The UK's Q4 2023 banking crisis.

[sancho panza]

23 minutes ago, Sugarlips said:

What’s another trillion or 10, anything to control the press anyway...can’t have folk waking up to real money

I know it's sort of half a joke SL but I think you're tlaking much more printed cash than 2008 for this bail out.

 

[reformed nice guy]

25 minutes ago, sancho panza said:

I know it's sort of half a joke SL but I think you're tlaking much more printed cash than 2008 for this bail out.

 

I think there is a huge risk that they will take a "two birds with one stone" attitude if they need to do a printed bail out, and the second bird would be a CBDC.

It would allow capital controls by the back door and that would be desirable for them.

A CBDC is easily implemented by making all benefits and public sector payments using it, then requiring tax to be paid using it too.

[sancho panza]

1 hour ago, reformed nice guy said:

I think there is a huge risk that they will take a "two birds with one stone" attitude if they need to do a printed bail out, and the second bird would be a CBDC.

It would allow capital controls by the back door and that would be desirable for them.

A CBDC is easily implemented by making all benefits and public sector payments using it, then requiring tax to be paid using it too.

I hadnt thought of that RNG.

Is this possbily the biggest global credit/sov debt bubble in the hsitory of mankind ? will it make 2008 look like a walk in the park? will the ruling elties hisitory of dodging tough decisions mean that they make some that end up making some that do more harm than good?

I think CBDCs makes sense using those parameters

[belfastchild]

Nationwide has just had a rebrand.

No further comment really.

[Harley]

18 hours ago, belfastchild said:

Nationwide has just had a rebrand.

No further comment really.

Part of the long march discussed in the Great Taking was the Nationwide closing its IOM branch.  It was great for expats and the service was excellent.  Others did similar.  I've been watching the moves for years, before the bail in legislations which were the most overt but were missed or ugnored by many, and since.

Edited October 8, 2023 by Harley

[Harley]

On 06/10/2023 at 13:04, sancho panza said:

I hadnt thought of that RNG.

I don't blame you for putting me on "ignore"!

[wherebee]

18 hours ago, belfastchild said:

Nationwide has just had a rebrand.

No further comment really.

Indeed. 

 

Rebrands are up there on my list of 'executive shitmind markers'

[spygirl]

Big banks sit out LBO rebound after being stung by earlier buyouts

Concern about loans getting stuck on their balance sheets has left some lenders wary of riskier deals

https://www.ft.com/content/8962a5cc-2c4c-4e18-801c-9ad4e342f1fd

[Democorruptcy]

Metro raised capital

 

Quote

 

LONDON, Oct 9 (Reuters) - Shares in Metro Bank (MTRO.L) jumped in early trading on Monday, after the embattled British lender struck a fundraising deal overnight to bolster its balance sheet after urgent talks over the weekend following volatile trading.

Metro announced a 325 million pound ($396 million) capital raise and 600 million pound debt refinancing on Sunday, in a deal that would hand majority shareholder control to its biggest investor, Colombian billionaire Jaime Gilinski.

Gary Greenwood, banking analyst at Shore Capital, said the deal appeared to secure the bank's immediate future, but said it represented "a very painful rescue" as it entails a hit for both the bank's shareholders and bondholders.

Metro Bank shares opened as much as 22% higher, and were last up 9% at 49.4 pence.

https://www.reuters.com/business/finance/metro-bank-shares-open-19-higher-after-funding-deal-2023-10-09/

 

 

[sancho panza]

4 hours ago, Democorruptcy said:

Metro raised capital

 

 

Out of the frying pan etc.

I don't think this will be the last time to they need extra funding.

They're selling what's likely they're prime book as that's the first and only thing any other bank would buy off them(otherwise theyd jsut wait wait for the asset dump)

They're then raising funding and going into riskier markets jsut at the very moment they shouldn't but this sort of behavoiour may be all they can do as prime marekts will be shut off for them.

AS for the equity raise,it'll be interesting to see the price points and the dilution looming.

https://news.sky.com/story/metro-bank-raises-925m-through-debt-and-funding-12980783

Nearly £1bn (£925m) has been raised by Metro Bank, which has 2.7 million customer accounts, making it one of the 10 largest banks in Britain.

In a statement the lender said it raised £325m in new funding and refinanced £600m of debt. The largest shareholder,

Spaldy Investments, an investment firm owned by a Colombian billionaire, is contributing £102m.

Metro Bank also confirmed Sky News reporting that it was in discussion to sell up to £3bn of residential mortgages.

