Sunday, October 12, 2008

Bank bail-out latest

Banks may get bail-out on Monday

The first banks to receive money under the UK government's bank rescue scheme could do so as soon as Monday morning. The banks and the Treasury are working on announcements to be made before the markets open, according to BBC business editor Robert Peston. He says the first banks to take up the recapitalisation are likely to be HBOS and Royal Bank of Scotland (RBS). A key aspect of the announcements will be what the government requires the banks to do in return for the cash.

Posted by jack c @ 12:18 PM (1743 views)
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38 thoughts on “Bank bail-out latest

  • This announcement should shortly be followed by one on a proposed merger between Brittania BS & Co-op Bank

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  • jack c, why say you thus?

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  • malct – I’m hearing reports from reliable sources that Brittania BS is in talks with Co-op Bank regarding a merger (I had heard a rumour recently that Brittania was struggling) – I wouldnt post this up unless I was certain it was true.

    I’ll be speaking with one of my colleagues later today (1600 UK time) and will report back if it’s of genuine interest.

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  • Co-op in talks with Britannia building society
    Britannia, the country’s second-largest building society, is holding secret talks with the Co-op’s financial services arm about creating a “super-mutual” that would have more than 6m members.

    The Sunday Telegraph has learned that the Britannia and the Co-op are at the early stages of negotiations about a move that would form one of the largest financial services groups in Britain with about £75bn in assets.

    Although both parties are in sound financial health, the talks are further evidence of the growing impetus for consolidation as a result of the current economic crisis.

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  • malct – the Reuters boys are onto it – uk.reuters.com/article/businessNews/idUKTRE49B1OG20081012

    Co-op in talks with Britannia building society
    Sun Oct 12, 2008 12:24pm BST Email | Print | Share| Single Page | Recommend (0) [-] Text [+]
    Market News
    UPDATE 4-UK banks set to unveil bailout plans -source
    UK could take board seats at banks-govt source
    Viacom drops after forecast of profit miss
    More Business & Investing News… LONDON (Reuters) – The financial services arm of the Co-Operative Group is in “early” takeover talks with building society Britannia ahead of a legal change which would allow the two to merge, the two companies said on Sunday.

    The combined group would have around 70 billion pounds of assets and 6 million customers.

    Britannia, the country’s second biggest building society, said the talks were at a very early stage and would cover a wide range of options as to how the two organisations could work together, including a possible future merger.

    Britannia said in a statement it had similar values and shared a mutual ethos with Co-Operative Financial Services.

    Britannia has an extensive branch network and a strong savings and mortgage franchise, it said, while CFS — part of the Co-Operative Group, the world’s largest consumer co-op — has a strong personal and business banking franchise and life and general insurance expertise.

    A spokesman for the Co-Operative Financial Services said the group had spoken to Britannia and other parties as part of its ambitious growth plans which were put in place a year ago.

    “We’re exploring a whole range of options and that might lead to a merger at some point in the future but then it might not,” the Co-op spokesman said.

    The spokesman said a full merger could not take place at the moment because mergers between mutuals and co-operatives were not currently allowed but this is likely to change either by the end of this year or early next year due to a bill in parliament.

    A merger would also have to be approved in a vote by Britannia’s members. Continued…

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  • My mate in Brittania says they have spoken to a number of parties regarding mergers over the last year. It’s the office gossip based on internal rumour.

    I see Robert Peston is “deliberately leaking” information about the government, once more. I don’t blame him for putting it on the web, but the government is clearly using him & the BBC at this time. Why can’t Darling just make an announcement?

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  • planning4acrash says:

    Alan, if they leak the info, the government can’t be accused of insider trading. The government is driving down the stocks of companies it wants to buy with the consolidation, sorry, I meant to say, bailout money. Its well known that some of the banks taken over were in good shape, but bought down by predatory fire sales and leaked disinfo. Darling can’t announce it, because he will get in trouble for breaking the law. Unfortunately, government thinks it is and finds ways to be above the law.

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  • planning4acrash says:

    If I wanted to buy a bank, and had connections to an influential journalist, I’d release a story to them that the bank I wanted to buy was in trouble, then, the prophecy illicits fear, and investors sell on the rumour. So I step in and say, oh, this bank is failed, let me buy it with charitable money. This is basic economic warfare strategy, and believe me, this is a war that we are seeing. A war between free market entrepreneurs and well heeled oligarch’s who produce nothing but nepotism.

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  • Following on from P4AC’s comments on this and other threads I posed a question a week or so back on HPC regarding the topic of Mr Peston being the unelected Government announcer.

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  • theboltonfury says:

    couldn’t agree more. Peston is hand operated by Brown. Who is this clown anyway?

