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Realistbear

Barclays Named As Bank Who Had To Borrow From Bo E

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Heard it this morning on Bloomberg--anyone got a link?

If this is accurate, it means one of our premier banks has liquidity problems. How many more skeletons to rattle out the cupboard today?

Edited by Realistbear

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Oh.

Wife had thing from Barclays yesterday about having a keypad chip and pin device in the house to log on to her online account. Not linked I know.

I moved all my money from Barclays to Halifax last week.

What in effect does this news mean for us other than a 'sign' of financial problems?

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What in effect does this news mean for us other than a 'sign' of financial problems?

Don't worry while Barclays can borrow from the BoE; start worrying when they can't!

p

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Thanks.

The Wall Street Journal reported on its Web site today that Barclays Plc was the borrower. Barclays used the money to cover a shortfall in its account with the central bank, the Journal reported, citing unidentified people familiar with the matter.
The pound fell on concern the credit market crisis is spreading to Britain
.

Appears to be a cover-up going on this side of the Atlantic and the US are saying, come on lets get all the cards on the table no point in deception at this stage of the meltdown. IMO, this is very significant as it does mean the high street banks may well be in trouble. It amazes me how people could have ever though Great Crash 2 was a US only problem when we have the biggest housing bubble in the world. :blink:

Edited by Realistbear

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Appears to be a cover-up going on this side of the Atlantic and the US are saying, come on lets get all the cards on the table no point in deception at this stage of the meltdown. IMO, this is very significant as it does mean the high street banks may well be in trouble. It amazes me how people could have ever though Great Crash 2 was a US only problem when we have the biggest housing bubble in the world. :blink:

Barclays is ABOUT the 14th biggest bank in the US , maybe there stuck with a belly full of sub prime .

BLOOMBERG tonight 8pm interview with Barclays president , see what he's got to say .

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Never had to deal with Barclays before until April when I *tried* to open one of their Tax Beater ISA's.

I am completely flabberghasted at their poor service.

It took over 2 months to get the account up and running.

Then when I wrote to them recently to tell them I'd changed my name due to marriage they wrote back saying they couldn't identify me on their records and I've got to go back in to a branch with my passport to prove who I am and reinstate my existence. :angry:

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The Wall Street Journal reported on its Web site today that Barclays Plc was the borrower. Barclays used the money to cover a shortfall in its account with the central bank, the Journal reported, citing unidentified people familiar with the matter.
The pound fell on concern the credit market crisis is spreading to Britain
.

Appears to be a cover-up going on this side of the Atlantic and the US are saying, come on lets get all the cards on the table no point in deception at this stage of the meltdown. IMO, this is very significant as it does mean the high street banks may well be in trouble. It amazes me how people could have ever though Great Crash 2 was a US only problem when we have the biggest housing bubble in the world. :blink:

That raises the question why? Why does Barclays have a shortfall in it's account with the central bank?

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That raises the question why? Why does Barclays have a shortfall in it's account with the central bank?

Barclays shares have not exactly collapsed. In fact, it seems to be on the way up. And they borrowed £320m, not exactly a lot of money for a bank which made more than £2bn last year.

Edited by AmateurEconomist

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Barclays shares have not exactly collapsed. In fact, it seems to be on the way up. And they borrowed £320m, not exactly a lot of money for a bank which made more than £2bn last year.

Doesn't answer the question though does it? (not that I expect you to be privvy to Barclays innermost workings!)

Why would such a profitable bank need to do this? They surely have huge reserves?

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This is non-news.

£2Bn was borrowed in the same way on 29th of June - money is frequently borrowed....

Although what may be of interest is that Barclays had to borrow because another bank missed it's payment dealine to them.

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Barclays shares have not exactly collapsed. In fact, it seems to be on the way up. And they borrowed £320m, not exactly a lot of money for a bank which made more than £2bn last year.

That, in a nutshell, is why the story is so scary. What on earth was Barclays doing cap in hand at the BoE to borrow at a premium rate of interest? Surely their credit was high enough that they could have tapped overseas sources?

Or has credit dried up to the point that even the top rated banks are having problems?

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That raises the question why? Why does Barclays have a shortfall in it's account with the central bank?

