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Poor Banks - Why Banks Will Bear The Brunt Of The Bank Of England Rate Cut

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CNBC - Why banks will bear the brunt of the Bank of England rate cut

Link: http://www.cnbc.com/2016/08/04/why-banks-will-bear-the-brunt-of-the-bank-of-england-rate-cut.html

The U.K. banking sector could be the one big casualty of the Bank of England's decision to cut interest rates by 25 basis points and the announcement of further easing.

The U.K. banking sector, along with the larger European banking sector, has been under pressure in this already low interest rate environment.

Add to that the massive blow banks like Royal Bank of Scotland, Barclays and Lloyds suffered after the U.K. voted to leave the European Union on June 23. Major European banks like Deutsche Bank and Credit Suisse saw their shares in free-fall after the referendum's results were announced. In the U.K., RBS was the worst-hit, with its shares plunging by more than 30 percent since June 24.

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BoE decision in line with expectations: CIBC

BoE decision in line with expectations: CIBC

BoE cuts key rate to 0.25%, first cut since 2009

Bank of England cuts key rate by 25 bp

These prices have seen a rebound since the Brexit vote but still continue to be in negative territory. Following on from the vote was weak second-quarter earnings report and stress test results from the European Banking Authority (EBA) that pointed to risks in the banking sector. But with an additional rate cut and more easing from the Bank of England, the sector has come under further pressure.

"Lower rates would be bad for bank margins, but of course so would a sharp economic downturn," Philip Shaw, chief economist at Investec, told CNBC via email.

"It does seem as though the Bank of England is unwilling to reduce the policy rate down to zero, therefore the process may not have too much further left to run."

Edited by Fairyland

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Don't be angry. They are trying hard to keep the economy out of recession. Their business is tough. Savers can wait a while.... Dare I say take a hair cut.

Edited by Fairyland

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Carney has enabled mortgages to become even cheaper so people can pay more for property which feeds into GDP to create growth ..... I assume this is the British economy you are talking about and it is clearly being run very well as the fall in house prices has been stopped in its tracks and with some more HtB and it will be booming again. There is another British economy to do with making things, you know maufacturing, steel and stuff which Carney is not really interested in, all that matters is property prices.

http://www.moneysavingexpert.com/news/mortgages/2016/08/just-five-big-mortgage-lenders-commit-to-cutting-their-svr-after-base-rate-drop?_ga=1.28186296.543644067.1388891385

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The Royal Bank of Scotland are in a particular fix right now. They are supposed to be hiving off a big chunk of the business into a new entity Williams and Glyn (The current Nat West Branches in Scotland plus the RBS branches in England)

But they are having massive problems - the assumption is that all they need to do is split up the staff and the property, but thats the easy part, they also need to split up thousands of banking IT systems. If you don't have working IT you don't have a bank, specifically you won't get a banking licence.

https://www.theguardian.com/business/2016/apr/28/rbs-admits-delays-offloading-williams-and-glyn

This is an EU demand as part of the £45 billion Fred Goodwin government bail out in 2008.

Realistically it will take them 5 or 10 years to do what they are attempting in about 3.

Post brexit, they probably wont get much more leeway from the EU.

Even if they achieve the impossible and pull it off, theres still the risk that Scotland votes for independence, in which case they would have to split Williams and Glyn apart into yet another Scottish and English bank.

Still I'm sure Fred is enjoying that generous pension.

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Carney has enabled mortgages to become even cheaper so people can pay more for property which feeds into GDP to create growth

Be interesting to see how HPI fits into the 'equation'

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Well they are going to be paid to pass on the drop in rates apparently using a thing called the Term Funding Scheme so they shouldn't be out of pocket.

That begs the question, what have they been doing for the last seven years? Or more worryingly why after this relatively small drop is it necessary to prop up the banks by the back door.

We're still wed to that sticking corpse of the EU and it is that that these moves are aimed. Our banks are liable to suffer contagion in the near future from the EU banking issues, they're getting their ducks in a row.

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The Royal Bank of Scotland are in a particular fix right now. They are supposed to be hiving off a big chunk of the business into a new entity Williams and Glyn (The current Nat West Branches in Scotland plus the RBS branches in England)

But they are having massive problems - the assumption is that all they need to do is split up the staff and the property, but thats the easy part, they also need to split up thousands of banking IT systems. If you don't have working IT you don't have a bank, specifically you won't get a banking licence.

https://www.theguardian.com/business/2016/apr/28/rbs-admits-delays-offloading-williams-and-glyn

This is an EU demand as part of the £45 billion Fred Goodwin government bail out in 2008.

Realistically it will take them 5 or 10 years to do what they are attempting in about 3.

Post brexit, they probably wont get much more leeway from the EU.

Even if they achieve the impossible and pull it off, theres still the risk that Scotland votes for independence, in which case they would have to split Williams and Glyn apart into yet another Scottish and English bank.

Still I'm sure Fred is enjoying that generous pension.

The whole thing has just been canned. 6000 people working on it. Santander deal must be done and dusted.

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The whole thing has just been canned. 6000 people working on it. Santander deal must be done and dusted.

No matter how much money RBS made on the up. they are more than losing it all on the down.

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Don't be angry. They are trying hard to keep the economy out of recession. Their business is tough. Savers can wait a while.... Dare I say take a hair cut.

No you f**king dare not.

The only hear cuts that should be happening should be via a guillotine in parliament square. IMHO

Edited by TheCountOfNowhere

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No matter how much money RBS made on the up. they the tax payers are more than losing it all on the down.

Well quiet.

Bank pensions should be inserted into the capital structure of the bank.

This way, Fred the wnker would be pushing rolleys at B+Q for £5 now.

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Don't be angry. They are trying hard to keep the economy out of recession. Their business is tough. Savers can wait a while.... Dare I say take a hair cut.

Angry :lol:

Interestingly enough I don't think they really care whether the country is in recession or not - only in so far as it alters voting patterns and people's attitudes.

They are interested in the inflation figures as deflation reduces their ability to thieve people's money. Of course savers should be grateful if the crooks and spivs don't just confiscate their savings but for sure as crooks and spivs they'll be working on it.

A tough business - you're joking - it's the most cosseted business there is and well overdue for some heads rolling.

Never mind haircuts.

Edited by billybong

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The whole thing has just been canned. 6000 people working on it. Santander deal must be done and dusted.

The fact Sandander are interested makes me think that the rest of their business must be in an even worse state.

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The fact Sandander are interested makes me think that the rest of their business must be in an even worse state.

Santander is too opaque and Spanish to trust.

Edited by spyguy

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Savers, follow their example of easing. Look for the biggest house you can afford ... Wait a minute correction...biggest they can lend for. Spend your weekends searching far and wide if you can't afford London/SE. Treat yourself a good pub meal. Buy your kids all the gadgets they want. Be an ideal citizen, you know. This will set a good example for your kids. Not. How not to live within your means.

I worry what the £ will be worth in another 10 years if it continues this way. Too late/difficult to immigrate with children in tow.

Edited by Fairyland

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Savers, follow their example of easing. Look for the biggest house you can afford ... Wait a minute correction...biggest they can lend for. Spend your weekends searching far and wide if you can't afford London/SE. Treat yourself a good pub meal. Buy your kids all the gadgets they want. Be an ideal citizen, you know. This will set a good example for your kids. Not. How not to live within your means.

I worry what the £ will be worth in another 10 years if it continues this way. Too late/difficult to immigrate with children in tow.

Trolly McTroll face has arrived or a proper sarky c**t

Edited by TheCountOfNowhere

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