A "gradual shift" towards providing specialist mortgages, often providing alternative solutions for people who have been denied a traditional mortgage, and commercial lending will be facilitated via the funding and refinancing, Metro Bank said in a statement.

Takeover bids from rival bank Shawbrook have been rejected by Metro Bank

[sancho panza]

Guardian saying customers are pulling moeny

Not surprised.

Price point is £0.30 for new shares

It still has looming hrudles with reference to end ing fo term funding sheme 2024/25/27.

This wont eb the last we hear from Metor methinks.

https://www.theguardian.com/business/2023/oct/09/metro-bank-costs-rescue-deal-customers-money

Metro, which became the UK’s first new high street lender in 150 years when it burst on to the scene in 2010, also confirmed overnight that customers had started to pull their money out in recent days amid worries over its financial health.

 

However, the lender said it still expected current account balances to grow, “notwithstanding the recent increase in deposit outflow rates in advance of the announcement of the capital package” announced on Sunday night.

In total, the rescue deal involves £600m of debt refinancing, on top of a £325m capital raise, which includes £150m of new shares sold at 30p a share. It is also planning to sell off about 40% – or £3bn – of its mortgages to reduce the risks on its balance sheet.

[BadAlchemy]

I really appreciate all the work you have done on this @sancho panza. Elderly mother is selling her house at the moment and I need to help her spread the proceeds around a few places to stay under FSCS limits etc. Talk about out of the frying pan and into the fire!

It's been very educating reading this thread. Thanks!

This will make you laugh, "Global Finance" magazine's award for Safest bank in the UK 2023 is....

 

     wait for it...

 

     drum roll...

 

Nationwide Building Society!

https://www.gfmag.com/media/press-releases/press-release-safest-bank-awards-2023-safest-banks-country-territory-and-district

So you see you are being very silly using balance sheets, Dowd Buckner ratios, deteriorating/defaulting loan stats and all that guff. You just need to go and look at what Moody's, Standard & Poors, and Fitch have to say about it all.

[InLikeFlynn]

14 hours ago, BadAlchemy said:

I really appreciate all the work you have done on this @sancho panza. Elderly mother is selling her house at the moment and I need to help her spread the proceeds around a few places to stay under FSCS limits etc. Talk about out of the frying pan and into the fire...

  

When we sold up in 2010 I held the proceeds of sale in an NSandI savings account for few years. NSandI are part of UK government and should be as safe as gilts. 

 

[BurntBread]

10 minutes ago, InLikeFlynn said:

When we sold up in 2010 I held the proceeds of sale in an NSandI savings account for few years. NSandI are part of UK government and should be as safe as gilts. 

 

Would that be like, "as safe as houses"?

[Democorruptcy]

Nat West got of bed in the red

https://www.hl.co.uk/shares/shares-search-results/n/natwest-group-plc-ord-gbp1.0769

[Harley]

On 27/10/2023 at 09:00, Democorruptcy said:

Nat West got of bed in the red

https://www.hl.co.uk/shares/shares-search-results/n/natwest-group-plc-ord-gbp1.0769

Wow, even they admit they behaved badly (lower actual and forecast income seems a key reason though, plus several more reasons no doubt).  For the ADR....

• Down 98.11% from its all-time closing high of $237.45 on Oct. 12, 2007

Edited October 30, 2023 by Harley

[TNS]

3 hours ago, Harley said:

Wow, even they admit they behaved badly (lower actual and forecast income seems a key reason though, plus several more reasons no doubt).  For the ADR....

• Down 98.11% from its all-time closing high of $237.45 on Oct. 12, 2007

7.5% divi, it's almost tempting to get a few.

[PatronizingGit]

On 13/10/2023 at 08:49, BurntBread said:

Would that be like, "as safe as houses"?

Thing is, if we get to the point of gilts going in to default, are you really worried about the proceeds of a house sale or more worried about the local chavs (the ones who arent so obese so as not to be confined to a mobility scooter, at least) & the legions of imported savages chasing you down with weapons for their next meal. 

[Kiwibobby]

1 hour ago, TNS said:

7.5% divi, it's almost tempting to get a few.

7.5% divi with the chance of losing 100% of capital in a bank collapse.  Are you the CEO of John Lewis?

[TNS]

15 minutes ago, Kiwibobby said:

7.5% divi with the chance of losing 100% of capital in a bank collapse.  Are you the CEO of John Lewis?

government owned, standard bailout in that event, nationalise the losses and all that jazz.

