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Hsbc 'under Pressure' To Exit London


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HOLA441

Again, get a few billions in taxes but forget the hundreds we are losing due to the indirect costs of these businesses being here. All is well, happy world...

What is 'cost' of running an international finance business? If an international bank in London sydicates a European bond sale and makes 0.2% on the deal, then what does that 'cost' us?

I'm much rather all the legal and accountancy fees etc stay in London rather that going to Switzerland. Quite a few are leaving already. One of the big hedge funds, Bluecrest moved to Switzerland 6 months ago. They do exactly the same business as before, but now the Swiss get the tax receipts and their businesses benefit at they money is now spent there.

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HOLA442

Ah ah! :-)

We will forget that these share price profits were generated at the cost of insuring hundreds of billions of stupid loans and maintaining asset markets overpriced at the expense of every saver in the country, shall we? Happy world...

no accountant will 'forget'. Maybe stupidity or financial self-interest.

I met a GS worker at a party last night. Still believes the banks are a part of the free market. Even with the bailouts, dishonest accounting, and existence of TBTF. The degree of cognitive dissonance is epic

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HOLA443

The ENTIRE global banking system was saved by a few props in key areas.

Without these props - well I hate to think what the consequences would have been.

Yes fair point . It did look like the whole lot was going to go down at one point.

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HOLA444

The entire premise of the UK economy during the Blair/Brown years was that we were somehow especially gifted with financial talent and that gave us a comparative advantage in the international economy.

It was bullsh*t because 95% of all the finance industry is bullsh*t. Better swallow the bitter pill, take our 10 years or so of abject pain and find a new way. Enabling the financial junkie will end in death.

95% of finance... that's a high value stat. Apparently, 95% of posters on here make stuff up and plop it directly onto the page without any further evidence.

Most of the financial sector does NOT generate wealth. That massive tax they are paying? Its the proceeds of stealing the wealth that the real wealth generators make.

So here's an analogy. If i steal your car but pay 50% of the proceeds from it in tax, its a fabulous thing for our country. Because thats exactly what you are saying.

Of course if your involved in the wealth theft buisness or servicing it, as you are, you'd be upset if it was made harder for you / your clients to steal.

A truly appalling analogy. Reading it I felt like a fridge that's been taken to the playground only to find that the moon has burned the slide.

Bearing in mind that many bank knockers here work in IT (not necessarily you), I'd be curious to understand how the way that industry generates wealth provides such corporate pride. It was just a big cost centre in every business I've worked in. Stealing our corporate advisory profits like some immoral car thief.

Anyone work in a true wealth generating business from the narrow direct wealth viewpoint espoused here? Obviously, public sector scum need not apply.

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HOLA445

We shouldn't get rid of the 50% tax...and I pay it. Don't be spooked by these threats, HSBC aren't going anywhere. Banks aren't in London for the fish and chips, they're here because this is where the business is.

HSBC used to pay tax in Hong Kong in the 1990s, but when they wanted to buy Midland Bank, the UK government at the time gave them permission only if they move their HQ to London. That agreement has now expired and they're free to go.

I'm not successful enough to pay the 50% tax but I still don't agree with it. It's past the peak on the Laffer Curve. i.e. a lower rate would raise more revenue, and that should be aim. It shouldn't be just some kind of revenge against the imagined evil that caused the crisis. (that was essentially due to the central bank flooding the global economy with cheap money, combined with lax regulation).

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HOLA446

HSBC used to pay tax in Hong Kong in the 1990s, but when they wanted to buy Midland Bank, the UK government at the time gave them permission only if they move their HQ to London. That agreement has now expired and they're free to go.

I'm not successful enough to pay the 50% tax but I still don't agree with it. It's past the peak on the Laffer Curve. i.e. a lower rate would raise more revenue, and that should be aim. It shouldn't be just some kind of revenge against the imagined evil that caused the crisis. (that was essentially due to the central bank flooding the global economy with cheap money, combined with lax regulation).

I agree on the Laffer curve, but the issue with the banks is more about corruption of the financial system through minimal reserve asset ratios and bailouts. If they weren't allowed to be leveraged 50:1 they wouldn't make such huge gains or losses from the gambles they make. Yes they do win some bets, but there is always an offsetting loss in this casino banking game and recently this has all fallen on tax payers.

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HOLA447
Anyone work in a true wealth generating business?
Good question!

First define wealth - I'd say some tangible benefit provided to another human being. If you make them a car or sing them a song to make them happy, then that is wealth creating.

However, once they have the car, they need to insure it. So providing insurance I guess also creates wealth?

How about the Bureau de Change at the airport? Do they create 'wealth'? After all, you can't have a pleasant honeymoon or holiday aboard without foreign currency. And for the Bureau de Change to provide it's services you need to use London traders to do the big transactions. So do they create wealth too?

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HOLA448

What is 'cost' of running an international finance business? If an international bank in London sydicates a European bond sale and makes 0.2% on the deal, then what does that 'cost' us?

