The UK's Q4 2023 banking crisis.

[sancho panza]

1 hour ago, Chewing Grass said:

I shall take some photos tomorrow of the advertising signs outside a good proportion of the office buildings on a business park near me.

There was an excess of office buildings before 2020, now it's worse but they carried on building more.

Perhaps they think that the UK requires more office workers and the good times will return for commercial property.

They won't, they are just competing with other developers over what remains of a shrinking market.

I think thsi is key concern as well.The losses are jsut beginning at the highly leveraged end of BTL,likely looming for some highly leveraged FTBers.

What I think it's key to try and guesstimate is the losses that are looming from CRE.

Rcently,Leicester's High cross shopping centre went into admin.The country is full of otehrs that will be getting given back to the banks this year.Whether these CRE losses will hit bond holders more than large banks is a matter for conjecture.

Over the next few months,I hope to have the time to go through some annual resutls and work out where those losses lie

 

PS would appreicate the photos

Edited April 2, 2023 by sancho panza

[Loki]

1 hour ago, Chewing Grass said:

I shall take some photos tomorrow of the advertising signs outside a good proportion of the office buildings on a business park near me.

There was an excess of office buildings before 2020, now it's worse but they carried on building more.

Perhaps they think that the UK requires more office workers and the good times will return for commercial property.

They won't, they are just competing with other developers over what remains of a shrinking market.

New blocks going up in Reading

[Noallegiance]

5 minutes ago, Loki said:

New blocks going up in Reading

High rises going up around Stratford, too.

[HousePriceMania]

7 minutes ago, sancho panza said:

I ,likely looming for some highly leveraged FTBers.

 

How does a FTB become highly levered?

 

 

[HousePriceMania]

Great thread SP.

 

Maybe this crosses over to the deflation thread, but how do People position themselves to profit and/or protect themselves from the carnage?

 

Is it simply, move out of fiat and into anything or wait in cash and buy big when the shit has blocked up the fans inner workings?

[sancho panza]

4 minutes ago, HousePriceMania said:

How does a FTB become highly levered?

 

 

Take your pick

1) you start with 95% LTV and then this happens

2) FTBer suffers real declines of 10% and IR's doubling

3) fuel prices go up

etc etc.

A financial system can go change gears in terms of leverage with a few varaibles changing.

[sancho panza]

5 minutes ago, HousePriceMania said:

Great thread SP.

 

Maybe this crosses over to the deflation thread, but how do People position themselves to profit and/or protect themselves from the carnage?

 

Is it simply, move out of fiat and into anything or wait in cash and buy big when the shit has blocked up the fans inner workings?

That's stuff for the macro boys to cosndier in the main thread against the background of hte wider economy incl fiscal deficits.this is mainly about bank finances and leverage within the system.

Worth noting that the main thread predicted(rightly so) that govt printing would overtake private sector credit creation,so economic lift could come from other areas tha bank creating credit.

[HousePriceMania]

10 minutes ago, sancho panza said:

Take your pick

1) you start with 95% LTV and then this happens

2) FTBer suffers real declines of 10% and IR's doubling

3) fuel prices go up

etc etc.

A financial system can go change gears in terms of leverage with a few varaibles changing.

I can see where you're coming from there but I'd say the leverage in property comes from there mortgage equity withdrawal crowd the people with a 20 deposit who decides to buy two houses instead of one and the, so called,  accidental landlords who use the house they live in as a collateral to buy a bigger house with even more debt...as well as the multiple BTL owning numptees who are up to their necks in IO mortgage debt.

 

In these cases their problems are multiplied, much more so than the single property owner who can service the debt, albeit levered off the back a small deposit.

The inflation might actually aid them ultimately 

Edited April 2, 2023 by HousePriceMania

[jamtomorrow]

8 hours ago, sancho panza said:

My working thesis is that the UK's 'sub prime' is going to be small BS's where basically the lenders didn't have the experience to discern riska nd price it appropirately.I say this from personal expereince

Amen to this.

I remortgaged on a 10Y fix with Coventry 2020ish, and had to do a "financial attitudes" interview to assess product suitability, including finding out about our other assets and investments.

I remember the moment it dawned on the interviewer that we didn't need the mortgage at all, and I had to explain I was applying because we just couldn't pass up an opportunity to borrow their money on terms that will seem regrettably advanatgeous within a year or two (which is what transpired). And they still gave us the money.

Truly, if this lot aren't screwed then nobody is.

[HousePriceMania]

I'd be pleased to see Skipton go, those ****s own several chains of EAs and push their mortgages onto their customers if the story in the news 2 weeks ago was to be believed.

I dont see how they can't be at risk.

[Chewing Grass]

These are all within a 500 metre radius of the Spar shop, all except one have been on the market for years with the Massive one with the Warehouse attached being new. They are all fully refurbished.

Must be hundreds of thousands of square feet in total, if I walk further I can find more. The bigger they are the harder it is to lease them.

It's like the only business in town is trying to outcompete other commercial property investors.

@sancho panza

[sancho panza]

2 hours ago, Chewing Grass said:

These are all within a 500 metre radius of the Spar shop, all except one have been on the market for years with the Massive one with the Warehouse attached being new. They are all fully refurbished.

Must be hundreds of thousands of square feet in total, if I walk further I can find more. The bigger they are the harder it is to lease them.

It's like the only business in town is trying to outcompete other commercial property investors.

@sancho panza

You do wonder where those loans are lying on the asset side of someone's balance sheet?

To say they're within 500metres of each otehr as well.....wow!!!

Not sure how current these stats are but they give an idea of the loan that mgiht be sat on them.Think theyre current as of Q1 2022.

