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lurker29

Boe Delayed Disclosing Bank Capital Details

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Hello, long time lurker, first time poster!

Saw this story the other day and not seen it mentioned anywhere, thought I'd post it up here for discussion:

http://uk.reuters.com/article/2013/10/01/uk-britain-boe-banks-idUKBRE9900OD20131001

LONDON | Tue Oct 1, 2013 2:52pm BST

(Reuters) - The Bank of England delayed disclosing how much more capital was needed in the British banking sector in late 2012 because it feared there could be a loss of confidence, it said on Tuesday.

A summary of discussions by regulators about the risks of talking publicly about insufficient capital levels without clear ways to fix them was omitted from the minutes of a meeting of the BoE's Financial Policy Committee in November, the Bank said.

"There was a risk that if these factors were highlighted by the Committee in public, without there being clear accompanying actions, confidence in UK banks - and hence financial stability - could be adversely affected," the text began.

The FPC did publicly stress the need for more capital at banks at the time of last November's meeting. Its members were shown to be in broad agreement that banks had to bolster their defences against financial shocks after many underestimated the cost of loans going sour and future fines for misconduct.

However, according to the omitted paragraph which was published on Tuesday, the Committee agreed it would be "contrary to the public interest" to reveal its judgments about the overstatement of bank capital positions across the sector.

The FPC was set up as part of a revamp of Britain's regulatory system to try to prevent a repeat of the financial crisis of 2008, when the government had to bail out some of the country's largest banks.

A core aim is to flag problems before they get out of hand.

In the originally omitted text, policymakers talked about an unnamed British bank which had issued contingent capital instruments and which was in talks with the now defunct Financial Services Authority about issuing more.

In November 2012 Barclays (BARC.L) raised $3 billion (1 billion pounds) in contingent capital bonds that can be written off in a crisis.

The two banks in which the government has a big stake - RBS (RBS.L) and Lloyds (LLOY.L) - had more limited options because the Treasury was "not minded" to inject more capital unless "absolutely necessary," although they were able to restructure their balance sheets and had state backing, the paragraph said.

"It was important that the FSA firmed up these initial indications with all of the individual institutions promptly, to ensure that there was no ambiguity about what the FPC's general recommendation implied for each of them," it continued.

"The Committee agreed, however, that it would be contrary to the public interest to reveal the broad quantitative judgments it had made with respect to the overstatement of banks' capital positions across the sector, or the FSA's indications of likely actions that banks might take to rebuild their resilience, at this point," the text said.

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Secrecy and dissembling is counter productive in the long run - because no one believes anything they say any more.

Yep it destroys trust. As money only has value because of trust you have a problem.

Good job banking doesnt revolve around confidence.

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Secrecy and dissembling is counter productive in the long run - because no one believes anything they say any more.

Countered by 0.5 base rate.

Investors are liking it.

T'is until t'isn't.

WE

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I love this idea that the way to promote confidence is to dissemble and lie. :lol::lol::lol:

At some point we enter a hall of mirrors in which no one any longer knows what is real and what is not, what is true and what is false- at which point there will be a dash out of fiat and credit in all it's debased forms for the safety of the real and the tangible- and the BofE will declare- 'well f*ck me- we never saw that coming!' as the economy falls off a cliff.

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It could still all be a pack of porkies. They have less than zero credibility.

Apart from anything else the market (or whatever it's called these days because it's not a proper market) has been defrauded yet again and it's another facet of the too big to fail sham.

So November 2012 is less than a year ago. Are they trying to suggest that within that time scale the "resilience" is now ok (and the base rate can rise without any effect on the banks etc and it's ok to sell off the nationalised banks)?

Edited by billybong

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The news story about the shortfall was released in March across the press: http://www.theguardian.com/business/2013/mar/27/fpc-capital-shortfall-uk-banks

Spreading alarm might be one reason for delaying release of the figures, but another might be that you have not completed your analysis of the books or agreed on the extent of the requirement for a particular firm. After all, saying "there is a shortfall, we know exactly what it is and there is a plan to close it", sounds far better than, "there is a shortfall, but we do not know how big it is and we do not yet have a plan to close it."

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(Reuters) - The Bank of England delayed disclosing how much more capital was needed in the British banking sector in late 2012 because it feared there could be a loss of confidence, it said on Tuesday.

Mind it makes a change from them trying to convince people that they couldn't possibly have known about anything - all the bad stuff in the banking sector and they couldn't have been expected to know about the Libor fraud etc etc etc.

This time the story is that they did know about stuff that is the shortfall but they just didn't tell people.

You take your choice.

Edited by billybong

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Mind it makes a change from them trying to convince people that they couldn't possibly have known about anything - all the bad stuff in the banking sector and they couldn't have been expected to know about the Libor fraud etc etc etc.

This time the story is that they did know about stuff that is the shortfall but they just didn't tell people.

You take your choice.

They need to bring the Knight Mare back. No-one's lied more baldly about the honour and integrity of British banking than the Dame.

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So the banks didn't/don't have as much capital as they should... but now they are able to bring forward help to buy 2 and issue a whole load of new mortgages?

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So the banks didn't/don't have as much capital as they should... but now they are able to bring forward help to buy 2 and issue a whole load of new mortgages?

Who needs capital when you have a taxpayer funded guarantee?

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