I'm much rather all the legal and accountancy fees etc stay in London rather that going to Switzerland. Quite a few are leaving already. One of the big hedge funds, Bluecrest moved to Switzerland 6 months ago. They do exactly the same business as before, but now the Swiss get the tax receipts and their businesses benefit at they money is now spent there.

The cost appears to be the government running the country for the benefit of the banksters rather than its population, such that economic policy is for their benefit rather than for the citizenry. So who's up for a massively below inflation savings account, any takers?

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HOLA449

is more about corruption of the financial system through minimal reserve asset ratios and bailouts. If they weren't allowed to be leveraged 50:1 they wouldn't make such huge gains or losses from the gambles they make.

yes, agree with that, if they had had 20% capital reserves instead of 6% it would have been fine
Yes they do win some bets, but there is always an offsetting loss in this casino banking game and recently this has all fallen on tax payers.
Not really, not in the UK, if you're keeping score. The 'casino' bits of the banks is not where losses can from. The bailouts were needed for the bog-standard mortgage lenders such as B&B and Northern Crock. For RBS is was their corporate loan book mostly from ABN Ambro.

The 'casino' bits is often a misnomer. This are usually the markets operations (RBS global markets division has always made good money)

The true risk takers were anyone involving in lending money for mortgages, essentially a huge bet that house prices only go up. There should have been regulation so that loan-to-values were never more than 80% etc etc and the bets would be less risky.

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HOLA4410
The cost appears to be the government running the country for the benefit of the banksters rather than its population, such that economic policy is for their benefit rather than for the citizenry. So who's up for a massively below inflation savings account, any takers?
Actually, the banks lose more money with low rates. Most current accounts only ever paid 1% or something, so the banks where able to take the difference between the old rate of say 6% and what they paid us in our current account. i.e. 5% of pure profit.

Now they're screwed because they pay us 0.0001% but rates at 0.5% so they only make 0.49999%.

I don't know who really benefits from low rates. I certainly don't either. The banks don't. It just bails out the feckless who borrowed too much and crucifies the prudent sensible people who didn't borrow a fortune to buy an overpriced flat. :angry:

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HOLA4411

yes, agree with that, if they had had 20% capital reserves instead of 6% it would have been fine

Not really, not in the UK, if you're keeping score. The 'casino' bits of the banks is not where losses can from. The bailouts were needed for the bog-standard mortgage lenders such as B&B and Northern Crock. For RBS is was their corporate loan book mostly from ABN Ambro.

The 'casino' bits is often a misnomer. This are usually the markets operations (RBS global markets division has always made good money)

The true risk takers were anyone involving in lending money for mortgages, essentially a huge bet that house prices only go up. There should have been regulation so that loan-to-values were never more than 80% etc etc and the bets would be less risky.

No Accountant, I am afraid you don't quite get the systemic issues. I can design a system where bankers can't exist, but I can't implement it. The current system has been designed by the bankers so they accumulate the most cash, without necessarily producing anything in return.

If I and every other productive person only dealt in Gold or some other currency the bankers weren't allowed to touch or inflate, I'd be be happy to let them have as many Billions or Trillions of funny money they wanted - they'd then just starve unable to buy food or goods.

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HOLA4412

Actually, the banks lose more money with low rates. Most current accounts only ever paid 1% or something, so the banks where able to take the difference between the old rate of say 6% and what they paid us in our current account. i.e. 5% of pure profit.

Now they're screwed because they pay us 0.0001% but rates at 0.5% so they only make 0.49999%.

I don't know who really benefits from low rates. I certainly don't either. The banks don't. It just bails out the feckless who borrowed too much and crucifies the prudent sensible people who didn't borrow a fortune to buy an overpriced flat. :angry:

You certainly are 'no accountant' because the rates banks charge are nowhere near 0.5%. Unsecured loads are easily > 7.5%. Mortgages are at best ~2.5%, going to 5 or 6% for new buyers. So with a BOE base rate of only 0.5% they actually have a bigger margin then before the crash.

The banks are not losing money on these rates - if they do it's down to the bad loans or assets they've made or bought before the crash (hello RBS!).

I can't tell if you're thick or a troll. Please keep posting so I can figure it out.

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HOLA4413

Actually, the banks lose more money with low rates. Most current accounts only ever paid 1% or something, so the banks where able to take the difference between the old rate of say 6% and what they paid us in our current account. i.e. 5% of pure profit.

Now they're screwed because they pay us 0.0001% but rates at 0.5% so they only make 0.49999%.

I don't know who really benefits from low rates. I certainly don't either. The banks don't. It just bails out the feckless who borrowed too much and crucifies the prudent sensible people who didn't borrow a fortune to buy an overpriced flat. :angry:

Err no thats utter BS. See graph below for non-bs answer.

5_20100118135132.jpg

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HOLA4414

If I and every other productive person only dealt in Gold or some other currency the bankers weren't allowed to touch or inflate, I'd be be happy to let them have as many Billions or Trillions of funny money they wanted - they'd then just starve unable to buy food or goods.

yeah, I agree with that. The whole idea of paper currency is a disaster. In the US there's a big backlash against the Fed because they've realised this too.

There should a backlash against the Bank of England over here. The banks are just a consequence of the system, as you say.

