This is starting to get a little scary Page 363

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  • LeoliansBro 24 Sep 2012 16:39:07 44,246 posts
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    I've given you the reasons why I think banks aren't being too risk averse.

    Would you like to tell me why they are? Please don't just say 'because not enough small businesses cam get loans' - banks aren't in the business of growing other businesses, they're in the business of investing in the interests of their stakeholders.

    And yeah, sure, this new bank is being transparent. Why then was I the only one in this thread to highlight this? Will any of you be switching to this new bank, with its higher risk of losing your money?

    *obviously you'll say yes because of government insurance and the need to pique me, but do you at least see my point?

    LB, you really are a massive geek.

  • LeoliansBro 24 Sep 2012 16:41:15 44,246 posts
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    Khanivor wrote:
    Last paragraph is precisely why it's a reasonable idea. We can't exist as an economy on nothing but Proctotr & Gambles.
    Reasonable idea from the government's standpoint, not from those who will need to deposit to make this whole thing work in the first place. Nor from the bank itself if left to its own, market facing devices.

    LB, you really are a massive geek.

  • Khanivor 24 Sep 2012 16:46:26 40,772 posts
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    In the long run it is indeed reasonable for all of those people. Unless you think depositors and employees of the bank will see their personal financial situation booming when the economy only employs a few thousand people handling paperwork for things being sold overseas, as the UK has no consumers left to purchase anything because all businesses deemed not 'safe as fuck' have gone down the toilet due to absence of credit.

    I know taking a long-term perspective is anathema to your lot but...
  • disusedgenius 24 Sep 2012 16:47:44 5,331 posts
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    LeoliansBro wrote:
    I've given you the reasons why I think banks aren't being too risk averse.
    Sure, which is fine if they're right. Seems like a good idea to spend a relatively small amount of money trying to see whether they're wrong though.
  • LeoliansBro 24 Sep 2012 16:48:46 44,246 posts
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    Where would you lodge your savings Khani? With a bank investing in start ups, or a bank investing in proven businesses? Bear in mind you'll get the same interest rate either way.

    LB, you really are a massive geek.

  • LeoliansBro 24 Sep 2012 16:49:52 44,246 posts
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    disusedgenius wrote:
    LeoliansBro wrote:
    I've given you the reasons why I think banks aren't being too risk averse.
    Sure, which is fine if they're right. Seems like a good idea to spend a relatively small amount of money trying to see whether they're wrong though.
    They ARE right. Banks aren't withholding loans because they're being dog-in-the-manger bastards, this is how they make money.

    LB, you really are a massive geek.

  • LeoliansBro 24 Sep 2012 16:52:33 44,246 posts
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    And I've taken a moment to read up on what this bank actually does. Can't stand Peston most of the time, but worth a read.

    Does lend to new SMEs at all. Guarantees pre-existing (and therefore pre-approved) loans and seeks to tie them up in financial instruments sold to investors (the 'depositors') who will be canny enough to up their cost of capital accordingly.

    In a nutshell, it isn't a riskier bank, but that's OK, because it isn't really a bank at all and doesn't do any of the things McM, DG, Khani etc hope it will.

    LB, you really are a massive geek.

  • disusedgenius 24 Sep 2012 16:54:27 5,331 posts
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    LeoliansBro wrote:
    They ARE right. Banks aren't withholding loans because they're being dog-in-the-manger bastards, this is how they make money.
    Making money and being a dog-in-the-manger bastard isn't mutually exclusive, you know. :)

    Either way, I'm not sure why you think that was my point. If anything they just seem to be a bit conservative and so have reached a level of consensus which could do with a bit of a shake up. That's all.
  • disusedgenius 24 Sep 2012 16:57:39 5,331 posts
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    LeoliansBro wrote:
    In a nutshell, it isn't a riskier bank, but that's OK, because it isn't really a bank at all and doesn't do any of the things McM, DG, Khani etc hope it will.
    I'm confused by what you think I think, you're the one arguing that it is really a bank.
  • LeoliansBro 24 Sep 2012 16:59:30 44,246 posts
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    Nobody here has given me a reason why banks are being too risk averse. Take a direct parallel, can the UK government have a go at Ford because they Fiesta should be 1k cheaper so more people can afford one?

