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S&p Downgrade Barclays, Lloyds, Rbs, Hsbc And Others

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No link yet other than a ZH article:

http://www.zerohedge.com/news/2015-02-03/sp-downgrades-numerous-european-banks-warns-deutsche-bank-may-be-next

Downgrades

  • *RBS GROUP PLC CUT TO BBB- FROM BBB+ BY S&P, OTLK TO STABLE
  • *LLOYDS BANKING GROUP CUT TO BBB FROM A- BY S&P, OUTLOOK TO POS
  • *S&P: ULSTER BANK TO BBB+/WATCH NEG FROM BBB+/NEGATIVE - FOR
  • *S&P: HSBC HOLDINGS PLC TO A/STABLE FROM A+/NEGATIVE - FOR
  • *S&P: STANDARD CHARTERED PLC TO A-/STABLE FROM A/NEGATIVE - FOR
  • *BARCLAYS PLC CUT TO BBB FROM A- BY S&P, OTLK STABLE
  • *S&P: ROYAL BANK OF SCOTLAND GROUP PLC TO BBB-/STABLE FROM BBB+/
  • *S&P: CREDIT SUISSE GROUP AG TO BBB+/STABLE FROM A-/NEGATIVE

Several others including Nationwide and Deutsche on negative outlook.

And the reason apparently is:

The driver of the shift in perspective is the apparent removal of the 'bailout put', as the prospect of "extraordinary government support" appeared less likely under recently passed bail-in legislation.

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There may be trouble ahead.

I keep saying it..

We will see a forced UK Bank holiday and some of them banks ( or building societies ) are not opening again.

The things will HAVE to change,

Good luck with the FCS guarantee.

They had a chance to stop the madness but instead we got FLS and HTB1/2, criminal if you ask me.

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Fantastic news. A material cost to the bottom line one sincerely hopes.

Meanwhile, Tory shit Lord Hill is doing everything he can to get post-GFC EU banking regulations repealed.

Lord Hill, the recently-appointed finance leader in the European Commission, has claimed that some of Europe’s rules imposed on the sector during the economic crisis could be rowed back if a review finds they are no longer required for stable markets.

Lord Hill said that bombarding finance firms with prescriptive rules risks companies taking less responsibility for their own actions.

“I want to be in a position where I can champion the contribution that financial services industries make to the European economy. It’s not healthy that they’re thought of as being separate to the mainstream economy and still are being, in some ways, seen as having some kind of pariah status. I don’t think that’s good for the overall economy or the industry,” he told the House of Lords EU economic and financial affairs sub-committee.

A draft of Lord Hill’s proposed reforms was prematurely leaked last week, showing a plan to reduce capital requirements for insurance firms, cut red tape for companies releasing prospectuses ahead of raising capital, and the omission of any move to hand Europe centralised powers to supervise markets.

http://www.telegraph.co.uk/finance/economics/11387140/Lord-Hill-looks-to-pare-back-crisis-era-red-tape-around-financial-firms.html

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There may be trouble ahead.

I keep saying it..

We will see a forced UK Bank holiday and some of them banks ( or building societies ) are not opening again.

The things will HAVE to change,

Good luck with the FCS guarantee.

They had a chance to stop the madness but instead we got FLS and HTB1/2, criminal if you ask me.

I don't think so; more likely oldies counting their HPI begin jumping out of the bedroom windows, head-first, onto their driveways below.

Would be inheritors telling us HPC doesn't matter so much, on their 80+ year old mothers home worth a fortune, waiting to inherit... change their mind a bit.

Housing market opening up to future generations for better value. If they can handle all the below (the banks), then assuming not each scenario happens, maybe they can handle a 80% HPC. The banks can reliquify on fresh debt as more HPCers buy, and younger generations buy, from the no-longer-so-smug older owners; other distressed sellers.

16 December 2014

Stress test scenario

Sterling falls by about 30%

House prices fall by 35%

Bank rate rises to 4.2%

CPI inflation peaks at 6.6%

Unemployment rises to nearly 12%

GDP falls by 3.5%

Share prices fall by 30%

http://www.bbc.co.uk/news/business-30491161

RBS and Lloyds could suffer more than £30bn of losses if property prices collapse - but will not need another state bailout

The Mail On Sunday

13 December 2014 | Updated: 22:03, 13 December 2014

Britain's state-backed banks would suffer more than £30billion of losses in the event of a collapse in property prices, a Government stress-test of the UK banking system will show this week. But the test will conclude that both RBS and Lloyds Banking Group would weather such a crisis without needing a fresh state bailout, according to analysis by investment bank JPMorgan.

The Bank of England tests will check that leading banks could cope with a 35 per cent drop in house prices and 30 per cent fall in commercial property values.