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HOLA4415

Err no thats utter BS. See graph below for non-bs answer.

That graph completely ignores the fact that banks and building societies cannot borrow money at Libor. It now costs Libor + 3 or 4% to borrow money, so lending it out at 5% makes a 1% profit, which is historically about right, given to probability of the loan going bad.

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HOLA4416
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HOLA4417

That graph completely ignores the fact that banks and building societies cannot borrow money at Libor. It now costs Libor + 3 or 4% to borrow money, so lending it out at 5% makes a 1% profit, which is historically about right, given to probability of the loan going bad.

The London Interbank Offered Rate (or LIBOR, ) is a daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London wholesale money market (or interbank market).

en.wikipedia.org/wiki/LIBOR

I take it you meant base rate ?

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HOLA4418

You certainly are 'no accountant' because the rates banks charge are nowhere near 0.5%. Unsecured loads are easily > 7.5%. Mortgages are at best ~2.5%, going to 5 or 6% for new buyers. So with a BOE base rate of only 0.5% they actually have a bigger margin then before the crash.

The banks are not losing money on these rates - if they do it's down to the bad loans or assets they've made or bought before the crash (hello RBS!).

I can't tell if you're thick or a troll. Please keep posting so I can figure it out.

So here are a few questions ....

What does the base rate have to do with anything?

Are banks more concerned with the base rate or the term structure of risk free rates and the term structure of their funding rates as a spread over the risk free term structure?

How do banks manage the mismatch in the maturity profile of their assets and liabilities, espececially after NR which showed the folly of running a short funding book and a long asset book?

Could the spread between the base rate and the term structure of retail rates reflect a more prudent management of asset / liability mismatches by banks which results in retail rates more accurately reflecting the risk adjusted term structure of rates than it did in the reckless era until 2007?

How do you reconcile appropriate criticism of the way that banks managed their funding and liquidity until 2007 which resulted in mispriced retail rates with criticism of the current environment where banks more accurately price the products that they make available to retail customers?

Do you want banks to be reckless so that they can provide cheap funding to retail clients or more prudent in the management of their balance sheets which results in more expensive retail rates?

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HOLA4419

The London Interbank Offered Rate (or LIBOR, ) is a daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London wholesale money market (or interbank market).

en.wikipedia.org/wiki/LIBOR

I take it you meant base rate ?

Liquid Libor markets exist for 1 to 6 (at the outside) month terms for prime borrowers.

Borrowing 5 year money can only be done at Libor plus a large spread in the FRN market.

The base rate is completely irrelvant. Libor is only relevant as a refernce rate over which spreads are quoted for term money in the long term floating rate market.

As we now want banks to reduce their funding gaps (and quite rightly so), Libor is not really relevant to the banking world where assets generally have a longer duration than Libor.

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HOLA4420

The London Interbank Offered Rate (or LIBOR, ) is a daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London wholesale money market (or interbank market).

en.wikipedia.org/wiki/LIBOR

I take it you meant base rate ?

But you can't fund mortgages on the interbank market, let alone base rate. That's what Northern Rock tried to do, and looked what happened to them. Now they use mostly deposits to fund lending. Which is why I linked to the MoneySupermarket site for 5 year deposit rates.

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HOLA4421
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HOLA4422

Liquid Libor markets exist for 1 to 6 (at the outside) month terms for prime borrowers.

Borrowing 5 year money can only be done at Libor plus a large spread in the FRN market.

The base rate is completely irrelvant. Libor is only relevant as a refernce rate over which spreads are quoted for term money in the long term floating rate market.

As we now want banks to reduce their funding gaps (and quite rightly so), Libor is not really relevant to the banking world where assets generally have a longer duration than Libor.

LIBOR was chiefly important in 2008-2009 as an indicator of the temperature of the financial crisis as it became increasingly difficult for banks to borrow in the short term market. Fortunately for them Central Banks and governments came to the rescue with all the free money the banks could handle. Sadly no such largesse has been made available to the rest of the populace who not only had to bail the likes of NR , HBOS and RBS but then have to suck up years of austerity as well.to pay for it all.

Edited by realcrookswearsuits
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HOLA4423

Liquid Libor markets exist for 1 to 6 (at the outside) month terms for prime borrowers.

Borrowing 5 year money can only be done at Libor plus a large spread in the FRN market.

Agreed. But....

That's what Northern Rock tried to do, and looked what happened to them. Now they use mostly deposits to fund lending.

Northern Rock did borrow short to lend long. Where it got shafted was that it could not get any short term loans from other banks. Libor rose to ~6% which was above the rate of mortgages it was selling.

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HOLA4424
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HOLA4425

You certainly are 'no accountant' because the rates banks charge are nowhere near 0.5%.

I never said the banks charge loan rates near 0.5%. If I did, can you point me to where I said it? I said if they raise money at 4.15% and lend it at 5% that's not really profiteering is it.

And why all the insults?

I think the government has stirred a up huge aggression towards banks to deflect blame from them or the regulators, The FSA's mission statement was to maintain financial stability. They truly f**ked up, and have avoided all blame, as did the politicians who set up the system.

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