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Bankwest and HBOS

Bankwest and HBOS

Old Sep 17th 2008, 12:05 pm
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Default Bankwest and HBOS

Well as HBOS nearly went under this afternoon until what looks like the BBC leaked some info the Lloyds was going to rescue it here in Western Australia little did people know that the owner of their state bank nearly went bust. As there's no protection for savings in Oz I was wondering what the implications could be if it actually happened. Hopefully Lloyds will save the bank, and Bankwest is sold off to and Australian bank, but I mentioned this to my colleagues and no one seemed to have a clue about how close they were to a big financial mess here. Interesting times.... Maquarie is now looking very shakey too, so much for Austrlalia not being affected.....
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Old Sep 17th 2008, 12:14 pm
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Default Re: Bankwest and HBOS

Didnt realise it was so close either - no doubt I'll read about it in The Australian tomorrow.. our internet connection (we are in a caravan park) is suspect to say the least

We have left our monies in LLoydsTSB over in the UK at the moment fortunately... interest rates and final decisions on if we are actually staying in Australia forever were the reasons and have to say that I am quite glad that they are there at the moment.. getting a shite return on the monies tho, but at the moment I think we shall just bide our time before we do much else..

The amount of jobs lost over the last week is gobsmacking.. considering the amount of people now without a wage coming in...

Em x
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Old Sep 17th 2008, 11:28 pm
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Default Re: Bankwest and HBOS

Originally Posted by jimbo_d View Post
Well as HBOS nearly went under this afternoon until what looks like the BBC leaked some info the Lloyds was going to rescue it here in Western Australia little did people know that the owner of their state bank nearly went bust. As there's no protection for savings in Oz I was wondering what the implications could be if it actually happened. Hopefully Lloyds will save the bank, and Bankwest is sold off to and Australian bank, but I mentioned this to my colleagues and no one seemed to have a clue about how close they were to a big financial mess here. Interesting times.... Maquarie is now looking very shakey too, so much for Austrlalia not being affected.....
I noticed this one as well and was a bit uncertain about what to do. I knew that bankwest was owned by the Halifax as when I first opened the account I checked it all out as the interest rates they were offering were so much higher than anywhere else.

I have temporarily moved my money out of Bankwest as a precaution.

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Old Sep 18th 2008, 3:17 am
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Default Re: Bankwest and HBOS

Originally Posted by jimbo_d View Post
Well as HBOS nearly went under this afternoon ...
HBOS didn't "nearly go under". Their share price went down - as did the share price of all other UK banks (and banks around the world).

This is because the collapse of the Lehman Brothers Bank in the US means that the interest rate at which banks lend money to each other has gone up a lot since last weekend.

The share price going down (or up) has nothing to do with how much cash (or capital) a bank has relative to the value of its loans. HBOS actually has the strongest capital ratio of all the major domestic UK banks. (There was a BBC table on all the UK banks' ratios a while back but I can't find it now.)

The problem starts when people don't understand the above. Ignorant Joe Public suddenly gets the idea in his head that a falling share price must mean the bank is running out of money. And before you know it there is a queue outside the bank. And no bank has the cash to re-pay all its account holders ...

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Old Sep 18th 2008, 4:12 am
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Default Re: Bankwest and HBOS

Originally Posted by GinaUK View Post
HBOS didn't "nearly go under". Their share price went down - as did the share price of all other UK banks (and banks around the world).

This is because the collapse of the Lehman Brothers Bank in the US means that the interest rate at which banks lend money to each other has gone up a lot since last weekend.

The share price going down (or up) has nothing to do with how much cash (or capital) a bank has relative to the value of its loans. HBOS actually has the strongest capital ratio of all the major domestic UK banks. (There was a BBC table on all the UK banks' ratios a while back but I can't find it now.)

The problem starts when people don't understand the above. Ignorant Joe Public suddenly gets the idea in his head that a falling share price must mean the bank is running out of money. And before you know it there is a queue outside the bank. And no bank has the cash to re-pay all its account holders ...

