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British Banks Gorge On Ecb's Cheap Credit

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Mein Gott :blink:

http://www.telegraph.co.uk/money/main.jhtm...1/bcnecb101.xml

British banks gorge on ECB's cheap credit

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 7:15pm BST 01/10/2007

British lenders are shunning the Bank of England and turning instead to the European Central Bank on a massive scale, taking advantage of much lower interest rates and guaranteed anonymity to weather the credit crunch.

# The credit crisis in full

EU sources say Britain's banks have been clamouring for money in Frankfurt, accounting for a substantial chunk of the €190bn (£132bn) lent last week in the ECB's variable tender operation. "It is fair to say they have been borrowing from the ECB on a very large scale. It's cheap, so why not," said one official.

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The UK banks were also major subscribers at the €50bn issue of three-month loans on September 27 at 4.63pc, and the earlier tender of €75bn on September 13.

Hans Redeker, currency chief at BNP Paribas, said British reliance on ECB funds has become to big that it is leaving a clear footprint in the currency markets, forcing up sterling on the days following ECB tenders as the banks switch euros into pounds – typically Thursdays, Fridays, and Mondays.

"There's been a huge amount of borrowing. It is causing movements in the euro-sterling exchange rate that do not make any sense otherwise. It is why the pound shot up in early September when the liquidity crisis was in full swing and there was nothing to justify this," he said.

"The money markets may look as if they are functioning again in Britain, but in reality they are not," he said. Mr Redeker believes the key motive in going to Frankfurt is the certainty of secrecy, rather than the lower interest rate.

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Guest vicmac64
Mein Gott :blink:

http://www.telegraph.co.uk/money/main.jhtm...1/bcnecb101.xml

British banks gorge on ECB's cheap credit

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 7:15pm BST 01/10/2007

British lenders are shunning the Bank of England and turning instead to the European Central Bank on a massive scale, taking advantage of much lower interest rates and guaranteed anonymity to weather the credit crunch.

# The credit crisis in full

EU sources say Britain's banks have been clamouring for money in Frankfurt, accounting for a substantial chunk of the €190bn (£132bn) lent last week in the ECB's variable tender operation. "It is fair to say they have been borrowing from the ECB on a very large scale. It's cheap, so why not," said one official.

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The UK banks were also major subscribers at the €50bn issue of three-month loans on September 27 at 4.63pc, and the earlier tender of €75bn on September 13.

Hans Redeker, currency chief at BNP Paribas, said British reliance on ECB funds has become to big that it is leaving a clear footprint in the currency markets, forcing up sterling on the days following ECB tenders as the banks switch euros into pounds – typically Thursdays, Fridays, and Mondays.

"There's been a huge amount of borrowing. It is causing movements in the euro-sterling exchange rate that do not make any sense otherwise. It is why the pound shot up in early September when the liquidity crisis was in full swing and there was nothing to justify this," he said.

"The money markets may look as if they are functioning again in Britain, but in reality they are not," he said. Mr Redeker believes the key motive in going to Frankfurt is the certainty of secrecy, rather than the lower interest rate.

Globalism is quaint word for 'treason'

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Mein Gott :blink:

http://www.telegraph.co.uk/money/main.jhtm...1/bcnecb101.xml

British banks gorge on ECB's cheap credit

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 7:15pm BST 01/10/2007

British lenders are shunning the Bank of England and turning instead to the European Central Bank on a massive scale, taking advantage of much lower interest rates and guaranteed anonymity to weather the credit crunch.

# The credit crisis in full

EU sources say Britain's banks have been clamouring for money in Frankfurt, accounting for a substantial chunk of the €190bn (£132bn) lent last week in the ECB's variable tender operation. "It is fair to say they have been borrowing from the ECB on a very large scale. It's cheap, so why not," said one official.

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The UK banks were also major subscribers at the €50bn issue of three-month loans on September 27 at 4.63pc, and the earlier tender of €75bn on September 13.

Hans Redeker, currency chief at BNP Paribas, said British reliance on ECB funds has become to big that it is leaving a clear footprint in the currency markets, forcing up sterling on the days following ECB tenders as the banks switch euros into pounds – typically Thursdays, Fridays, and Mondays.