    IMO the plan is for Peston to report armaggeddon every day, so that when eventually it’s averted, Brown looks like he’s saved our skins. Very clever

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  • any info on barclays as you know i bought a wad on friday……… will be buying BA and Vodafone monday………

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  • @mark – no immediate news on Barclays but I might have a better idea from 4pm onwards when I speak to my man at UBS (the markets are open in Israel today after their holiday break)

    My concern with the banks is that we could see share value pretty much wiped out if we end up with a N Rock/B&B sitution across the board and it cant be ruled out at this stage. I have very limited exposure to Banks other than LTSB and HBOS and at this stage I’m prepared to sit tight but accept my holdings could soon be worth Zero.

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  • Mark Jack has a point – yes it could all “boom boom boom everybody say ao” monday and next week in general but then a capitulation of the market (which i would be surprised would exclude the banks but could i suppose) Mark are you planning on holding this for the long term? By which i mean not just after lunch! I dont really understand why you would buy some shares – i would have thought some options would have been a safer bet – but i spose you migh be looking at p/e, and PROSPECTIVE Divi yield.

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  • just saw a very very nervous looking Peston on BBC, must have been reading your comments

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  • i meant unless your going to hold them why buy em? if its a turn then i would have bought some at the moneys or even slightly out of the moneys, and make a quick turn. I spose im asking if you think this is THE low or low enough to THE low at least for Barclays and / or the markety in general….. OR you can make my weekend and tell me you are just covering shorts! 🙂

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  • Pestons not bad but his whinny voice gets on my nerves. Can they actually tell you anything useful BEFORE it happens? Well nope but i spose thats not their (the journos) raison d’etre.

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  • i like to hold for a while till i get a profit………

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  • well dont think you will have to wait long! – how long you hold em depends on how much profit your looking for. Jack be nimble jack be quick in this market – well IMO.
    Was a good call first thing Frid am – then agaion buying anything was :-).

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  • mountain goat says:

    On TV Peston was wondering how this will get paid for, can’t raise taxes now when we headed for a recession. He obviously is the inside man for gov releasing financial info but he still asks awkward questions.

    TM – thanks for your comments the other day, appreciated.

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  • No probs MG – just say it as it is …..well as i see it anyway!

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  • well first thing mon AM i will be buying BA and Vodafone, unless anyone has any worrying info….

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  • mountain goat says:

    You guys got to have balls of steel trading this mess. I got out of my HBOS shares 2 years ago for a small profit when I saw the housing crash was coming. Now have no intention of going near financials ever again! My trading personality at the moment is “hiding under the bed” and hoping my softs recover when people realise people must eat, even in a recession.

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  • what we did was to sell our properties in 2006, hoard the money after the taxes…then buy shares when the market hit the lows, i personally think the lows are now and expect it to climb as confidence comes back….

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  • MG if all goes well my balls will be made of gold……

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  • that would stop further falls…. would they stop all trading or just banks…

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  • mark i think my strategy is a little safer, i am net short at the moment – well that doesnt concur with what i think because i am looking to sell rallies . At least 2 more of which this will be one methinks.

    IF i am wrong i am effectively short @ 4950 but really small. (well in the context of my trading its a 5% short position with a put) I got in and got out gradually until i had 25% left on Thursday had a “buy” order at 4200 on thursday which was missed by approx 50points and then got filled at a huge Gap open on Friday am. That was Luck ( i have NEVER made 1000 points before!). So am looking to add to the short position on a pull back. Think it will be a big pullback next week and will initiate some more puts – basically to buy the 20% puts again, again looking for another swing low. If it goes wrong i have limited risk – albeit bigger than i want because of the cost of options increasing re the volatility. I used to and would normally short or buy a market on the futures – but i want to be able to sleep at night!!

    By a big pullback i would be looking for around 4400-4500. If it doesnt get that high next week – i will just relax with the profits so far, and will look at other markets. Hope this scenario gives you your balls of gold. – Good luck! MG – IGindex will probably trade through any suspension – albeit with a big spread. Yes i thought this would be a possibility for the US markets given the scale of the probable intervention and the fact that (i think) there are some closures in the Bond market anyway. Its Columbus day!

    I think individual shares are really risky – there is specific and market risk. market risk overides (in general) specific risk. Cover with some out of the money puts on BCLYS would be my advice….. but what do i know ;-).

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  • Guy’s here’s my latest opinion on things (for what it’s worth)

    I suspect the UK markets may not open tommorrow as a funding deal for the UK banks is thrashed out behind closed doors today and announced tomorrow. A few people I have spoken with today share my view (and this is just opinion) that the UK Government will do whatever is necessary to “prop up” the banks and protect individual savers – they also need to protect businesses, however in all of this they dont really care about the equity investor or the equity value of the Banks, consequently you could be looking at the whole lot effectively being deemed worthless if they go for a nationalisation or part nationalisation option – this would have a major impact on the FTSE 100 which could then fall more dramatically than other markets (hence the thinking that the markets here might be temporarily closed)

    No view specifically on Barclays other than it ties in with previous comments including those above – although they bought into Lehmans (as they see it) on the cheap the suspicion is they will be round the table seeking funding (again all opinion)

    @mark – techiemans stance on individual shares is mirrored by others I have spoken to today – Banking stocks are seen as far and away the riskiest category – I sincerely hope you do not lose out on the £20K you placed on Barclays last week.

