Possible banking crisis/crash this week in the UK

I though I would share this for anyone in the UK that might not be aware of whats going on this week and within the next few weeks.

The newly established Supreme Court replaced the House of Lords this month as the highest court in the land. The Supreme Court will decide whether the OFT can judge bank charges using fairness rules as the first test case result back in April last year ruled.

Since then, the banks have been appealing the decision and delaying the case that could see them billions of pounds worse off. Writing on the bank charges case, Tony Hazell at the Daily Mail said:

"Our information is that the Financial Services Authority has asked for details of charges going back to 2001. This implies that the banks may be forced to repay any unauthorised charges going back a full eight years.

"The implications are stunning. We estimate that the total bill could be close to £20billion if the banks are forced to repay every customer every penny they are owed," he said, adding, "This could seriously strain the finances of some of the biggest semi-nationalised banks."

Banks such as Lloyds and RBS, both of which have been hit hard by the banking crisis, could soon find themselves in an even more vulnerable position, depending on the Supreme Court's decision.

www.fairinvestment.co.uk...

The results of this bank charge case are expect very soon and each bank may be forced to go back 8 years and repay every single bank charge to every single customer along with the interest lost!
Peoples initial reactions might be that this is a good thing as quite a lot of people will be recieving a lot of refunds but what about the effects this will have on the banking system?

Also a company called Welcome Finance which is owned by Cattles PLC, that is currently in suspension since April this year after it could not repay a total of over £2 billion in loans to high street banks, is expected to announce its relisting or its liquidation. Nobody knows what will happen with this sub prime lender but if it goes bust along with these bank charges I expect that the UK will be plunged into something that will make last september look like christmas to say the least.

You can have a read about cattles here...

www.iii.co.uk...:CTT.L&display=news&it=le

(cant get the link working for some reason)

Anyways, I though I should alert people to what could happen this week or the next few weeks depending on what happens.

This is not a prediction but more a possible scenario that could occur if the facts play out most likely.

Thanks for reading and it might be a good idea to get some beans in the cupboard

I am hoping that someone with more knowledge of this might add anything or speculate on its effects as I am not exactly an expert but I do think this will have an effect, what I do not fully know is how bad it could get.

Im interested to hear from people.



[edit on 22-10-2009 by XXXN3O]

Question, I do not know how the GB banking system is set up. Are these banks part of a "Federal Reserve" type system like in the US? The Fed here loans money to all of the other banks here and then those banks interact with the people. Also, are these banks you are referring to some of the Mega banks?

What I am getting at, is this a way to destroy the Mega banks competition?

I believe here in the states, one of the reasons this whole debacle happened was to thin the herd(so to speak) of the smaller banks. Just like how it is destroying all of the smaller companies.

edit for grammatical error

[edit on 10/22/2009 by endisnighe]

reply to post by endisnighe


As far as I am aware the bank of england is fairly similar to the federal reserve, it gives loans to the government (treasury department), sets the base rate of borrowing for high street banks and controls the rate of inflation. The Bank of England operates independently of government as far as I am aware but is given objectives by the government.

The Bank of England is the central bank of the United Kingdom and was established as a corporate body by Royal Charter under the Bank of England Act 1694. The Bank was nationalised on 1 March 1946, and gained operational independence to set interest rates in 1997 (the Bank of England Act 1998 Part II sets out the responsibilities and objectives of the Bank in relation to monetary policy).

www.bankofengland.co.uk/publications/annualreport/index.htm

The "big banks" are normally referred to as high street banks in the UK some of which are Royal Bank of Scotland, Halifax Bank of Scotland, Lloyds TSB (now owns Halifax Bank of Scotland), Barclays, Abbey etc.

The high street banks have been lending to the subprime markets (cattles plc) and the loans are not being repaid because the customers cannot afford the repayments just like the US.

As for, is there a way to destroy the smaller competition, the scenario here is pretty much the same situation with different companies. The bank charge case however would directly impact the main big banks so the small and the large are going to take a hit if this bank charge case is ruled in favour of the customers.
As far as I can see nothing like this has happened before anywhere where big banks have to pay a huge sum of charges back to customers and take a hit from the subprime market not being able to repay business loans, looks like a big double wammy of a mess if that makes sense. The big banks are already being bailed out by the government as it is and none of these things have hit yet.

Im not an expert and would appreciate another member who has more knowledge of the system maybe adding some information here.

As far as I understand the system however.

Bank of England --> Government/High street banks ---> Subprime/Businesses/Customers




[edit on 22-10-2009 by XXXN3O]

Originally posted by XXXN3O
reply to post by endisnighe

 

As far as I am aware the bank of england is fairly similar to the federal reserve, it gives loans to the government (treasury department), sets the base rate of borrowing for high street banks and controls the rate of inflation. The Bank of England operates independently of government as far as I am aware but is given objectives by the government.

Also all interbank transactions and payments has to pass through the BoE, so BACS, CHAPS, FasterPayments etc are all tied to the BoE. I don't know whether that is the case in the USA.

reply to post by moniker


Thats right.

I dont think the US has PAYE taxes or any of the other things that you mentioned going through the FED.

Thanks for the post.



[edit on 23-10-2009 by XXXN3O]

Bloomberg just announced the UK are still in recession and GDP down 0.4% which was totally unexpected because they expected Britain to follow Germany out of recession. The number was "much worse than expected."

So will the BofE be putting more money into the UK economy?

Can someone with a little more knowledge add what the implications, of this news, could be?

Is this true? Does anyone have more information about this?

Natwest's computer systems are currently experiencing problems that have lead to service outages, according to reports by bloggers and Twitter users.

Dan Stuchbury, a developer who lives in Wiltshire, blogged on Friday that he had been told at his local Natwest branch that their computer systems had crashed. Twitter user Gavin Quayle said that Natwest ATMs across London were also not working.

Other Twitter users reported that RBS machines were also down (Natwest is owned by RBS).

A Natwest spokesperson had not responded to a request for comment at the time of writing.

Link