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Sheer Heart Attack

Inside The H B O S Monster

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This was told to me by a mate who is a staff member within HBOS last night.

When the rumours first surfaced, many, if not most, of the staff got an email from the Chief Exec stating that they have £5bn in ready funds and are completely solvent.

In today's climate, would £5bn last that long given rising mortgage defaults and market margin calls?

Also, HBOS threatened to sue two newspapers (apologies but can't remember their names as I was drunk) if they did not print retractions and apologies the following day.

Anyone know anything more about this?

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This was told to me by a mate who is a staff member within HBOS last night.

When the rumours first surfaced, many, if not most, of the staff got an email from the Chief Exec stating that they have £5bn in ready funds and are completely solvent.

In today's climate, would £5bn last that long given rising mortgage defaults and market margin calls?

Also, HBOS threatened to sue two newspapers (apologies but can't remember their names as I was drunk) if they did not print retractions and apologies the following day.

Anyone know anything more about this?

Personally I don't think that £5billion covers their obligations to their creditors. Of course if someone in HBOS were to come on here and tell us the true situation we would all be most happy. Does anyone on here think that with their declining book value, the mortgages they own cover their risk?

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According to the Scottish press , the HBOS chairman and senior execs were buying up several hundred thousand shares when the price plunged down .

Not insider trading, of course, just to show confidence in the bank :)

Edited by Shoeshine Boy

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Banks can disguise their illiquidity and they can even disguise their insolvency with help from the B o E but they cannot reinstill lost confidence amongst their depositors once it disappears. All it takes is for Joe Bloggs or institutional investors to take fright en masse, a la Northern Rock, and a bank is finished. It's the very real possibility of bank runs that is putting the wind up bankers and governments alike. No bank can survive a sudden demand to repay all its depositors at once. When the dozy public wake up to the fact that their deposits are not sitting safely in a bank vault (and never were) but have been frittered away on lousy loans to sub-prime customers, they'll do the only rational thing and panic. That's why we keep hearng "everything-in-the-garden-is-rosy" type comments from spokesmen for banks and governments.

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£5 billion is really very little indeed. Was that meant to reassure people?

I work for a very small lender indeed, in 2007 it lent out around half a billion, and just as the wholesale markets were collapsing secured 1 billion. The lender is now in a kind of hibernation mode, new lending is down but at higher rates and the money has been put aside to last for 3 years.

£5 billion does not sound very reassuring, however i'm sure they can pull money in from other sources.

Sounds crazy but maybe they could reduce the amount they lend out, and let their balance sheet build up slowly from repayments.

MMmmmmm crunchy.

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i know this has been said before but i want to say it again:

this is what happens when banks start gambling with their money instead of doing plain old boring banking.

i mean societe general and credit suisse might as well have stuck their money on black at the roulette wheel.

i also think that the worse this whole mess gets the more likely an attack on iran becomes as that is the only thing they can do to create liquidity in the US economy.

i cant prove this from first principles as i dont have the economics training but empirical evidence over the last 7 years shows that every time the US economy freezes up with a liquidity and/or stock market meltdown a war is executed which somehow frees up the system again .

its like putting the defibrillators on a heart attack victim.

[edited for spelling ]

Edited by jimmyjazz

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Also, HBOS threatened to sue two newspapers (apologies but can't remember their names as I was drunk) if they did not print retractions and apologies the following day.

Well these blokes may know a lot about banking, but they know sodomise all about the media and even less about human instinct. Doing something like that would cause everyone, from the editor of The Guardian to your granny who was a couple of grand in an HBOS ISA to think 'What have they got to hide, then?', and act accordingly. That was precisely the same reason why Prince Charles eventually backed off from serious legal action in response to the Italian press allegation that he'd backed on to his butler, so to speak. Before going to court, you'd better make damn sure that there aren't any skeletons in your closet. Even if HBOS isn't on the brink of going down the gurgler, the chances are that there are lots of things its directors and shareholders wouldn't want airing in public.

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i know this has been said before but i want to say it again:

this is what happens when banks start gambling with their money instead of doing plain old boring banking.

Not their money; Other people's money.

At the end of the day should things go belly-up, the bankers will walk away with their bonuses and the savers lose their cash.

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This was told to me by a mate who is a staff member within HBOS last night.

When the rumours first surfaced, many, if not most, of the staff got an email from the Chief Exec stating that they have £5bn in ready funds and are completely solvent.

In today's climate, would £5bn last that long given rising mortgage defaults and market margin calls?

Also, HBOS threatened to sue two newspapers (apologies but can't remember their names as I was drunk) if they did not print retractions and apologies the following day.

Anyone know anything more about this?

Simple way to not use £5bn is to not lend money, or do so at higher rates. And what margin calls would they be meeting exactly?

I think this is a bit of a non-story, but if it keeps the dissident financials arm of the HPC movement happy, then so be it.

Are you lot thinking of starting your own splinter group?

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Get the big picture with offical facts and figures

much too much detail for me to understand so i was hoping the better educated here could help me out

Unfortunately, I'm extremely amateur in this regard.

If you think this is an accurate reflection of the big picture (which, well it might be) one thing disturbs me. All of the banks are American. London has, allegedly, been a hot-bed of derivative trading in recent years... so it seems remarkable to me that none of the banks with big buildings in London get a look in on this league table.