"There's been a huge amount of borrowing. It is causing movements in the euro-sterling exchange rate that do not make any sense otherwise. It is why the pound shot up in early September when the liquidity crisis was in full swing and there was nothing to justify this," he said.

"The money markets may look as if they are functioning again in Britain, but in reality they are not," he said. Mr Redeker believes the key motive in going to Frankfurt is the certainty of secrecy, rather than the lower interest rate.

This is heavy... it will all come out in the wash soon.

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Please correct me if I am wrong, but doesn't this amount to a stirling euro 'carry trade'. If so just how vulnerable are these banks to getting whacked by some of their big investment collegues betting against them?

I mean if the currancies were to move against them couldn't they end up loosing huge sums (to add to their losses on the CDO markets).

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The German press has reported that Barclays Capital in a major borrower at the ECB tenders. The bank has declined to comment.

;)

If you look and see what the interbank rate is in euroland, it's much better than in the UK, so what of course has been happening is that, because the banks operate in multiple jurisdictions, they have taken a straightforward commercial decision. if the price of money looks better overseas then that's where you're going to get it," she said.
Edited by crash2006

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Barclays have been borrowing from the BoE as well. It seems they may have something worth keeping quiet, me thinks. Although, I would really like to see the numbers including 'normal' activity numbers as well. Fat chance. :ph34r:

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Please correct me if I am wrong, but doesn't this amount to a stirling euro 'carry trade'. If so just how vulnerable are these banks to getting whacked by some of their big investment collegues betting against them?

I mean if the currancies were to move against them couldn't they end up loosing huge sums (to add to their losses on the CDO markets).

No, they are not borrowing to invest in sterling denominated assets, they are borrowing because of the ridiculously high inter bank rate.

They will have to pay it back within 3 months, in a carry trade you are not restricted to a time frame and use the money to invest in higher yielding currencies/assets.

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This is bizarre.

Are these banks not required to be registered in one particular country and regulated by their "home" regulator?

Can they just borrow money from say the ECB and then transfer it from their Frankfurt registered office to their London registered office without declaring what they are doing?

Surely Barclays for instance is registered as a Bank in the UK, with a UK listing, shares issued on the London exchange, regulated by the FSA and BoE as reserve bank.

If it is taking money of the ECB then how do the BoE ensure it is meeting its capital requirements and so on?

Quite honestly if John Gieve is keeping his eye on what is going on here then I think we're all in sh*t.

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No, they are not borrowing to invest in sterling denominated assets, they are borrowing because of the ridiculously high inter bank rate.

They will have to pay it back within 3 months, in a carry trade you are not restricted to a time frame and use the money to invest in higher yielding currencies/assets.

But aren't they borrowing euros to cover operating cost in stirling? I which case they could get hurt by a change in the exchange rate at the end of the 3 month loan period.

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Guest vicmac64

This is good - let them gorge themselves there - but not here at the taxpayers expense.f

Eat your fill, you ravenous gorbes.

And may your bellies ache with the foreign tripe you are eating.

Britain for the British - ourselves alone if you like.

Sounds good.

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Could end really bad, this one. George S. betting against Sterling in 3 months time when the money has to be returned?

EDIT: They should be allowed to get their money in Japan (everyone else is doing this too, right?). :lol:

Edited by Goldfinger

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This is good - let them gorge themselves there - but not here at the taxpayers expense.f

Eat your fill, you ravenous gorbes.

And may your bellies ache with the foreign tripe you are eating.

Britain for the British - ourselves alone if you like.

Sounds good.

:lol:

Hahahahaha.

You are asking for a British Sinn Fein

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This is good - let them gorge themselves there - but not here at the taxpayers expense.f

Eat your fill, you ravenous gorbes.

And may your bellies ache with the foreign tripe you are eating.

Britain for the British - ourselves alone if you like.

Sounds good.

What really fukks me off about this is that the higher volumes of cash movements just means more cream for the bankers to skim off at our expense.

Come the revolution - bankers will be first up against the wall.

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Omg in my naivety I didn't even think the UK banks could or would do this. But of course they would and it would explain the no show for bids at the recent BoE auction. Hmmm how on earth is this going to pan out?