Almost certainly incompetence somewhere in its treasury department. A bank the size of Barclays moves 10s, possibly, 100s of billions worth of various currencies around the place ever day as part of its normal operations. It's very easy when you're dealing with amounts that large to make a mistake and end up, at near to close of business, with a gap somewhere. Banks have regularly used this facility in the past, it's only news now because of the sub-prime mess. This does not mean Barclays is hiding something or is about to go bust. If this really was an indication of serious problems, its shares would be in the toilet right now but, since most of its big shareholders are banks and insurance companies who know just how easy it is to make this kind of mistake (since they'll all have done it themselves in the past) there's been no negative impact (they were up 1% or so when I looked a few minutes ago).

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Although what may be of interest is that Barclays had to borrow because another bank missed it's payment dealine to them.

Was that the reason? Do you have a link/quote, please? Possibly it was HBOS now that they have how many gazillions to pump into Grampian?

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Almost certainly incompetence somewhere in its treasury department. A bank the size of Barclays moves 10s, possibly, 100s of billions worth of various currencies around the place ever day as part of its normal operations. It's very easy when you're dealing with amounts that large to make a mistake and end up, at near to close of business, with a gap somewhere. Banks have regularly used this facility in the past, it's only news now because of the sub-prime mess. This does not mean Barclays is hiding something or is about to go bust. If this really was an indication of serious problems, its shares would be in the toilet right now but, since most of its big shareholders are banks and insurance companies who know just how easy it is to make this kind of mistake (since they'll all have done it themselves in the past) there's been no negative impact (they were up 1% or so when I looked a few minutes ago).

Thanks that explains it nicely! The market must be jumpy to make an issue out of such a common occurance.

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That, in a nutshell, is why the story is so scary. What on earth was Barclays doing cap in hand at the BoE to borrow at a premium rate of interest? Surely their credit was high enough that they could have tapped overseas sources?

Or has credit dried up to the point that even the top rated banks are having problems?

Put yourself in the position of the treasury department of a big bank. You have billions coming in in various currencies each day and billions to pay out for all sorts of purposes. The money comes in lumps overnight and at various times during the day and is scheduled to go out in different size lumps in different currencies at the end of the day. There are lots and lots of these lumps and it's the job of the treasury department to make sure that they end the day as close to zero as possible so as not to have money sitting around doing nothing. It's not an exact science dealing with this - in fact, in mathematical terms, it's very clearly an NP problem http://en.wikipedia.org/wiki/NP_(complexity).

Mistakes happen and, when they do, the BoE is a convenient and not too expensive place to go to cover a shortfall.

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That, in a nutshell, is why the story is so scary. What on earth was Barclays doing cap in hand at the BoE to borrow at a premium rate of interest? Surely their credit was high enough that they could have tapped overseas sources?

Or has credit dried up to the point that even the top rated banks are having problems?

My point is that if indeed it is something sinister, then the punters dabbling in Barclays shares would know it and sell it quick. At least they would know more than bloomberg.com.

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so is this an official - move along, nothing to see here story?

Not at all. In fact, given the current credit situation, rumours like this may well turn out to be self-fulfilling. Anyone wanting the banking sector to collapse should keep at it!

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Guest The_Oldie
Was that the reason? Do you have a link/quote, please? Possibly it was HBOS now that they have how many gazillions to pump into Grampian?

http://www.bloomberg.com/apps/news?pid=206...6Y&refer=uk

Aug. 22 (Bloomberg) -- Barclays Plc borrowed 314 million pounds ($623 million) from the Bank of England on Aug. 20 after a loan from HSBC Holding Plc was delayed, according to people with knowledge of the situation.

Barclays didn't get the funds from HSBC in time to meet the deadline, the people said. Spokesmen for Barclays and HSBC Holdings Plc declined to comment.

The U.K. central bank loaned the money through its standing facility at an emergency rate of 6.75 percent, 1 percentage point above the benchmark, the central bank said in London yesterday. It was the first loan to be made at that rate in a month after rising U.S. subprime mortgage defaults made commercial banks reluctant to lend to each other.

``It looks like they just missed the deadline and I take that at face value, though it's a very suspicious market at the moment,'' said Sandy Chen, an analyst at Panmure Gordon in London with a ``sell'' rating on Barclays.

To contact the reporter on this story: Jon Menon in London

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