Gina
Well said Gina !

Bankwest/HBOS Australia is now in an even better position following this release from the BBC

"Lloyds TSB is to merge with HBOS in a £12bn deal which will create a banking giant holding close to one-third of the UK's savings and mortgage market.
The firms' boards agreed to a deal, at a price of 232p per HBOS share, following talks on Wednesday."
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Old Sep 18th 2008, 4:19 am
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Default Re: Bankwest and HBOS

Originally Posted by jimbo_d View Post
Well as HBOS nearly went under this afternoon until what looks like the BBC leaked some info the Lloyds was going to rescue it here in Western Australia little did people know that the owner of their state bank nearly went bust. As there's no protection for savings in Oz I was wondering what the implications could be if it actually happened. Hopefully Lloyds will save the bank, and Bankwest is sold off to and Australian bank, but I mentioned this to my colleagues and no one seemed to have a clue about how close they were to a big financial mess here. Interesting times.... Maquarie is now looking very shakey too, so much for Austrlalia not being affected.....

Could be that the new owners of the banking system will speak Mandarin.

Citic bank of China may well take over Morgan Stanley.

Checking the implications of Bankwest v HBOS on my London board now.

Last edited by ozzieeagle; Sep 18th 2008 at 4:21 am.
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Old Sep 18th 2008, 4:28 am
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Default Re: Bankwest and HBOS

Originally Posted by GinaUK View Post
HBOS didn't "nearly go under". Their share price went down - as did the share price of all other UK banks (and banks around the world).

This is because the collapse of the Lehman Brothers Bank in the US means that the interest rate at which banks lend money to each other has gone up a lot since last weekend.

The share price going down (or up) has nothing to do with how much cash (or capital) a bank has relative to the value of its loans. HBOS actually has the strongest capital ratio of all the major domestic UK banks. (There was a BBC table on all the UK banks' ratios a while back but I can't find it now.)

The problem starts when people don't understand the above. Ignorant Joe Public suddenly gets the idea in his head that a falling share price must mean the bank is running out of money. And before you know it there is a queue outside the bank. And no bank has the cash to re-pay all its account holders ...

Gina
This explains what happened pretty well I think.....

'On funding, a few points are worth making. HBOS has a loan to deposit ratio of
177%, which compares to UK large cap peers on 90-142%. Clearly this makes it
the most exposed to wholesale funding markets, which are extremely stretched.
We have estimated that HBOS has £12.5bn of term funding maturing in the rest
of 2008.
NH
Following yesterday’s downgrade by S&P to an A+ rating, we think the
term market is now effectively shut for HBOS at anything approaching economic
spreads. This pushes HBOS into replacing its term funding with shorter term
money. This has become expensive, as the overnight LIBOR rate of 6.79%
yesterday (versus 5.49% on Monday) demonstrates. Moreover, it can only be a
temporary solution for HBOS, because the bank cannot allow all its funding to
become bunched at an overnight maturities. We have already seen short term
funding (<1yr) move from 53% at the start of last year to 59% at end June this
year, and we suspect that this has shortened even further since then.
NH
What is the endgame for the funding situation? We think that the increased
central bank activity heads off the risk of a Northern Rock type crisis. But we think
that longer term HBOS might have to think about aggressively reducing the
overall size of its loan book to ‘right size’ it for current market conditions. We
estimate that if HBOS were to reduce its mortgage book and its corporate loan
book by 10% each, the loan to deposit ratio would improve to 154%, and earning
estimates would be cut by ~20%. If funding markets remain so stressed, we
would expect HBOS to announce such a move, and based on the experience of
others who have said similar things (eg B&B), the market would not react'


HBOS was in a similar situation to Northern Rock, good deposits, however relied on the markets for short term finance. Another bank going tits up today is Macquarie, same situation and also plagued by short sellers. Expect many more consolidations and bankruptcies.
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Old Sep 18th 2008, 4:38 am
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Default Re: Bankwest and HBOS

Originally Posted by GinaUK View Post
HBOS didn't "nearly go under". Their share price went down - as did the share price of all other UK banks (and banks around the world).

