LloydsTSB and HBOS in merger talks

Amp34 said:
If you have more than 35k I would assume you either have a good understanding of the banking/investment system or a financial advisor, both of which means you should have known about it. People with less than 35k cash don't need to know about it...
Click to expand...

Jonny69 said:
On £30K I make a month's interest about £100 according to the online calculators. Every month you're waiting to claim that back you'll be losing it.
Click to expand...

I find very few people, even today, know about the 35k thing. I didn't until Northern Rock and I had more than that in one place - I spread it out immediately.

Walking back from a meeting today with one of the account managers today I asked him if he knew about the 35k limit, he did not and he's someone that earns £100-£140k a year after tax.

I find the populace is widely in the dark around how much is protected or even if it is protected at all.
 
Vanilla said:
I find very few people, even today, know about the 35k thing. I didn't until Northern Rock and I had more than that in one place - I spread it out immediately.

Walking back from a meeting today with one of the account managers today I asked him if he knew about the 35k limit, he did not and he's someone that earns £100-£140k a year after tax.

I find the populace is widely in the dark around how much is protected or even if it is protected at all.
Click to expand...

Then it might be fair to say it's their own stupid fault if they loose it....
 
Vanilla said:
No, it would be the fault of the bank that loses it.

Ignorance is no excuse but they wouldn't be at fault for the failings of a bank.
Click to expand...

If I had some means of spreading a rumor that Natwest was financially rocky and people believed me and there was a run on Natwest tomorrow they'd be screwed because no bank anywhere holds enough cash to cover their deposits. Regardless of how strong their position was they'd still be stuffed, which just goes to show the lunacy of bank runs but there we go.

Point is, that would not be the banks fault.

Original point is, if somebody has more than 35k in a bank and something happens to the bank, and they didn't know or ignored the limitations of the compensation scheme then that's their own stupid fault.
 
bigredshark said:
Point is, that would not be the banks fault.

Original point is, if somebody has more than 35k in a bank and something happens to the bank, and they didn't know or ignored the limitations of the compensation scheme then that's their own stupid fault.
Click to expand...

I think it is the banks fault. It's the banks responsibility to maintain that confidence, it's the banks issue if a run begins on them and they are targeted by shorts. Keep a solid balance sheet and your position is solid. They need to make the environment where such a rumour would not be believed by avoiding being exposed financially.

If a bank suffers losses it's not the big bad market out to get them, it's their fault, their responsibility. Unfortunate? yes but that's what the CxO levels and the board are paid millions for.

On the original point I think people should be aware of their financial cover but in the instance of such a loss the blame lies at the foot of the bank for not running their business but the losses above 35k lies at the foot of the saver, but not the blame for the losses.
 
Vanilla said:
I think it is the banks fault. It's the banks responsibility to maintain that confidence, it's the banks issue if a run begins on them and they are targeted by shorts. Keep a solid balance sheet and your position is solid. They need to make the environment where such a rumour would not be believed by avoiding being exposed financially.

If a bank suffers losses it's not the big bad market out to get them, it's their fault, their responsibility. Unfortunate? yes but that's what the CxO levels and the board are paid millions for.

On the original point I think people should be aware of their financial cover but in the instance of such a loss the blame lies at the foot of the bank for not running their business but the losses above 35k lies at the foot of the saver, but not the blame for the losses.
Click to expand...

Tell that to HBOS and see how their board feel, there's nothing wrong with their position, their perfectly healthy, the city knows it, the FSA knows it and is telling anyone who'll listen but they're getting hammered.

It's a delicate balancing act now, if Lloyd merge with them it'll be great for them, it'll likely cost between 250 and 300p per share when they're likely worth 350-400p....unless the public get scared by the BBC and start a run on them, in which case they're screwed. It's a big enough risk I'm not chancing holding onto HBOS shares day to day despite the potential profits...
 
bigredshark said:
If I had some means of spreading a rumor that Natwest was financially rocky and people believed me and there was a run on Natwest tomorrow they'd be screwed because no bank anywhere holds enough cash to cover their deposits. Regardless of how strong their position was they'd still be stuffed, which just goes to show the lunacy of bank runs but there we go.

Point is, that would not be the banks fault.

Original point is, if somebody has more than 35k in a bank and something happens to the bank, and they didn't know or ignored the limitations of the compensation scheme then that's their own stupid fault.
Click to expand...

I agree that it's not always the fault of the bank. I have a small amount of sympathy for Northern Rock - who knows if they would have survived if £2bn of cash hadn't been withdrawn in a few days.

However to say people are stupid for not knowing the £35k limit is just ridiculous. Prior to Northern Rock why would they know about it? A run on a bank in this country was unthinkable back in those days. I think everyone though that if NR went under they would lose everything, hence why so many people withdrew their savings despite being worth less than £35k. Mind you, I still think I would have tried to get my money out if had had savings with NR.
 
scorza said:
I agree that it's not always the fault of the bank. I have a small amount of sympathy for Northern Rock - who knows if they would have survived if £2bn of cash hadn't been withdrawn in a few days.

However to say people are stupid for not knowing the £35k limit is just ridiculous. Prior to Northern Rock why would they know about it? A run on a bank in this country was unthinkable back in those days. I think everyone though that if NR went under they would lose everything, hence why so many people withdrew their savings despite being worth less than £35k. Mind you, I still think I would have tried to get my money out if had had savings with NR.
Click to expand...

Well, in my opinion, if you trust your money to a private company without having knowledge of what comeback you have if that company goes bust then you only have yourself to blame. That we've got used to trusting banks doesn't really excuse that fact.