    LB, you really are a massive geek.

  • Khanivor 24 Sep 2012 16:59:39 40,772 posts
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    I was just arguing against the points you were making LB. Not my fault if our resident financial expert hadn't actually bothered to look into the basic facts of what he was saying was a stupid idea that couldn't work.
  • LeoliansBro 24 Sep 2012 17:00:33 44,246 posts
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    disusedgenius wrote:
    LeoliansBro wrote:
    In a nutshell, it isn't a riskier bank, but that's OK, because it isn't really a bank at all and doesn't do any of the things McM, DG, Khani etc hope it will.
    I'm confused by what you think I think, you're the one arguing that it is really a bank.
    That I'll give you, was going by Bremanacht's post, half heard background Lib Dem waffle on the telly. Oh, and the fact that everyone is calling it a bank.

    LB, you really are a massive geek.

  • LeoliansBro 24 Sep 2012 17:02:49 44,246 posts
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    Khanivor wrote:
    I was just arguing against the points you were making LB. Not my fault if our resident financial expert hadn't actually bothered to look into the basic facts of what he was saying was a stupid idea that couldn't work.
    Yeah, touche.

    I love how the Lib Dem prophet of the apocalypse has come up with a solution to our economic woes which basically copies the system that got us into this mess in the first place.

    And it still is a stupid idea. That cannot work.

    Edited by LeoliansBro at 17:03:08 24-09-2012

    LB, you really are a massive geek.

  • Bremenacht 24 Sep 2012 17:03:39 18,275 posts
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    Sorry! THought 'Cable Bank!' sounded catchy.

    : (
  • Bremenacht 24 Sep 2012 17:09:26 18,275 posts
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    FWIW - I kind of assumed peeps would read the article linked.
  • Khanivor 24 Sep 2012 17:11:32 40,772 posts
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    Having a quick gander of the linked Fact Sheet and it seems to suggest that banks would indeed find it more appealing to approve loans, if they know the government will then step in and buy those loans. In fact, sounds at face value like an awesome way for banks to get back on the horse they rode over the last cliff; approving loans to shitty prospects then repackaging them and selling the turd off onto an unsuspecting mug.
  • LeoliansBro 24 Sep 2012 17:11:34 44,246 posts
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    OK, now as it stands I don't understand how it is going to work.

    The principle intent is to guarantee the loans the have been made to SMEs, so they are financially secure. This is done by taking loans (with a maturity date of whatever) and changing it so the SMEs have 10 year loans. Nice, and noble, and indeed worthwhile.

    This obviously increases exposure to these businesses, and therefore risk. So either the pension funds being asked to invest by buying these bonds will want either a) a higher interest rate, which will have to come from Government funding (or are you going to ask the SMEs to pay more interest?) or b) Government backing for the loan, which means all the businesses that go bust will need to be covered by Government funding.

    Bear in mind, that a proportion of these businesses (2%, or 5%, or 10%) WILL fail. Who is going to pick up this cost?

    LB, you really are a massive geek.

  • LeoliansBro 24 Sep 2012 17:12:11 44,246 posts
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    Khanivor wrote:
    Having a quick gander of the linked Fact Sheet and it seems to suggest that banks would indeed find it more appealing to approve loans, if they know the government will then step in and buy those loans. In fact, sounds at face value like an awesome way for banks to get back on the horse they rode over the last cliff; approving loans to shitty prospects then repackaging them and selling the turd off onto an unsuspecting mug.
    And that's what you want to see?

    Take my point?

    LB, you really are a massive geek.

  • mcmonkeyplc 24 Sep 2012 17:17:17 39,457 posts
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    LeoliansBro wrote:
    I've given you the reasons why I think banks aren't being too risk averse.

    Would you like to tell me why they are? Please don't just say 'because not enough small businesses cam get loans' - banks aren't in the business of growing other businesses, they're in the business of investing in the interests of their stakeholders.

    And yeah, sure, this new bank is being transparent. Why then was I the only one in this thread to highlight this? Will any of you be switching to this new bank, with its higher risk of losing your money?

