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Bofe Called Upon Today To Provide Emergency Funds

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Mervyn King, the Governor of the Bank of England, will meet the heads of the UK's five biggest banks later today following days of stock market turmoil and rumours of market manipulation by short-sellers.

The chief executives of Halifax Bank of Scotland, Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC, the UK's five biggest lenders, will meet Mr King for an "exchange of views".

The meeting comes as the Bank of England said it would double the weekly emergency funding to £10.93 billion at a rate of 5.25 per cent and will offer this each week until April 9.

Angela Knight, chief executive of the British Bankers' Association, told BBC Radio 4’s Today programme this morning that the banks are likely to ask the Bank of England to work with other major global central banks to help shore up liquidity in the markets.

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She said: "I expect they will want to ensure that the same type of collateral (for central bank loans) is taken here as it is by the Fed and European Central Bank.”

Ms Knight said it was vital the Bank helped maintain confidence in the financial system.

She added: "I think the issue here is much more about ensuring that as peaks and troughs hit, central banks are prepared to act and provide liquidity if liquidity is required.

“The Bank of England is very keen to ensure that we have good strong confidence in our market. After all, we’ve got good strong banks.”

The meeting comes the day after the Bank of England was forced to publicly deny rumours that HBOS was seeking emergency funding, and the Financial Services Authority announced it was launching an inquiry into suspicions that some traders had spread false rumours in the hope of making profits on market gyrations.

Andy Hornby, chief executive of HBOS, is expected to want to discuss how rumours that his bank was about to request an emergency loan flew around the stock market yesterday.

The Bank of England said the meeting with bank executives was scheduled a week ago and was not in response to any specific event. However, it is virtually certain that the news of the past few days will be top of the agenda.

It is likely that the banks will want to be assured that the Bank of England will take decisive action to stop the economy falling into recession, as the US Federal Reserve has done in recent weeks with aggressive rate cuts. The Bank of England has so far been slow to cut rates.

Britain's high-street banks have already announced billions of pounds worth of writedowns owing to their exposure to the US housing market.

Stephen Green, HSBC chief executive, said earlier this month that his bank had lost £8.7 billion through the credit crisis.

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Mervyn King, the Governor of the Bank of England, will meet the heads of the UK's five biggest banks later today following days of stock market turmoil and rumours of market manipulation by short-sellers.

The chief executives of Halifax Bank of Scotland, Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC, the UK's five biggest lenders, will meet Mr King for an "exchange of views".

The meeting comes as the Bank of England said it would double the weekly emergency funding to £10.93 billion at a rate of 5.25 per cent and will offer this each week until April 9.

Angela Knight, chief executive of the British Bankers' Association, told BBC Radio 4’s Today programme this morning that the banks are likely to ask the Bank of England to work with other major global central banks to help shore up liquidity in the markets.

Related Links

Malicious traders try to topple the Halifax

Savers urged to hold tight as HBOS shares dive

HBOS Q&A: Banking turmoil

She said: "I expect they will want to ensure that the same type of collateral (for central bank loans) is taken here as it is by the Fed and European Central Bank.”

Ms Knight said it was vital the Bank helped maintain confidence in the financial system.

She added: "I think the issue here is much more about ensuring that as peaks and troughs hit, central banks are prepared to act and provide liquidity if liquidity is required.

“The Bank of England is very keen to ensure that we have good strong confidence in our market. After all, we’ve got good strong banks.”

The meeting comes the day after the Bank of England was forced to publicly deny rumours that HBOS was seeking emergency funding, and the Financial Services Authority announced it was launching an inquiry into suspicions that some traders had spread false rumours in the hope of making profits on market gyrations.

Andy Hornby, chief executive of HBOS, is expected to want to discuss how rumours that his bank was about to request an emergency loan flew around the stock market yesterday.

The Bank of England said the meeting with bank executives was scheduled a week ago and was not in response to any specific event. However, it is virtually certain that the news of the past few days will be top of the agenda.

It is likely that the banks will want to be assured that the Bank of England will take decisive action to stop the economy falling into recession, as the US Federal Reserve has done in recent weeks with aggressive rate cuts. The Bank of England has so far been slow to cut rates.

Britain's high-street banks have already announced billions of pounds worth of writedowns owing to their exposure to the US housing market.

Stephen Green, HSBC chief executive, said earlier this month that his bank had lost £8.7 billion through the credit crisis.

Hang on did'nt HBOS release a statement yesterday that they had deep reserves they could call on when needed before going into the money markets, I think our nice people at the Boe should let them stand by their word. Use your reserves (if you have any?) why do you need to come to us. All is well in HBOS land.

Edited by Letsdance

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Hang on did'nt HBOS release a statement yesterday that they had deep reserves they could call on when needed before going into the money markets, I think our nice people at the Boe should let them stand by their word. Use your reserves (if you have any?) why do you need to come to us. All is well in HBOS land.

and why would any bank with such deep pockets need to borrow a piddling £750mil earlier this week at over 9% just to meet a position :rolleyes:

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and why would any bank with such deep pockets need to borrow a piddling £750mil earlier this week at over 9% just to meet a position :rolleyes:

I think that if you read the thread, this was to increase their capital base - a different sort of borrowing. Those more in the know didn't seem to think that it was a bad thing,

Peter.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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