The Bank will say on Tuesday how weak the UK’s eight biggest banks and building societies would become in the event of three-year economic collapse. In the hypothetical scenario, RBS’s and Lloyds’ capital would remain comfortably above a minimum threshold, JPMorgan estimates.

http://www.thisismoney.co.uk/money/news/article-2872881/RBS-Lloyds-suffer-30bn-losses-property-prices-collapse.html

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*Even when they own outright.

It's surprising how much many people put of their identity/persona, into their very overvalued houses; and the sense of self-worth if gives them. Pathetic really.

A real HPC could seep into the very core of their being with crushing effects; I can't wait.

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Fantastic news. A material cost to the bottom line one sincerely hopes.

Meanwhile, Tory shit Lord Hill is doing everything he can to get post-GFC EU banking regulations repealed.

I was wondering when that would happen.

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Worth reading why S&P did this.

As of 1 Jan 2015, the EU's Bank Recovery and Resolution Directive (BRRD) precludes the type of state support the UK provided to RBS, HBOS etc. Instead, it attempts to ensure that banks carry the can for poor decision making (to some extent). S&P believe that many UK banks were relying on, or hoping to rely on, state and taxpayer support to continue 'normal' operations in the event of a future crisis. That will now be much more challenging, hence S&P's belief that there will be lass value in these financial institutions going forward.

Directives are directly enforceable on EU member states. The UK would have to leave the EU to repeal the BRRD.

Edited by Cozza

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Worth reading why S&P did this.

As of 1 Jan 2015, the EU's Bank Recovery and Resolution Directive (BRRD) precludes the type of state support the UK provided to RBS, HBOS etc. Instead, it attempts to ensure that banks carry the can for poor decision making (to some extent). S&P believe that many UK banks were relying on, or hoping to rely on, state and taxpayer support to continue 'normal' operations in the event of a future crisis. That will now be much more challenging, hence S&P's belief that there will be lass value in these financial institutions going forward.

Directives are directly enforceable on EU member states. The UK would have to leave the EU to repeal the BRRD.

****** me that's a difficult read. I suppose they'll be summaries going to clients in the morning.

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The value of the support is known as 'the implicit government guarantee' - the value of the fact that governments were likely to bail out bond holders. This was evidenced in the crisis when bondholders were bailed out.

With its removal, and the likelihood of bail-in, you get the more accurate estimate of the bond paying out. Naturally lower rated bonds trade at a higher yield and the difference between the two yields is the annual value of the subsidy that the British taxpayer has been paying the shareholders of the major banks.

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I can and will read it as, no future support for house prices.

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Worth reading why S&P did this.

As of 1 Jan 2015, the EU's Bank Recovery and Resolution Directive (BRRD) precludes the type of state support the UK provided to RBS, HBOS etc. Instead, it attempts to ensure that banks carry the can for poor decision making (to some extent). S&P believe that many UK banks were relying on, or hoping to rely on, state and taxpayer support to continue 'normal' operations in the event of a future crisis. That will now be much more challenging, hence S&P's belief that there will be lass value in these financial institutions going forward.

Directives are directly enforceable on EU member states. The UK would have to leave the EU to repeal the BRRD.

Thanks Cozza

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Worth reading why S&P did this.

As of 1 Jan 2015, the EU's Bank Recovery and Resolution Directive (BRRD) precludes the type of state support the UK provided to RBS, HBOS etc. Instead, it attempts to ensure that banks carry the can for poor decision making (to some extent). S&P believe that many UK banks were relying on, or hoping to rely on, state and taxpayer support to continue 'normal' operations in the event of a future crisis. That will now be much more challenging, hence S&P's belief that there will be lass value in these financial institutions going forward.

Directives are directly enforceable on EU member states. The UK would have to leave the EU to repeal the BRRD.

Here's an article with a similar interpretation,

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11388312/RBS-Barclays-and-Lloyds-downgraded-over-fears-government-will-not-help-them-in-next-crisis.html

If banks are on their own in a crisis then by definition they also become riskier for depositors. If you're over the FSCS £85,000 limit it's time to open some new accounts with other UK regulated deposit takers. Even if you're below the limit, if the bank goes bust you might wait for a considerable time for compensation, so a second account might still be a prudent move.

I've been an active investor for nearly forty years, and I've had my share of losses, but the scariest financial moment I ever had was during and after the Northern Rock bank run. I'd STR'd a couple of years earlier and had what was for me a great deal of cash with one bank. At the time I was frequently travelling abroad with my job so didn't have as much opportunity as I needed to open new accounts, plus I found myself at one time with my passport away for a new visa and a bank requiring my passport as part of their checks before they'd give me a new account. It was a bit of a nightmare as the prospect of a household name bank going under seemed very real.

The irony is that my biggest financial fright came not from shares or bonds, but from holding cash in the bank!

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Well, well. Not a peep on the beeb about it this morning. Wonder how they will spin it.

I know it's difficult to understand, but it's for their own good. It's just a little cut.

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