Sunday, Oct 21, 2007
Major UK banks seek emergency funding in the US
Telegraph: Barclays and RBS line up Fed for £15bn
Barclays and Royal Bank of Scotland have lined up emergency funds of up to $30bn (£15bn) from the US Federal Reserve to bail out American clients (yeah right!) caught up in the global credit crunch. Barclays has been given permission to borrow up to $20bn through the facility, while RBS can borrow up to $10bn. The banks would have to put up assets as collateral with the Fed to gain access to the cash.
Posted by uncle chris @ 08:28 PM (532 views) Add Comment
7 Comments
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1. Planning4acrash said...
Holy Macaroni. Run on a bank x2 before christmas? Lets put this into context, initial estimates on replacing Trident, the UK's nuclear deterrent, ran at £15-20bn. Crossrail, Britain's greatest ever engineering project (apparently) will cost less than this. What the F*ck is going on? Another chorus of "well, you couldn't see that happening" anybody?
2. deepak said...
Would they ever think about doing the same in UK ? You bet not.
Could they also be servicing there UK funding by taking money from FED?
3. David Smith's Sub Prime. . . said...
I cannot see the BOE able to intervene to the same extent as Northern Rock if Barclays goes down ...
Wow!
Incidentally, how much have Northern Rock now taken? I should have thought their time is nearly up?....
4. Bigyin said...
Having sought and received compensation because of errors made by both these 'organisations' a couple of months ago, it cost RBoS a damn sight more than Barclays, I can only wish them both the worst of luck in all their endeavours.
5. James said...
M'eh. Again, people posting comments really ought to understand before commenting.
The Fed has been encouraging banks to set these lines up as assurance against any future problems. The whole point is that everyone should have one in place, precisely to reduce the stigma attached to having one. The thinking is that 'bank borrows from fed' will cease to be news and NRK panic situations won't be sparked.
BARC & RBS only off in line with the market. Incidentally, watch what happens when the US opens today... Could get very interesting! DJIA futures < 100.
6. dbnazz1 said...
There were lots of rumours about Barclays needing assistance when the Northern Rock trouble started. This was all dismissed by Barclays, but it looks like they just ran to America to get there assistance from there instead of the UK. I am not to sure on this point so i am open to further suggestions, but I wonder if it was anything to do with Barclays being listed on the London Stock exchange and I believe not in America, so if they borrow the money from a country remote from where they are listed, this might limit the impact on there share price.
7. James said...
dbnazz1 - nope. Barclays hasn't actually borrowed in the US, it just has a line that would allow it to be able to do so.
Barclays did go to the BoE at the beginning of the 'NRK trouble', but to borrow relatively small amounts overnight to balance the books - ie, for technical, systems, reasons. The only reason this attracted attention was because of the general climate of fear. Far from dismissing it, Barclays owned up to the BoE borrowings, whereas they are usually anonymous.