under the bed then it's just about as insecure as it can be. Why did banks emerge in the first place? In days of yore you paid them to keep your money safe.
These days they pay you for the privilege. You lose this interest if you do not lose them. Moreover the notes and coin in your pockets grant the BoE an interest free loan.
Why avoid the banking system if your money (with a little care) can be
100% secure and earning interest anyway?
The entire banking system is not going to collapse. If I'm wrong on this then your money becomes worthless anyway and we are back to a system of barter.
One weird bit about Barclays is that, according to their press releases, in early 2007 they were heavily exposed to the toxic loan market but by July/August had drastically reduced their exposure. Perhaps somebody spotted which way the wind was blowing and dumped the liabilities onto some other poor bank ?
AFAICT none of the UK clearers is anywhere near insolvent, but a number, starting with Northern Rock have become seriously illiquid.
The government can't really allow a UK big four bank to go bust, so would intervene.
Funding is irrelevant. The Bank of England would simply print lots more twenty pound notes that would be handed to creditors who wanted to draw out their cash. This would be inflationary (and much of what has already gone on will have this effect) and on a large enough scale would affect the exchange rates with other currencies. I suppose this is the advantage of having your own currency - you can always print more money, whereas if the BoE ran out of Euros there would be a really big problem
I suggest you learn the basic of writing to newsgroups - everything you have quoted was said by me (Toom Tabard)
No, the FSCS is not funded by taxes (unless that has changed very recently) - it is funded by a levy on member financial institutions. Apperently the FSCS had to get a loan of £14bn from government to underwrite the B&B deal - the amount to be repaid by a levy on the banks.
My understanding is that the money market loans £70+bn to NR may have been largely preference which would have left the odinary savers £20+bn more at risk
The common distinction between money market loans and retail deposits.
If you know nothing and have nothing useful to contribute, one option is to say nothing.
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