Jump to content
House Price Crash Forum
Sign in to follow this  
Sybil13

"assumptions Of 40% + Falls" See Lenders Having To Merge

Recommended Posts

I think there's too many banks and building societies as it is.

Imagine walking down the highstreet and seeing as many different burger shops as there are different banks.

There are all after a slice of our money and they should reduce in numbers.

Share this post


Link to post
Share on other sites

5 Building Socieites to Fail within a Year

I don't think there was a thread on this yesterday, did take a look.

Ralph Silva of TowerGroup, the leading financial services research firm, said that up to 15 building societies could be forced to merge within the next year or so but that at least five others would fail on the lines of Dunfermline Building Society.

He said: "At least four or five more will go the same way [as Dunfermline] over the next 12 months. Most building societies wait too long before asking for help and the result will be that some will be too far along to be saved. I think that 10-15 societies could merge within the next year or so – although to be clear, I expect them to merge into other entities, not disappear completely

As you know, this is all part and parcel of the Moody's and FSA downgrades. Moodys as you know:

said it had changed its assumptions about UK house prices in the past few months. It also stress-tested the mutuals’ commercial loan portfolios, where it expects the performance to worsen during the next few years.

Marjan Riggi of Moody’s said: “What’s different is the loss expectation is higher than it was three or four months ago looking at the economic forecasts on housing.

“Last year we were looking at mortgage lenders and stress-testing a 25 per cent fall in house prices. In the past three or four months that assumption has changed to a 40 per cent fall, which is a considerable difference.â€

On Wednesday Adrian Coles, director-general of the Building Societies Association, said Moody’s had included an extreme stress test of a 60 per cent fall in house prices

The FSA as you know tested for 50% falls. The FSA have also said they will not allow bs to remain independent if they cannot show they can absorb potential future losses:

Understandably, the FSA is in the process of verifying whether all societies - not just the Moody's seven - have the capital to cope with further strains in the housing market and whether they have sufficient access to finance to withstand a prolonged drought of wholesale funding.

Societies unable to demonstrate they can absorb potential future losses comfortably will not be allowed by the FSA to retain their independence - unless the Treasury were to invest in them on taxpayers' behalf (not impossible). As for those with adequate capital but inadequate access to deposits and wholesale finance, their future hinges on whether the Treasury and Bank of England relax their conditions for providing taxpayer loans and guarantees.

So my Q is, in the article about 15 bs's merging this year , it said about Nationwide and Santander taking them on.

Moodys downgraded Abbey and A&L , A&L from C to E, even though they are owned by Santander, isn't that therefore a reflection on Santander? So why would more bs's in trouble get merged with a lender whose other bs's are being downgraded to E? Nationwide was downgraded by Moodys too and in an article about W.Brom it said:

Nationwide, Britain’s biggest building society, has already bailed out three struggling societies and is said to have a limited appetite to do more deals

Yet the article at the start of this thread seemed to imply that Natiowide would have to take them on but will this not simply destabilise them even further like Lloyds last year ?

Edited by Sybil13

Share this post


Link to post
Share on other sites

I think that a lot of building societies must be struggling, especially those who sold tracker mortgages to borrowers who are now reaping the benefit of a low BoE base rate. The financial institutions kept saying that they didn't want the base rate lowering and seemingly the Bank of England took no notice.

Share this post


Link to post
Share on other sites
Could a bank take over a Building Society?

Having spent 2 days having my nose rubbed in how stupid I am by Rinoa and Hamish I feel almost unable to open my mouth but HBOS took over Birmingham Midshires didn't they?

Share this post


Link to post
Share on other sites
Having spent 2 days having my nose rubbed in how stupid I am by Rinoa and Hamish I feel almost unable to open my mouth but HBOS took over Birmingham Midshires didn't they?

That`s like being told your jeans don`t look cool by Coco the Clown.

Share this post


Link to post
Share on other sites
That`s like being told your jeans don`t look cool by Coco the Clown.

:lol:

I know I know but its really got through to me today, bears of little brain are quite insecure and vulnerable to people saying that everything you say is rubbish and the people you quote, even BOE officials are muppets. I know Rinoa is not right but just think perhaps I should leave the experts to discuss threads, but just feel that if I do, people like myself, will not understand what is being said, I had hoped the little contribution I make helps make some complex threads more accesible for people like myself. Maybe I am wrong.

Off for a cup of tea

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   296 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.