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Realistbear

2nd Wave Of Credit Crunch To Happen In 2010

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http://www.bloomberg.com/apps/news?pid=206...id=a8SRTXNaqUk4

British Consumers’ Bad Loans Won’t Peak Before 2010, KPMG Says

By Andrew "Andy" MacAskill

Aug. 19 (Bloomberg) -- U.K. banks’ impairments on unsecured loans won’t peak before 2010 at the earliest because of rising unemployment and declining house prices, KPMG said in a report.

Retail banking is unlikely to be profitable in the second half of this year because of the high level of impairments, the accounting firm said in a statement today. Investment banking profit, which had offset the rising cost of writedowns in the first six months of 2009, is unlikely to be sustained as revenue from selling and trading loans and bonds falls, KMPG said.

“Unemployment is not going to disappear anytime in the near future,†David Sayer, global head of retail banking at KPMG, said in a telephone interview. “It is going to be one of the key factors driving provisions for the near term.â€

U.K. unemployment climbed to the highest level in 14 years in the second quarter, according to the Office for National Statistics. Bank of England Governor Mervyn King said last week the global economy remains in “deep recession†and that banks may need to raise more capital to rebuild their balance sheets.

HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group and Barclays Plc’s total impairments climbed to 30 billion pounds ($50 billion) in the first half of this year, compared with 10.3 billion pounds for the whole of 2008.

About 7.5 percent of London-based Lloyds’s loans were impaired in the first half of this year, up from 2.7 percent at the end of 2008, KPMG said. Barclays had the second-highest proportion of impaired loans at 4.8 percent, followed by Edinburgh-based RBS with 4 percent and HSBC with 3.4 percent.

Its getting worse and we ain't seen nuttin' yet.

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It appears that we might have to wait now until 2010 for bank bailout 3.

I felt we would see one before the end of the year, looks like this won't happen now.

Looks like they have engineered a delay.

Perhaps you're forgetting the way the banksters "heads we win, tails you lose" guarantees have been structured.

First 10% of insured asset losses to them.

After that you and me pick up their bonus bill and pension entitlements.

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Perhaps you're forgetting the way the banksters "heads we win, tails you lose" guarantees have been structured.

First 10% of insured asset losses to them.

After that you and me pick up their bonus bill and pension entitlements.

Thas really not true is it? And only RBS are in any insurance scheme.

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"U.K. banks’ impairments on unsecured loans won’t peak before 2010 at the earliest because of rising unemployment and declining house prices, KPMG said in a report."

Its getting worse and we ain't seen nuttin' yet.

Is it actually getting worse, or is it a case that it is just taking time for the existing issues to come out into the open?

The process

lose job -> miss a couple of mortgage payments -> get stern letters -> still don't pay -> get repossessed -> bank sells house -> loss crystallised

takes months and months to work its way through. Jobs lost today could easily take until the middle of 2010 to show in all the figures as loan losses.

I'm not sure whether things are truly getting worse or just lagging indicators still adapting to a new reality.

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Is it actually getting worse, or is it a case that it is just taking time for the existing issues to come out into the open?

The process

lose job -> miss a couple of mortgage payments -> get stern letters -> still don't pay -> get repossessed -> bank sells house -> loss crystallised

takes months and months to work its way through. Jobs lost today could easily take until the middle of 2010 to show in all the figures as loan losses.

I'm not sure whether things are truly getting worse or just lagging indicators still adapting to a new reality.

I think the unsecured loans is the key in this report. All those people who agreed to work for less money rather than face redundancy are still having to meet the liabilities of unsecured loans and credit card debts.

These will be more pernicious because unless there is a default there is no finality of a repossession. The banks will have to agree to restructuring these debts or face massive consumer bankruptcies. That will mean an additional three to five years on repayments.

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