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Banks Face An Extra £80Bn Of Bad Debts

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http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8207767/Banks-face-an-extra-80bn-of-bad-debts.html

Britain's four largest lenders are facing losses on loans to consumers of up to £80bn over their own forecasts, the Bank of England has warned.

The four banks – Royal Bank of Scotland, Lloyds Banking Group, Barclays and HSBC – have set aside £71bn in provisions, the Bank noted. However, losses on consumer debts alone – such as mortgages and credit cards – will be £100bn if "write-off rates return to their pre-crisis average" and £150bn if losses on bad debts hit "levels seen in the early 1990s recession", the Bank said in its Financial Stability Report.

The extra impairments will "be a further drain on banks' profits" and, in the extreme case, would amount to 28pc of lenders' £281bn of total core tier one capital – their buffer against future problems.

Although "manageable", the Bank said the extra bad debts are just one risk the industry is facing. A resurgent eurozone crisis would also devastate UK bank profits. The lenders have a £210bn exposure to Spanish and Irish debt – about 75pc of total capital. Another £288bn is in German and French debt, which may suffer if the eurozone crisis worsens.

In addition, the Bank said, UK lenders have to refinance £400bn to £500bn of wholesale funding in the next two years, having managed just £130bn this year. If refinancing costs rise 50pc above current levels as funding conditions deteriorate, the Bank said, lenders would lose "around 15pc of pre-tax profits in 2011 and 20pc in 2012".

Luckily for us we have the recovery.

Still it's all contained.... Does the current share price factor in the fact the banks have underestimated potential losses or is the current share price reflecting the optimistic assessment given by the banks?

At least we can all be assured the banks will be lending even more money on this news....

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Awful. And Merv & his muppets say the banks need to create even MORE debt by lending more and indebting people even more than they are today and unable to repay.

The whole edifice looks like its going to collapse again--band aids floating off in the sea of debt in fact.

Muppetry continues (vigilance).

Edited by Realistbear

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As dealers in money, the only way banks can make honest profits is to lend.

the other way is to reduce criteria for loans to risky or impossible levels and sell the bonds thereby created to pension funds and foreigners.

Odd, that our own banks, knowing exactly what THEY put into their bonds, bought the same thing from other Countries..

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So if it comes to the crunch, the coalition will have the choice of bailing the banks out AGAIN at taxpayers' expense or cutting them adrift, which would mean all the previous bail-out money is wasted and lost.

no, they only have to let one go....some savers will be claiming on the FSCS and there will be a large shortfall, but the other banks will now be able to buy up the debt and write off stuff they hadnt the bottle to before.

maybe 2.

but there is room for banks in the market place, just not for all of them.

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So if it comes to the crunch, the coalition will have the choice of bailing the banks out AGAIN at taxpayers' expense or cutting them adrift, which would mean all the previous bail-out money is wasted and lost.

Nicely put. This is exactly where the banks was us, looking up the barrels of their shotgun pleading with them.

The whole thing is a joke. Still the ConDems will no doubt look after their banking cronies.

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So if it comes to the crunch, the coalition will have the choice of bailing the banks out AGAIN at taxpayers' expense or cutting them adrift, which would mean all the previous bail-out money is wasted and lost unless you were a banker who got an extra two years pay and bonuses.

Corrected for you.

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Spin up the presses and put the rest on the taxpayers' tab. They'll have children and grandkids who can keep paying.

Oh, cut a few more public services too just to be safe - got to keep those bankers in bonuses.

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Nicely put. This is exactly where the banks was us, looking up the barrels of their shotgun pleading with them.

The whole thing is a joke. Still the ConDems will no doubt look after their banking cronies.

`

Or Liebours banking cronies? Corruption isn't partisan, it is endemic to government.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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