    *obviously you'll say yes because of government insurance and the need to pique me, but do you at least see my point?
    I do see your point but you have to see the point of this bank isn't profit for it's self it is in fact as you said in the business of growing other businesses.

    Come and get it cumslingers!

  • LeoliansBro 24 Sep 2012 17:26:05 44,246 posts
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    There is a way to thread the eye of the needle with this. But I don't have the figures.

    If it turns out in 10 years time, when all these loans mature, that the profit (and associated taxes) of the businesses which would have failed but for their loan restructure, outweighs all the businesses who have subsequently failed, such that the net effect on the Government coffers is positive, then it can work.

    Like I said, I don't have the numbers to crunch on that. I'm very, very skeptical though (not least because this doesn't even seem to be the intention of the new bank).

    LB, you really are a massive geek.

  • Khanivor 24 Sep 2012 17:36:57 40,772 posts
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    I thought your point is no one would want to invest their money in riskier prospects if the rate of return they were going to get was the same as for safe ones. As if investing based on something other than pure profits was totally unheard of...

    Warning of a non-risk averse bank is one thing. Warning of a non-risk averse bank which will repackage those things and claim they are rock solid, so of course we aren't actually risky at all! is another thing altogether.
  • Bremenacht 24 Sep 2012 17:38:29 18,275 posts
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    Something worth quoting from the article I linked, for clarity

    The new bank's cash will not be channelled directly to companies but through "challenger" banks such as the Co-operative, Handelsbanken and Aldermore. It will be run at arm's length from the Treasury.
    I don't know much about co-op or anything about Aldermore, but I have followed Handelsbank for some years. Look at what it Says about itself.

    It's a proper boring old retail bank. Proper, boring old branch managers having meetings with customers to discuss loans etc. Charging a boring rate of interest. Charging for bank services. Good old risk-aversive banking.

    Our major banks seem to operate on either a floodgates-on or floodgate-off risk basis. I'd rather have a loan request assessed by a human who understands my accounting than some call-centre bod with a big checksheet.
  • LeoliansBro 24 Sep 2012 17:46:51 44,246 posts
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    Handelsbank operates in exactly the same way as most all other high street banks, sorry.

    LB, you really are a massive geek.

  • Bremenacht 24 Sep 2012 18:26:50 18,275 posts
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    By employing people trying to flog you crap financial products and outsourcing assessment of your business case/accounts to PWC or their kind, because they no longer have an in-branch or in-house ability to do so? I don't think so.

    These banks have been tagged exactly because they are unlike the usual high-street mob.
  • LeoliansBro 25 Sep 2012 00:45:42 44,246 posts
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    Are we really all such bastards?

    LB, you really are a massive geek.

  • RobTheBuilder 25 Sep 2012 01:14:43 6,521 posts
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    Banking in 2012, a summary:

    Government: "You MUST lend to businesses as we bailed you out"
    Banks: "ok"
    Banks don't increase lending

    Government: "You MUST lend to businesses, here's some low interest loans to help you"
    Banks: "Ok"
    Banks don't increase lending

    Government: "You MUST lend to businesses or we will get very cross"
    Banks: "Ok"
    Banks don't increase lending

    Government: "We're going to work with you through our own bank set up to increase lending to businesses"
    Banks: "ok"

    ...
  • Psychotext 25 Sep 2012 01:25:58 54,208 posts
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    Mostly.
  • whatfruit 28 Sep 2012 11:35:14 1,519 posts
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    http://www.bbc.co.uk/news/business-19748613

    What are the chances that any of them will see serious prison time?
  • LeoliansBro 28 Sep 2012 12:00:39 44,246 posts
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    Problem with that is they didn't actually do anything illegal. They merely stretched their interpretation of the FSA regulations whilst staying within the letter of the law.

    A fine seems the most appropriate response, anyway.

    LB, you really are a massive geek.

  • sport 28 Sep 2012 12:03:11 12,732 posts
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    LeoliansBro wrote:
    Problem with that is they didn't actually do anything illegal. They merely stretched their interpretation of the FSA regulations whilst staying within the letter of the law.

    A fine seems the most appropriate response, anyway.
    Exactly what a filthy banker would say!!
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