Hyperinflation in the EU?

Sterling going on a crazy run for the next 3 months then collapsing horribly at the end?

ECB rates going through the roof anytime soon (they will have to with all this excess borrowing)?

Hmm "New Paradigm" comes to mind but not in any good sense <_<

We all knew it was too much credit. The Chinese Yuan is looking like a fairly sure fire bet for long term now. :lol:

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Guest Popalot

This is why Gordon cannot force a cut on Mervyn this week. If the pound drops this sort of shenanigans will backfire on the banks and therefore the government, massively.

Nice rock/ hard place situation Gordon in - no wonder he has b**ered off to Iraq.

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Could it be that a lot of UK banks are taking a massive bet, Soros style, on the Pound dropping sharply against the Euro in the next few weeks?

With the trade deficit on visible goods hitting £80 billion (by far the highest in Europe), and all the recent speculation on a cut in IR, it is all pointing to the Pound following the USD downward path against the Euro.

Or perhaps they have some inside knowledge on the USD being dropped as a reference currency by a few oil producing countries (Iran, Venezuela .....) for the Euro .....

If this gets big, there's bound to be some leaking from the ECB as to who are the biggest players. After all, I can't see the ECB bankers being happy helping the 'Anglo-saxon locusts'.....

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If we lived in a country with state controlled media, the fact that the banks are borrowing heavily in Europe could be conveniently ignored. Instead the story would be a triumphant "Banks Don't Need To Borrow From Bank Of England So Everything Must Be Okay Folks!"

Well done to the Telegraph.

Meanwhile over at the Beeb:

http://news.bbc.co.uk/1/hi/business/7023861.stm

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Could it be that a lot of UK banks are taking a massive bet, Soros style, on the Pound dropping sharply against the Euro in the next few weeks?

If they borrow Euros (which have to be repaid in 3 months) to buy Pounds they would lose out big time if the Pound drops sharply.

This is certainly not speculative, seems more like desperate refinancing, no matter at what cost.

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If they borrow Euros (which have to be repaid in 3 months) to buy Pounds they would lose out big time if the Pound drops sharply.

This is certainly not speculative, seems more like desperate refinancing, no matter at what cost.

Yes, very true ...... unless they hedge their position but I think that might be rather difficult in the current climate!

You're very likely right - there must be some desperate players out there. Just pray for some info to leak out of Frankfurt .....

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If we lived in a country with state controlled media, the fact that the banks are borrowing heavily in Europe could be conveniently ignored. Instead the story would be a triumphant "Banks Don't Need To Borrow From Bank Of England So Everything Must Be Okay Folks!"

Well done to the Telegraph.

Meanwhile over at the Beeb:

http://news.bbc.co.uk/1/hi/business/7023861.stm

i keep complaining sending emailings to the BBC, about half truths reporting

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Nicely summed up Popalot, looks like Gordy's trip to Iraq hasn't been greeted with over enthusiasm either

http://news.bbc.co.uk/1/hi/uk_politics/7023735.stm

Reminded me of the sickening stunt he pulled when bringing Margeret Thatcher to Downing street, a frail lonely old lady now she would never have fallen for this smarmy creeps tricks in her prime, anything to keep power. :angry:

This is why Gordon cannot force a cut on Mervyn this week. If the pound drops this sort of shenanigans will backfire on the banks and therefore the government, massively.

Nice rock/ hard place situation Gordon in - no wonder he has b**ered off to Iraq.

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If they borrow Euros (which have to be repaid in 3 months) to buy Pounds they would lose out big time if the Pound drops sharply.

This is certainly not speculative, seems more like desperate refinancing, no matter at what cost.

Simply and accurately stated. As the Worldbank website shows, the UK banking system is the most indebted in the world. Far exceeding US bank debt. Our system is bankrupt and we are forced to borrow from any source to prevent more NR style runs from occuring. And where is all this borrowed money going? To shore up a HPI-MEW-BTL bubble. How long will our credit last and when will the system say enough--no more drugs for the miracle economy?

THe pound blipped up when it appeared that NR was going to be bailed out. In the immortal words of Max Bygraves: "Go figure."

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