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TheCountOfNowhere

Uk Banks Need To Plug £27Bn Capital Hole

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http://www.bbc.co.uk/news/business-22982311

"UK banks need to raise billions more in capital to cover their risks, according to the financial regulator"

no-shit-sherlock-559x640.jpg

"Royal Bank of Scotland was the regulator's main cause of concern, accounting for £13.6bn of the total.

Lloyds Banking Group accounted for £8.6bn and Barclays £3bn. Nationwide had a small shortfall of £400,000.

Co-operative Bank has already identified a £1.5bn hole in its finances and announced a bond-to-equity 'bail-in' plan to deal with the shortfall. "

"The PRA concluded that, as at the end of 2012, Barclays, Co-op, Lloyds, Nationwide and RBS "fell short of this standard"."

According to Reuters, the Nationwide £400K is £400Million, which would make more sense.

http://uk.reuters.com/article/2013/06/20/uk-britain-banks-capital-shortfall-idUKBRE95J05K20130620

Maybe they need to raise interest rates and encourage savers!!!!

Edited by TheCountOfNowhere

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Peston on the R4 today programme @ 0805 indicated that Barclays and Nationwide felt a "bit" miffed as they were the 2 biggest genuine users of FLS and actually increasing lending to individuals and small businesses which had actually left them needing to increase more capital than they otherwise would... and it would have been better for them to shrink lending.

Peston has now his piece:

http://www.bbc.co.uk/news/business-22983363

It can achieve the effect of meeting the new target by shrinking lending, and selling assets. And I understand the bank is hopeful that it can do what the PRA wants without too much strain. I understand that both Barclays and Nationwide feel a bit miffed about being forced to hit this tough so-called leverage ratio at this juncture, because they are rare in that they have been supporting economic recovery by increasing their net lending.

They now feel they are being penalised for doing what the government wants.

So I would expect there to be something of a spat between government and regulators about all this.

There will now be a negotiation on how and when they will raise the necessary equity - but it will be easier for Barclays, with its stock market listing, than for Nationwide as a mutual building society.

As it happens, the decision to push through the new leverage ratio is very much in keeping with what the outgoing governor of the Bank of England Sir Mervyn King believes is the sine qua non of strengthening banks.

Some will see it as his last hurrah.

So it will be fascinating to see if his Canadian successor, Mark Carney, is more or less flexible on this.

If Nationwide and Barclays (Woolwich for Mortgages) do less mortgage lending is this the downward trigger caused by a stepped decrease in transactions (they are more than quarter of the market currently.)

Nationwide Market mortgage share q1 2013 is 15.1%

Barclays Market mortgage share q1 2013 is 12.8%

Nationwide seem to have southern bias (propping up southern HPs?) and Barclays a more prime (better LTV etc) and re-mortgage customer orientation.

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And Lloyds were crowing in a recent results release about hitting target debt/equity ratios.

It's been a huge inconsistency in policy, simultaneously telling banks to shape up and splash out, and the drip drip of more capital holes to fill will surely keep things in the mortgage market on the slow downward trend for the forseeable future.

Seems this is the preferred route to solvency- bite sized chunks to fill regularly. This will help keep net lending going down, FLS+HTB in the doldrums, and transaction levels low.

Edited by cheeznbreed

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In other news, banks surprised at record mortgage lending in May 2013...the highest since 2008.

Now, HAVE THEY GOT SUFFICIENT CAPITAL OR NOT?....If not, they are WORSE off this month than last month.

Zee Stabeeleetee is becoming unstable.

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It seems to me the companies listed are the ones promising to lend to 95% of applicants......yet they have no money.

Weird.

Just saying.

:rolleyes:

Do we really need capital to have capitalism?

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It seems to me the companies listed are the ones promising to lend to 95% of applicants......yet they have no money.

Weird.

Just saying.

:rolleyes:

There's plenty of liquidity. Capital is the thing they are short of.

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There's plenty of liquidity. Capital is the thing they are short of.

indeed, assets and money that actually belongs to them.

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And Lloyds were crowing in a recent results release about hitting target debt/equity ratios.

It's been a huge inconsistency in policy, simultaneously telling banks to shape up and splash out, and the drip drip of more capital holes to fill will surely keep things in the mortgage market on the slow downward trend for the forseeable future.

Seems this is the preferred route to solvency- bite sized chunks to fill regularly. This will help keep net lending going down, FLS+HTB in the doldrums, and transaction levels low.

But strangely LLOY is up today even though its a black day for the markets in general. How so?

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Carney can print it up. His arm has been well rested since leaving the Canuck press.

Are you suggesting the central banks will buy addtional shares?

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Are you suggesting the central banks will buy addtional shares?

Perhaps there should be a bar on posting on capital-related threads unless you can demonstrate an understanding of the meaning of "capital".

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  • 242 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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