I'm not as concerned by the "total nominal amounts" - since I'm aware, from some basic research into derivative techniques, that when derivative positions are taken, they often require a number of seemingly almost opposite contracts in order to synthesize a contract that doesn't exist. I strongly suspect that risk is also 'laid off' with big potential losses from a particular outcome prompting yet another contract to be signed - to reduce, rather than increase, that risk.

Analysis of the effect of unpredicted events on the derivaties market would be very, very complex. Volatility, however, I expect, will make derivatives participants demand a greater margin for any risk they do take on. This, I suspect, will make borrowing more expensive - since the lender either requires to accept greater risk themselves - or pay more to hedge it.

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You're more sensible than most on here.

Lots of betting on the short term price of gold. Wonder what that will do for he price when it is unwound?

Agreed. That's not so much acting as lender of last resort as acting like a garbage collector. What do they hope to do - recycle the rubbish? Must be the B o E going green! Come to us - we will recycle all your toxic waste!

Oops! Sorry about that! How did that happen? This post was meant to be in response to a post by CL about the B o E being lender of last resort.

Edited by Methinkshe

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very interesting how this rogue shorters story caught fire and was bought hook line etc. by the meeja at large yet no explanation of just how bad BM/HBOS exposure to sub prime is and further no explanation of how such a solid bank went crying for a 750mil piffling loan to get through another day. <_< This appears to be the banking industry supported by the Treasury/Boe/BBC and media barons gonig into attack mode. Surprisingly (for me) radio 4 have been one of the most complicit in this support

Edited by Converted Lurker

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very interesting how this rogue shorters story caught fire and was bought hook line etc. by the meeja at large yet no explanation of just how bad BM/HBOS exposure to sub prime is and further no explanation of how such a solid bank went crying for a 750mil piffling loan to get through another day. <_< This appears to be the banking industry supported by the Treasury/Boe/BBC and media barons gonig into attack mode. Surprisingly (for me) radio 4 have been one of the most complicit in this support

They quite regularly borrow that sort of money, as indeed most banks do. People are forgetting that this is normal in banking!

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Simple way to not use £5bn is to not lend money, or do so at higher rates. And what margin calls would they be meeting exactly?

I think this is a bit of a non-story, but if it keeps the dissident financials arm of the HPC movement happy, then so be it.

Are you lot thinking of starting your own splinter group?

I'm only relaying what I heard. I was not presaging future disaster!

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i also think that the worse this whole mess gets the more likely an attack on iran becomes as that is the only thing they can do to create liquidity in the US economy.

i cant prove this from first principles as i dont have the economics training but empirical evidence over the last 7 years shows that every time the US economy freezes up with a liquidity and/or stock market meltdown a war is executed which somehow frees up the system again .

Yes Jimmyjazz I hope you are wrong but unfortunately I think you might be right.

Cheney meets Saudi king

Cheney was given a King Abdul-Aziz sash, the highest honour awarded to a deputy head of state [AFP] Dick Cheney, the US vice president, has met King Abdullah of Saudi Arabia with the soaring price of oil and instability in the region expected to be on the agenda. However, it is unclear whether Cheney will urge the leader of the world's largest oil exporter to increase output during the talks at the monarch's horse farm in Riyadh

The two men were also likely to talk about efforts to confront Iran over its disputed nuclear programme.

Cheney will also visit Israel, the West Bank, and Turkey before returning to Washington.

http://english.aljazeera.net/NR/exeres/E82...6EB22D3176A.htm

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I'm only relaying what I heard. I was not presaging future disaster!

Sorry, wasn't having a go! You have to admit that there are quite a few posters on here who just want total collapse. A bit like the anti-capitalist movement in the 80s. (I'm sure I was at school with most of them). Unfortunately they can't justify why the system should collapse or the benefit of it. All the statistics show that house prices are due for a fall. With the SM we are just at a mid-point.

Edited by the end is nigh

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Sorry, wasn't having a go! You have to admit that there are quite a few posters on here who just want total collapse. A bit like the anti-capitalist movement in the 80s. (I'm sure I was at school with most of them). Unfortunately they can't justify why the system should collapse or the benefit of it. All the statistics show that prices are due for a fall. WIth the SM we are just at a mid-point.

I try to separate what I hope will happen from what I think is/will/can happen... and I try not to let one colour my take on the others.

I'm pro-capitalism, because I believe it to be simple and effective. I believe in small government and fair taxation - which, from my perspective, is any set of tax rules which are clearly understood and enforced. I expect the overwhelming majority of people to behave in a self interested way - and that this will define the overall outcome for everyone.

For these reasons, when I see a collapse in confidence in practices which I consider to be unethical, stupid and counter-productive for society... I don't want to be coerced to prop them up. When one lives by the sword - etc.

I do expect government intervention to support the current elite - since politicians are motivated by personal bias just like everyone else. This doesn't mean I have to, or do, approve.

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I do expect government intervention to support the current elite - since politicians are motivated by personal bias just like everyone else. This doesn't mean I have to, or do, approve.

"The current elite" - sounds like "they" won't let it happen etc.

the whole situation should be allowed to sort itself out - Bear Stearns was a great example of how it should be - business bust, shareholders lose out - eaten by a bigger business - lots of BS workers lose their jobs - all within a week, no messing - unfortunately over here we have a nanny state and a government that had to intefere for its own political gain

what i disagree with is capitalism that puts people at a disadvantage for the prosperity of others e.g. BTL - people making money by depriving others - if people want to gamble with shares etc. then so be it, but pushing up the price of a basic neccessity whilst depriving others and getting a state handout to do it, sucks

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  • 292 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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