[sancho panza]

On 27/10/2023 at 09:00, Democorruptcy said:

Nat West got of bed in the red

https://www.hl.co.uk/shares/shares-search-results/n/natwest-group-plc-ord-gbp1.0769

I've been looking after sick Mum so not been around much.

As forewarned on here,natWest have had their eye off the ball playing politics rather than sqauring their loan book..Liquid assets down,RWA's up

from the pillar 3 disclosures

https://investors.natwestgroup.com/~/media/Files/R/RBS-IR-V2/results-center/27102023/nwg-plc-pillar-3-report.pdf

My comments-I think the deveil is in the detail and this is a very lagging measure.This was presaged by the rising stage 2's in the full year to end 22,so we can't be surprised at this at all.Suprised it wasn't bigger but then their Dowd Buckner ratio is now 45/1 or so.Stated shareholder equity £35bn versus market cap £15bn.

 

 

Page 9-Interesting here to see Nat West increasing RWA's using the the IRB approach.For thsoe who may not know,Satnadraadized approach using inudtry parameters,IRB approach allows NatWest to use their OWN default data which could elad to some skew of risk

Page 14-MC-sdome interesitng changes in depsoti levels.Liquidity levels down on year end 2022

Edited October 30, 2023 by sancho panza

[sancho panza]

https://www.telegraph.co.uk/business/2023/10/27/rising-wave-property-defaults-threatens-us-banks/

A rising wave of property defaults threatens hundreds of US banks

Vulnerable lenders are being squeezed on all sides as a debt-laden real estate sector succumbs to hybrid working

America’s commercial property collapse is becoming a danger to the financial system.

Office blocks purchased with debt remain half empty, 18 months after the end of the pandemic. Thousands of buildings will have to be torn down. Hundreds of regional banks are sitting on crippling losses that they yet to acknowledge.

“It’s a trainwreck in slow motion,” said Professor Stijn Van Nieuwerburgh, a property and finance expert at Columbia University.

“The return to the office isn’t happening. Data from turnstile swipes shows that occupancy levels are still just 49pc of where they used to be. It has been stable for a year and a half,” he said. Sensors tracking physical presence in offices tell the same story. Hybrid work is here to stay.

Renters are walking away or taking less space as leases come due. Average office rents have already dropped by 20pc. Yet two-thirds of the leases have not yet come up for renegotiation. The full exodus has yet to happen.

US commercial real estate has $5.5 trillion (£4.5 trillion) of debts. The worst trouble is in office buildings, though prime assets in hot spots have avoided the broader bloodbath. Projects that made sense in the QE world of free money are no longer viable in the new world of 5pc bond yields.

If you can get a loan. Banks are being forced to slash exposure by shareholders, boards, and regulators. “They’re not actively lending any more. They’re only lending to their best customers,” said Mr Rechler.

The failure of Silicon Valley Bank (SVB) and two smaller lenders in March may only be the first phase of a long dragging crisis in the regional banking system. “I wouldn’t be surprised two years from now if there were 500 to 1000 fewer banks. I’m not saying they’ll go out of business, but there will be heavy consolidation,” he said.

The Fed has staunched the liquidity crisis since March with emergency lending but that buys only time. It does not tackle the deeper solvency crisis.

Prof Van Nieuwerburgh said vulnerable banks are being squeezed from all sides. They are having to lift interest rates drastically to stop deposit flight to money market funds or Treasury notes. Their bond portfolios are trading at a large paper loss, which become real losses if they are forced to crystallise them, the fate that befell SVB. Revenues are flat on good real estate loans. Developers are throwing in the keys on bad loans.

Banks hold $2.7 trillion of commercial real estate debt. Two-thirds is concentrated among the small and mid-sized regional banks. Exposure among local lenders with assets below $10bn is 280pc of their capital. It is 180pc for sub-tier banks up to $250bn.

The likely losses are as large as the $1.2 trillion meltdown of subprime and Alt-A property securities that set off the banking collapse on both sides of the Atlantic in 2008. But this episode has a different character.

Today’s losses are not concentrated in a clutch of ultra-leveraged mega banks. They are spread wider. The process is slower. There is less risk of a chain reaction and a Lehmanesque vortex of doom. It is akin to the savings and loan crisis in the late 1980s, which led to the failure of 747 thrifts but never slipped out of control. But it would be courting fate to count on that.

“If a couple of hundred banks get into trouble at the same time and there is another run on deposits, this could turn into a systemic crisis. There are some parallels with 2008,” he said.

