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Hbos - Capital Raising

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Article in the FT suggest that HBOS is seeking permisison to raise capital in Asia.

This is consistent with the rumours that shook the bank last week are said to have emenated from the Far East.

It makes sense that if capital is beig raised there that at least some parties would have heard of the plan - hence the source of the rumours.

http://www.ft.com/cms/s/0/ff7f8c6c-f7b1-11...?nclick_check=1

Edited by Wad

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Article in the FT suggest that HBOS is seeking permisison to raise capital in Asia.

This is consistent with the rumours that shook the bank last week are said to have emenated from the Far East.

It makes sense that if capital is beig raised there that at least some parties would have heard of the plan - hence the source of the rumours.

http://www.ft.com/cms/s/0/ff7f8c6c-f7b1-11...?nclick_check=1

They want to issue shares denominated in Yen to raise their tier one capital ratio? :rolleyes:

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The rumours last week were around liquidity, not capital and if I recall they did a tier 2 (i think) capital raising the week before last anyway,

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Lets not go there...we do not want to start a rumour!

You are quite at liberty to ask questions, however uncomfortable, but its the passing off of falsehoods as facts that will get you into trouble.

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I was thinking of this:

http://business.timesonline.co.uk/tol/busi...icle3558310.ece

_______

15th March 2008

HBOS raises £750m of new capital in a bid to beat credit crunch

Iain Dey, The Sunday Times

HBOS has raised £750m of new capital at a staggering interest rate of almost 9.5%, in a clear sign of the funding crisis facing the world’s banks.

Britain’s biggest mortgage lender sealed the deal last Wednesday, seizing an opportunity to raise money after the US Federal Reserve announced further plans to bail out the money markets.

The bail-out plan left a brief window of opportunity for banks to raise money, according to investment bankers. By the end of the week, the opportunity had gone, following the collapse of US investment bank, Bear Stearns.

The interest HBOS is paying investors in the new bond is roughly 350 basis points higher than the rates it is charging mortgage customers.

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Although HBOS has one of the strongest balance sheets among the UK banks, its chief executive, Andy Hornby, has repeatedly warned the markets that the credit crunch is far from over.

The new capital, raised through a 10-year bond, is structured to rank on a par with shareholders’ equity. The fundraising move is designed to help maintain HBOS’s Tier 1 capital ratio at 7.7%.

The HBOS deal was the first Tier 1 capital raising by any British bank since the funding package put together last September to support Royal Bank of Scotland’s acquisition of ABN Amro.

The fundraising was more than two times oversubscribed, as investors scrambled to buy into the deal. UBS, BNP Paribas and Royal Bank of Scotland led the deal.

One source close to the deal said: “Banks, by their very nature, have to finance themselves throughout an economic cycle. HBOS took the decision that it was better to raise capital while there was an opportunity than to wait for the credit crunch to end.”

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All banks raise capital, all of the time, the panic of last week was due to more salacious rumour.

If we get a panic every time a bank raises capital or taps a new credit line it will get ridiculous.

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KEEP IT SIMPLE STUPID

They lent the most, they are holding the most sub prime

2006

Name of

group £bn

HBOS 73.2

Abbey 32.6

Northern Rock 29.0

Lloyds TSB 27.6

Nationwide BS2 21.1

The Royal Bank of Scotland 20.0

Barclays 18.4

Alliance & Leicester 12.6

HSBC Bank 12.4

GMAC-RFC 12.1

Bradford & Bingley 7.7

Bristol & West 7.3

Britannia BS 7.2

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More Data For you all

in 2006 & 2007 there was £220Bil given out to BTL (94.4Bil in 2006 and 122.1bil in 2007)

lets assume, that all of those are sub prime.

Guess who the biggest BTL lenders are?

top 10 in order of biggest to smallest.

Birmingham Midshires

Mortgage Express

Paragon group

Cheltenham & Gloucester

Mortgage Business

Northern Rock

Capital Home Loans

Bristol & West

Barclays - Woolwich

West Bromwich

Guess who owns Birmingham Midshires, the biggest BTL lender, yep HBOS

that is why the market doesnt like HBOS, the biggest BTL lender probably means they are holding the most sub prime

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I was thinking of this:

http://business.timesonline.co.uk/tol/busi...icle3558310.ece

_______

15th March 2008

HBOS raises £750m of new capital in a bid to beat credit crunch

Iain Dey, The Sunday Times

HBOS has raised £750m of new capital at a staggering interest rate of almost 9.5%, in a clear sign of the funding crisis facing the world’s banks.