WHich bit of the country is that CG?

https://www.statista.com/topics/4882/industrial-and-logistic-property-in-the-uk/#editorsPicks

 

 

Here's Hammersons share price now 25p after being over £11 in 2007(although they've had two splits both after big drops so I presume eequity raising)

Edited April 3, 2023 by sancho panza

[sancho panza]

In the sarch for these losses worth noting the following.

The last chart is pure bubble.Anyone know which company/REIT is a big warehouse owner?Hammerson is mainly shopping centres I belive,hence why it's been nailed.

https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/articles/theriseoftheukwarehouseandthegoldenlogisticstriangle/2022-04-11

 

 

[spygirl]

On 01/04/2023 at 00:15, sancho panza said:

I've held off starting a thread like this for years due to the work involved and the fact that the crisis didn't seem to be imminent.No point discussing a banking collapse when the ponzi has years to run.

However, this week certain things have fallen into place and it's time.

The plates have been kept spinning for years in the UK banking system due to Zirp/QE/HTB and a host of other factors(not least a compliant political elite). The day they end Help to Buy seems an apt time to start the banking crisis thread.

The thesis is simple,the UK banking system is overleveraged, poorly capitalised and facing losses in residential and commerical property that will require either equity raising for some of the systemic banks or mergers/bankruptcy(dare we even suggest it?) for the small BS's that have mispriced risk.

Those losses are going to start coming as we begin to see marginal BTL players go under. Initially,it's the most leveraged and then we'll work down the ladder until the bottom.These are the losses that will likely deal blows to the smaller BS's that are overexposed to the BTL sector.

As ever,the worst leverageappears to be in the peripheries.

All opinions and views welcomed,particularly from those who can shed light on bank accounting mechanisms.

Going to start with a repost of Kevin Dowd & Dean Buckner's enlightening paper on UK banks post covid,which lays out the context for the coming crisis and then over the next few months start trawling through the accounts of some of the financial houses to see who's the most exposed.

I have timestamped a prediction for when I think the losses will become apparent but there is an element of guesswork here due to us being unable to second guess not only consumers who've caused runs on supposedly solvent US banks but also central banks who aren't always rational players themselves

Time will tell.

Not sure

I cant give figures but a lot of  commercial property is on life n pension books.

The smaller stuff, think shops etc is owned  by individual LLs. Not sure what leverage but I'd be surprised if it's much.

I dont think commercial stuff will take down UK banks.

However theres is - and are - a lot of small time commercial LL shod thought theyd discovered a gold mine only to find its sewage.

 

 

[spygirl]

Just checked.

It's mainly insurers.

I'll try n post a few articles from over the years.

 

[Chewing Grass]

57 minutes ago, sancho panza said:

WHich bit of the country is that CG?

Prime NorthWest, right at the Junction of the M6 & M62 so perfect for N/S/E&W.

[Chewing Grass]

@sancho panza half of those buildings are on the estate owned by the local council that they bought of MPC Property for IIRC nearly £200 Million.

https://www.warringtonguardian.co.uk/news/23401022.council-boss-celebrates-companys-expansion-birchwood/

[jamtomorrow]

A lot of warehouse space and industrial space round here (Midlands) is owned by St. Modwen. They got taken private by Blackstone in 2021 for £1.25bn

[King Penda]

12 hours ago, HousePriceMania said:

I'd be pleased to see Skipton go, those ****s own several chains of EAs and push their mortgages onto their customers if the story in the news 2 weeks ago was to be believed.

I dont see how they can't be at risk.

I’d love to know how much deposit my neice put down on her 225k new build.her first home my sister has had morgages for over 35 years and ended up with nothing.fucking idiot

5 minutes ago, jamtomorrow said:

A lot of warehouse space and industrial space round here (Midlands) is owned by St. Modwen. They got taken private by Blackstone in 2021 for £1.25bn

Yes they used to do a lot in stoke and uttoxeter areas

[Loki]

1 minute ago, King Penda said:

Yes they used to do a lot in stoke and uttoxeter areas

He said warehouse space not whorehouse 

[King Penda]

37 minutes ago, spygirl said:

Not sure

I cant give figures but a lot of  commercial property is on life n pension books.

The smaller stuff, think shops etc is owned  by individual LLs. Not sure what leverage but I'd be surprised if it's much.

I dont think commercial stuff will take down UK banks.

However theres is - and are - a lot of small time commercial LL shod thought theyd discovered a gold mine only to find its sewage.

 

 

Typically around 30% I think

[King Penda]

Just now, Loki said:

He said warehouse space not whorehouse 

You lot of got off light recently I’ve been a bit rough the last 3 days hell I was tucked up in bed for 9 last night.I had to force myself to get drunk Friday Saturday I could only muster 4 cans.‘I’m just debating do I go for it tonight and break through the pain barrier .

[Loki]

Just now, King Penda said:

You lot of got off light recently I’ve been a bit rough the last 3 days hell I was tucked up in bed for 9 last night.I had to force myself to get drunk Friday Saturday I could only muster 4 cans.‘I’m just debating do I go for it tonight and break through the pain barrier .

Even I'm sipping the Famous Lout tonight - you gonna let a Southern poofta with work the next day out do you? I think not

[King Penda]

Just now, Loki said:

Even I'm sipping the Famous Lout tonight - you gonna let a Southern poofta with work the next day out do you? I think not

But your Loki the Norse god of tricks and diversions and divides you could be sipping a cup of tea with your little finger in the air.

[Loki]

Just now, King Penda said:

But your Loki the Norse god of tricks and diversions and divides you could be sipping a cup of tea with your little finger in the air.

GERTCHAAASHIDFUCKKKAAA