 

[jamtomorrow]

Posting a thing that is ostensibly about Swiss and US banking, but I'm claiming it's on-topic because we know the UK would have to follow suit.

I'm provisionally calling the tweet and video BS until I see the references/sources (the video mentions Fed papers - alright then, give us the links), even though I think this frog-boiling is *exactly* how capital controls will creep up on us Joe Schmoes.

In a nutshell, this is exactly why I keep a decent chunk in gold and Bitcoin - you won't know when the fuckers are about to narrow the exits, and nobody knows for sure which alternative money will be most useful when that occurs.

Edit to add: found a source for the Swiss part, the video clearly sexing it up a bit to farm engagement (which worked!) - https://www.reuters.com/markets/europe/swiss-authorities-banks-mull-new-rules-prevent-bank-runs-sources-2023-11-02/

 

Edited November 8, 2023 by jamtomorrow

[Stuey]

On 06/11/2023 at 21:16, sancho panza said:

https://www.telegraph.co.uk/business/2023/10/27/rising-wave-property-defaults-threatens-us-banks/

A rising wave of property defaults threatens hundreds of US banks

Vulnerable lenders are being squeezed on all sides as a debt-laden real estate sector succumbs to hybrid working

America’s commercial property collapse is becoming a danger to the financial system.

Office blocks purchased with debt remain half empty, 18 months after the end of the pandemic. Thousands of buildings will have to be torn down. Hundreds of regional banks are sitting on crippling losses that they yet to acknowledge.

“It’s a trainwreck in slow motion,” said Professor Stijn Van Nieuwerburgh, a property and finance expert at Columbia University.

“The return to the office isn’t happening. Data from turnstile swipes shows that occupancy levels are still just 49pc of where they used to be. It has been stable for a year and a half,” he said. Sensors tracking physical presence in offices tell the same story. Hybrid work is here to stay.

Renters are walking away or taking less space as leases come due. Average office rents have already dropped by 20pc. Yet two-thirds of the leases have not yet come up for renegotiation. The full exodus has yet to happen.

US commercial real estate has $5.5 trillion (£4.5 trillion) of debts. The worst trouble is in office buildings, though prime assets in hot spots have avoided the broader bloodbath. Projects that made sense in the QE world of free money are no longer viable in the new world of 5pc bond yields.

If you can get a loan. Banks are being forced to slash exposure by shareholders, boards, and regulators. “They’re not actively lending any more. They’re only lending to their best customers,” said Mr Rechler.

The failure of Silicon Valley Bank (SVB) and two smaller lenders in March may only be the first phase of a long dragging crisis in the regional banking system. “I wouldn’t be surprised two years from now if there were 500 to 1000 fewer banks. I’m not saying they’ll go out of business, but there will be heavy consolidation,” he said.

The Fed has staunched the liquidity crisis since March with emergency lending but that buys only time. It does not tackle the deeper solvency crisis.

Prof Van Nieuwerburgh said vulnerable banks are being squeezed from all sides. They are having to lift interest rates drastically to stop deposit flight to money market funds or Treasury notes. Their bond portfolios are trading at a large paper loss, which become real losses if they are forced to crystallise them, the fate that befell SVB. Revenues are flat on good real estate loans. Developers are throwing in the keys on bad loans.

Banks hold $2.7 trillion of commercial real estate debt. Two-thirds is concentrated among the small and mid-sized regional banks. Exposure among local lenders with assets below $10bn is 280pc of their capital. It is 180pc for sub-tier banks up to $250bn.

The likely losses are as large as the $1.2 trillion meltdown of subprime and Alt-A property securities that set off the banking collapse on both sides of the Atlantic in 2008. But this episode has a different character.

Today’s losses are not concentrated in a clutch of ultra-leveraged mega banks. They are spread wider. The process is slower. There is less risk of a chain reaction and a Lehmanesque vortex of doom. It is akin to the savings and loan crisis in the late 1980s, which led to the failure of 747 thrifts but never slipped out of control. But it would be courting fate to count on that.

“If a couple of hundred banks get into trouble at the same time and there is another run on deposits, this could turn into a systemic crisis. There are some parallels with 2008,” he said.

 

We had three people on our half of the office yesterday, and two on Monday. 

Room enough for 50-60 people. 

[Chewing Grass]

2 minutes ago, Stuey said:

We had three people on our half of the office yesterday, and two on Monday. 

Room enough for 50-60 people. 

Office space is an overhead and overheads kill businesses where actual competition is involved i.e. non glubbernment work.

Any business that can conduct it's affairs with minimal office space can under price it's competitors.