This is because the collapse of the Lehman Brothers Bank in the US means that the interest rate at which banks lend money to each other has gone up a lot since last weekend.

The share price going down (or up) has nothing to do with how much cash (or capital) a bank has relative to the value of its loans. HBOS actually has the strongest capital ratio of all the major domestic UK banks. (There was a BBC table on all the UK banks' ratios a while back but I can't find it now.)

The problem starts when people don't understand the above. Ignorant Joe Public suddenly gets the idea in his head that a falling share price must mean the bank is running out of money. And before you know it there is a queue outside the bank. And no bank has the cash to re-pay all its account holders ...

Gina
Sorry but your wrong. This is why the UK government intervened by asking Lloyds to takeover HBOS and then promising to ignore claims of anti competitiveness because the UK cannot risk another northern rock situation.

You can be the best bank in the world but if no ones prepared to do business with you then your history.
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Old Sep 18th 2008, 5:29 am
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Default Re: Bankwest and HBOS

We had money in bankwest, but used it to buy a house. Still have account with them, just a few dollars to keep it open. So are they safe now? sounds like it if this rescue has gone ahead, probably one of the better options.

More of a worry is having funds in bloody aussie:curse: dollars, currency seems to be heading for similar value to monopoly money, aussie drops like a brick off a skyscraper in trouble times. Amusing financial 'experts' were predicting it to be at parity with USA sa by end of 2008. Ummm...



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Old Sep 18th 2008, 6:12 am
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Default Re: Bankwest and HBOS

I assume everyone here knows, that in the UK only 30,000 pounds of ones money is guaranteed under the current banking licence system.

There is no current guarantee for funds under the Australian system, although a paltry 20,000 Aud Guarantee is being proposed.

Last edited by ozzieeagle; Sep 18th 2008 at 6:19 am.
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Old Sep 18th 2008, 6:22 am
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Default Re: Bankwest and HBOS

Originally Posted by ozzieeagle View Post
I assume everyone here knows, that in the UK only 30,000 pounds of ones money is guranteed under the current banking licence system.
It's 35k and that's across one banking group, so you could have 2 accounts in a banking group and only be covered to 35 grand

ie you have 50K in an Royal Bank of Scotland account and 50k in a Nat West account but you will only be covered to 35 grand as they are the same banking group.

Still, better than Australia where you'd get zip if the bank folded.
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Old Sep 18th 2008, 6:25 am
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Default Re: Bankwest and HBOS

Originally Posted by ozzieeagle View Post
I assume everyone here knows, that in the UK only 30,000 pounds of ones money is guaranteed under the current banking licence system.

There is no current guarantee for funds under the Australian system, although a paltry 20,000 Aud Guarantee is being proposed.
UK compensation limit is £35k for savings and £48k for investments.
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Old Sep 18th 2008, 6:25 am
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Default Re: Bankwest and HBOS

Originally Posted by renth View Post
It's 35k and that's across one banking group, so you could have 2 accounts in a banking group and only be covered to 35 grand

ie you have 50K in an Royal Bank of Scotland account and 50k in a Nat West account but you will only be covered to 35 grand as they are the same banking group.

Still, better than Australia where you'd get zip if the bank folded.
I got my info from here Renth.

http://www.guardian.co.uk/business/2...olitics.money1
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Old Sep 18th 2008, 7:03 am
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Default Re: Bankwest and HBOS

Originally Posted by ozzieeagle View Post
It's a year out of date.
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Old Sep 18th 2008, 7:36 am
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Default Re: Bankwest and HBOS

Originally Posted by renth View Post
It's a year out of date.
It's happened. HBOS/BankWest is safe.

http://www.londonstockexchange.com/L...683&source=RNS
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