Bank of England urges banks to strengthen reserves..... 1st Dec 2011

Just saw this news .........

www.bbc.co.uk...

In Which the governor of the Bank of England, Sir Mervyn King, said they needed to build up their capital buffers further to protect against an "exceptionally threatening" environment...

According to the story, British Banks have alreay 12% cash reserves which is higher than before the 2008 crisis and yet they are being URGED to have more. !!
Also to cut down on dividends and bonuses paid out.........

There was also a story a few days ago about the British Government sending out instructions to British Embassies in the EuroZone and beyond, outlining what to do if the Euro collapses and how to support British Citizens.....

Reading between the lines here............ are TPTB really saying that a collapse is Iminent ??

To have a bigger buffer in the banks (cash holdings) is really expecting a Decrease across the board of greater than the currently accepted Tier 1 cash holding levels (12%) that other banks inc Americans are still struggling to get too ??

Has Mervyn King just giving us all a 'Heads up' to what is about to happen ??

regards

PDUK

reply to post by PurpleDog UK


Possibly all that you say is true but also it would mean tightening credit control..
That means less loans to individuals and businesses at a time when they need money
and let's not forget that the banks were bailed out so they could "supposidly" help the little guy and business..
Obviously the banks are only worried about themselves..

I guess the collapse is kind of inevitable, since it's the system thats flawed and said system is still in place.

If the banks didn't ready themselves it would be even more outrageous. THEY are the ones that should see it coming first so if they don't bother to prepare they are # retarded.

I'm also hearing that this (stock) rally is over done and a knee jerk reaction to a nugget of positive news . It's being seen as a pre xmas boost only.

Plus there were rumours yesterday of a European bank having difficulty funding itself - I'll c/paste the link after.

Was the Dow rally the last hoorah before a final descent ?

www.telegraph.co.uk...

In the last paragraph the European Bank is mentioned though not named - that's almost certainly what drove the
global central banks to rally round.

It appears to be more of the same daily doses of "we are all doomed" from one of the globes monetary bodies.

Personally i am getting a bit weary of it all - not that it isn't vitally important just that i am worn down by constant economic gloom.

I just wish that, as an experiment, the world's media tried a week of positive economic stories just to see if it has a positive effect on the global markets. I doubt it but you never know!

I would also add that whilst depressing news it is actually good financial planning. Our banks already have a larger buffer zone than those of other countries. If, as expected, everything goes belly up then our banks will be in an even stronger position against their competitors and compared to banks in other countries.

reply to post by Flavian


Indeed. Banks such as Barclays and HSBC weren't even affected by the initial credit crunch and now hold even stronger positions.

You can almost see HSBC licking it's lips as Santander and the like sweat buckets... If the share prices of those banks fall low enough, gobble-gobble...

reply to post by PurpleDog UK


the article tell of UK banks and the RBS (partly owned by UK banks)...

it seems the advice is to increase the UK banks liquidity


now that might mean the advice is to shore up the liquidity of 'Sterling' rather than The "€ "
now this is just a personal opinion, but the collapse of the Euro, a run on the banks to cash-in
the public's € holdings is what is really being addressed here....again imho

reply to post by St Udio


Whilst i see where you are going with that line of thought, the actual strengthened reserves were a direct result of the 2008 meltdown - whilst other nations were arguing about all sorts of financial stuff our banks were ordered to strengthen reserves so that a similar situation wouldn't hit us as hard as it would other nations. I was / am actually rather proud of this action!