So someone has lent HBOS £750m @ 9.5% under the assumption that their not going to get their money back

is that what you are saying ?

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Cells says in post 17 that Lloyds TSB lent out a total amount of 27.6bn in mortgages in 2007 and then

in post 18 says Cheltemham & Gloucester is the fourth biggest BTL lender, so as C&G are part of

Lloyds TSB one would assume that as a percentage of total lending Lloyds TSB will have a greater

exposure to BTL than HBOS, or an i missing something here.

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Cells says in post 17 that Lloyds TSB lent out a total amount of 27.6bn in mortgages in 2007 and then

in post 18 says Cheltemham & Gloucester is the fourth biggest BTL lender, so as C&G are part of

Lloyds TSB one would assume that as a percentage of total lending Lloyds TSB will have a greater

exposure to BTL than HBOS, or an i missing something here.

the data i have didnt say how much each BTL lender lent out, just in order of size

so for all i know the one in first position could have lent just £1 more than the lender in second place.

it would be fantastic if we had data for how much each lender have out in BTL

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Well we do have data for how the banks share prices have faired since 1 Aug 2007

and they're all much a much.

RBS 1st Aug 2007 stock value £57.9bn now £32.1bn loss £25.8bn

HBOS 1st Aug 2007 stock value £35.2bn now £17.7bn loss £17.7bn

Barclays 1st Aug 2007 stock value £44.5bn now £28.2bn loss £16.3bn

HSBC 1st Aug 2007 stock value £106.7bn now £94.7bn loss £11.0bn

Lloyds TSB Aug 1st 2007 stock value £31.2bn now £24.5bn loss £6.7bn

Total loss UK banks values since 1st Aug 2007 £77.3bn.

All back to where they were 2003-4.

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So what if they don't get it?

Thats easy the goverment takes mine and your money to bail out their friends and if that is against EU law then that does not matter they will simply change the law.

all these financial institutions are inter connected like a spiders web and if hsbo does a northen rock then hit Tesco's even if the cash machines have stopped working and if at the till they won't take plastic (technical problom) then make a dash for it as i'm sure others will follow you out past the security gards.

things could move much faster than we could imagine

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Thats easy the goverment takes mine and your money to bail out their friends and if that is against EU law then that does not matter they will simply change the law.

And good for them, hoping for house prices to fall is one thing but allowing banks to fail is a different

ball game all together, don't get me wrong here the banks have been more than wreckless, as their

share prices above are now showing hindsight is a wonderful thing.

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An excerpt about the norwegian bank crisis -

"In addition, the value of the existing share capital in the bank would be written down according to the bank's losses. In cases where the losses exceeded the existing share capital, the entire capital would be written down to zero. Such decisions would normally have to be made by the banks' General Meetings. In order to avoid a stalemate if a majority at the meeting objected to the decision, the Storting had one month earlier made an amendment to the Commercial Bank Act. This amendment entitled the government by Royal Decree to write down the share capital of a bank against losses in the audited interim accounts, if the shareholders' General Meeting did not do so. This authority was used in two instances where shareholders refused to write down a bank's shares as required by GBIF. Shareholders in one bank brought the case to the courts, but lost.."

More or less what we should do. Shareholders get nothing. Senior management and directors are fired, with no severance packages from the insolvent banks. If they are found to have been willfully negligent then claim back from these individuals any monies/shares/etc they have. Bring in outside economic experts (NOT management consultants or the like). Banks are taken over by government with the government taking on any losses, risks, or potential future gains. In 3+ years when crisis is over and banks have a value refloat with all proceeds going to the government. Also put in regulation to prevent anything even remotely similar happening again. Coordinate this with all other affected countries to have comparable laws.

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They want to issue shares denominated in Yen to raise their tier one capital ratio? :rolleyes:

If this is true it sounds worse that the rumours. Why would shares denominated in Yen be a good idea ? What's wrong with the Pound ? Are we suddenly a banana republic ? Come to think of it , maybe it's not a bad idea ! I'd buy if I could get a 15 to 20% return but that would have to be guaranteed by HMG (taxpayers!)......but on the other hand if things are that bad the risk would be too great. Actually it reminds me of the Yen denominated bonds sold by the Argentinian govt in the 90's (?)....and what happened to them !!?

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  • 294 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% +
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