wagrain

Don't think this information is out in the public arena, I got it from a loose tongued Senior HBOS employee
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Some banks are still "cash rich" but they are still borrowing money so they can lend to others at higher rate.
Some banks though, are borrowing as they are short of cash.

For every £1 that Northern Rock received in the form of peoples savings, it would lend out £8 in loans / Mortgages!


With HBOS, for every £1 they received from savers, they would lend out just £1.60 in loans / mortgages.

HBOS has always been, and still is, "cash rich", and some of its employee's are pi$$ed off at the current financial situation and the way it is being portrayed.

If the government had just said "every persons savings in the UK is safe and we will guarantee it" then it would have solved a lot of the problems.


But some idiots are still withdrawing savings from banks, and where are they putting it? Under their beds!!!
The bank staff ask what the money is for etc, and you'd be amazed how many are withdrawing hundreds of thousands in cash to put it under their beds. One woman I heard of, had a bankers draft made payable to herself for £80,000 and intends to keep it safe at home as she feels its safer there than in any bank!!! Before 6 months is up she will decide where to bank it again.

STUPID PEOPLE - If they have a house fire or burglary they will have lost the lot!

EddScott

Its why the inter-bank lending rate is so high because none of them know which are in the poo and which aren't.

When this happened a while ago in Japan, the government lent the banks money but one of the provisos was that all the banks come clean.

Luminous

iTrader: (3)

its capitalism. The cash rich banks want the poor banks to fail so they can take over their business at a pittance. Then we will all be left with a market that has less players, and can be controlled by some very large international banks.

Its not a good situation, and somehow they need to be forced to start lending to one another

Suresh

I checked the HBOS financial statements expecting to be able to correct you here, but no - HBOS at the end of 2007 had 430 Bn in loans that were financed with 243 Bn in savings and 206 Bn from bonds issued.


The problem is if savers call their funds, then the bank has to find an alternative source of short term financing as it cannot just demand repayment of mortgage loans given on the other side of the balance sheet. Also maturing bonds issued have to be re-financed, but not by issuing new paper as investors are simply just not interested right now.

This is where the interbank market had previously been useful, but is now totally dry. Even with such an apparently strong balance sheet, HBOS would have to eventually cease repaying deposits if BoE didn't help them out.

wagrain

My info came from a very reliable source high up in HBOS. Nice to know its sort of confirmed by what you've found out!
Been doing some work on his (or her) house and after they'd had a few glasses of strong stuff the info flowed out. There was more, but I felt it not appropriate to be posting sensitive info on an internet forum.

Lets just say, I'm more than happy leaving my savings being with HBOS

Dark

iTrader: (1)

Surely if the bank that issued the draft goes t*its up she's lots her money anyway and won't have any protection???

The world's gone mad!!!

wagrain

Exactly!

Apparently after the staff explained the pit falls, the manager then had a word with her. But she was still adamant her money would be safer in the form of a bank draft

You couldn't make it up

TelBoy

Spare a thought for Russia at the moment - a story you won't be reading in The Sun i wouldn't think. Their three month interest rate is currently about 32%, overnight interest rates are about 10% and the Russian government has wasted over $65bn of reserves to defend the Rouble in the past four months. How Russia can be considering lending money to Iceland is beyond me. The country is in complete disarray financially. Just so you know.

Dave T-S

Not necessarily. A draft is guaranteed funds (assuming it is not a fraudulent one of course) and funds are debited to the issuing account at source. Once a draft is released, it matters not a jot that the issuing bank might go belly up. That's the whole point of using bank drafts for payment, they don't have to go through the clearing system to get funds.

If, however, you lost the draft before you banked it, and then applied for a replacement, and the issuing bank had gone bust in the meantime, then your life just got more complicated, although you should be covered under the guarantee scheme (only up to £50k at present).

Remember, in this case, the woman was drawing her *own* funds on a draft and paying herself.

Boro

iTrader: (1)

Wouldnt it be better spreading that 80k between atleast 2 banks and then both accounts are protected to the highest amount covered?