    I’ll be interested to see how this all pans out when I get back from holiday in a week or so’s time – hope I have a business to return to !

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  • sometimes it is worth taking a risk, as you can make more out of it….

    will let you know

    or will come begging for a bailout

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  • @mark – agreed regarding taking risk and do hope you are right and I’m wrong on this one, but even the most adventurous investor I know will not go near the banks now because he thinks all of his money is likely to disapear in an instant next week – this is based on having lost a significant sum on B&B PIBS which the Government have effectively siezed.

    Time will tell – best of luck

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  • jack c enjoy your holiday

    Holiday Schedule

    PennTrade
    Oct 11, 2008

    Dear PennTrader,

    Monday is Canada’s Thanksgiving Day and the Canadian markets will be closed.

    Monday is also Columbus Day in the US.

    It`s one of those odd US legal holidays where banks and government offices are closed, mail isn’t delivered, the bond market is closed… BUT the US stock markets are open as usual, as are many other businesses.

    So on Monday, we’ll be open for US trading only.

    The Canadian markets will reopen on Tuesday morning.

    Enjoy your holiday (if you have one).

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  • obscure threat to hpc get together

    Dr. Altmann notes that “the present analysis has not found convincing arguments that the ADS would be immoral or illegal in each foreseeable circumstance,” and that acceptance will depend very much on how it is used. If it is used to clear protesters out of the way it may be seen differently.

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  • [email protected] & 8

    So let’s see, the government spreads rumours via the BBC that a bank is in trouble, the bank’s shares plummet and the government buys these up on the cheap as it were. So shareholders take a hit, but this hit reduces the hit taken by taxpayers. GOOD!

    We just need Preston to say that the value of empty new build apartments is going to fall by 80%. There will then be a fire sale of these to local authorities. BTLs will make a massive loss, while local authorities will then be able to reduce their housing waiting lists, thus reducing the demand for private rented accommodation and the money those local authorities have to spend on putting families up in cramped Bed and Breakfasts. Again, it would be all for the good.

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  • Jack I looked at PIBS a while back – not to trade but really as a way to get hgher yeilds safely. I decided against it – so i understand your mates position. I think that the markets may be closed (but i would think it likely that thats co-ordinated) . In any case, i think the first reaction would be aha the banks are saved – and so the rally. IMO thats a time to get out, not load up. You are right mark – in general the best time to buy is when everyone things its going to collapse, which was why i (in effect) bought on Friday am – that was ridiculous and i feel sorry for people who liquidated there. to be fair I dont know what Mark is worth so how can i – or anyone else – say £20k is a big investment for him? I dont understand that myself – if i wanted to put down £20k whats gonna happen to barclays? Double hmmm.

    I have just looked at the chart, A move back up to 310 ish is a possibility, although there could be some more downside first, but even if it gets there it gets followed by new lows. At that point assuming Jack c is wrong re full public ownershp then that would be a good place to be a scale up buyer. On IG at the moment at 207 – yes there is some RSI divergence (which is consistent with a bottom) but its not my cup of tea to be honest. Short term resistance at 240 needs to overcome that which will close the bearish gap on the chart.

    The boys are gonna throw this one around Mark. Have looked at the other two and it looks like you are picking some bottoms without any rhyme or reason – there are no technical indicators that these are lows ….except vodaphone does have some “better” divergence. {ersonally if im trading off a bottom (and yes i have done it) i look for a reason and a technical stop. Still if you feel the prices are low enough to preempt a bottom its really your call and yes you are probably right in thinking its nothing to do with TM!!

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  • techieman – difficult to predict correctly at the best of times and even more so in current market turmoil – I’m just going to sit back (on the beach) and see how this one unfolds. Incidentally have you followed the threads on a proposed meet up – r u up for it?

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  • i have seen but dont think its a good idea to be honest – when i meet with “real” people the last thing i like to do is to discuss this kind of stuff. Combination of reasons really i dont want people to feel like i am an expert if you know what i mean – and its a busmans holiday and also someone could catch me out 😉 . Probably opposite to how i come across in cyberspace. But having said that it would be good to meet you and plato and am sure s2r1 would be very entertaining where are you based? Anyway have a good holiday.

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  • Based in Northumberland

    Thanks to all those who wished me a good holiday – of course I’m might have to abandon it based on developments in the banking world – I hope the airline can get me and my family to Spain and back !

    HPC has turned into world economic meltdown.

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