I completely agree, once a run got started you want to be at the front of the queue to get your money out, however much it is, even if it's less than 35k the system doesn't pay out quickly in this country like it does in the US so you could be out of pocket for quite some time...
 
I've known for quite a while about the 35k limit, but the more I read about it the less confidence I actually have in it. Where exactly is the banking system/UK govt going to get the money to pay this out if another bank goes under? We're talking billions in deposits. If they try to tap the other banks they're going to get hammered, if they issue a load of treasury bills to pay for it all you can forget about our (supposed) single digit inflation rate. In which case everyone's net worth is being eroded.

Oh and you're braver man than I if you're piling into HBOS shares now. Watching the bloomberg screens is sickening enough as it is without having a direct investment!
 
bigredshark said:
Tell that to HBOS and see how their board feel, there's nothing wrong with their position, their perfectly healthy, the city knows it, the FSA knows it and is telling anyone who'll listen but they're getting hammered.

It's a delicate balancing act now, if Lloyd merge with them it'll be great for them, it'll likely cost between 250 and 300p per share when they're likely worth 350-400p....unless the public get scared by the BBC and start a run on them, in which case they're screwed. It's a big enough risk I'm not chancing holding onto HBOS shares day to day despite the potential profits...
Click to expand...

If I could I would. They're responsbile for their confidence and the decline has been slow, they have not persuaded shareholders they represent good value.

Confidence in HBOS has been shaky for a year, ever since they had low profits in 2007, Halifax lost huge market share and took a hits by being involved in US alt-A mortages. Losses include $1b credit crunch hit and then went onto cancel a $1b share buy back. If I were a shareholder that would have been my note to get out. Why would you stay in? A shares rule is not to hold on, at the first sign of trouble take the losses and go, things rarely get better.

It's not all malicious shorters, their decline has been occuring over the last year. HBOS were exposed and as the largest mortage lender with a record numbers of defaulters they could not maintain market confidence despite how loud they shout about being 'fine' (they all do).
 
Last edited:
frankmcg said:
I've known for quite a while about the 35k limit, but the more I read about it the less confidence I actually have in it. Where exactly is the banking system/UK govt going to get the money to pay this out if another bank goes under? We're talking billions in deposits. If they try to tap the other banks they're going to get hammered, if they issue a load of treasury bills to pay for it all you can forget about our (supposed) single digit inflation rate. In which case everyone's net worth is being eroded.

Oh and you're braver man than I if you're piling into HBOS shares now. Watching the bloomberg screens is sickening enough as it is without having a direct investment!
Click to expand...

Depends on what kind of time period you're looking at, assuming there's no run on them they're a good bet, either they get bought and you make a tidy profit, or they rebound towards their likely real worth of 300-400p and you make a tidy profit. It's only if there's a run on them you'd loose out, but it's not a risk I'm taking right now...
 
40,000 people out of a job isnt really going to help the overall economy either

that many people will mean compulsory redundancies....just in time for christmas no doubt..all down to misinformation and panic
 
Robert Peston has had a busy day: http://www.bbc.co.uk/blogs/thereporters/robertpeston/

1) The price of Lloyds TSB's takeover of HBOS will be around 280p-ish in shares, valuing HBOS at around £15bn. And the terms will be announced tomorrow, probably at 7am.

2) The government will use the "national interest" clause in the law that created the independent competition authorities to over-ride concerns about the huge market share that the enlarged Lloyds TSB will have. But it may have to use secondary legislation (which wouldn't involve any kind of debate in Parliament) to flesh out this clause, to the effect that the national interest would be served by the imperative of maintaining the stability of the financial system.

3) The reason the government is facilitating the takeover is that depositors and lenders to HBOS were beginning to withdraw their cash from HBOS, following all that downward pressure on HBOS's share price. There were growing concerns in the HBOS boardroom that a climate of fear was being created about its future, that could have led to a funding crisis - or a Northern-Rock style run, on steroids.

4) The enlarged group will be subject to competition law. If it exploits its massive market share in an anti-competitive way, the Office of Fair Trading will come down on it like a ton of bricks. But ministers took the view that consumers interests, in this case, were better served by protecting their deposits, rather than worrying about whether the market share of a beefed-up Lloyds was too great.

5) One part of the UK where there will be significant anger about this deal will be Scotland, because HBOS's totemic head office is in Scotland (though since the credit crunch began, HBOS's chief executive - Andy Hornby - has been spending most of his time in London). There will be a perception that the deal will relocate an important financial powerhouse to London. And that's probably true, in a practical sense, since Lloyds' chief executive Eric Daniels spends most of his time at his office in the City. But here's the curious irony: in a formal sense, Lloyds TSB's registered head office is in Glasgow (though that's not where any of the action takes place).

6) Eric Daniels will remain chief executive of the enlarged group. The future of Andy Hornby is unclear.
Click to expand...

:eek:
 
1) The price of Lloyds TSB's takeover of HBOS will be around 280p-ish in shares, valuing HBOS at around £15bn. And the terms will be announced tomorrow, probably at 7am.
Click to expand...

I'll be waiting eagerly. If markets open and no merger has taken place watch the SP fall to less than what we saw today. No doubt trading in those shares will be suspended.

The Government has to make sure the merger goes ahead or we could see a much bigger run on the bank than Northern Rock. After that it's a downwards spiral.

Hopefully my Lloyds shares will get a bit of a boost too. I saw a nice +17% for a few hours today.
 
You must log in or register to reply here.
Back
Top Bottom