101–110 of 156 posts
Thank god we've got a PM who's a grown up again.
Do we? His style is more school-boy debate club than anything else. It doesn't matter what the reality is, so long as you get some zingers in.
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What is “free money” and how does a big bank print money?
They acquired a bunch of client assets for 1 GBP. Those client assets will generate money for them in the long term. For HSBC this is a great deal. For the clients too, come to think of it. On Friday the future of their money was uncertain, whereas today they can relax a bit because a big bank is backing them.
Earlier quoted context omitted.
They acquired a bunch of client assets for 1 GBP. Those client assets will generate money for them in the long term. For HSBC this is a great deal. For the clients too, come to think of it. On Friday the future of their money was uncertain, whereas today they can relax a bit because a big bank is backing them.
Assuming of course clients don't fucking pull out the moment they can when svb uk reopens.
There is a much lower chance HSBC experiences a bank run. Not to jinx it but the most likely outcome is that most customers are satisfied that HSBC is a well-capitalized bank and keep their money there, while HSBC gets to use their deposits and the bank's assets to sit comfy earning yield.
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Do we? His style is more school-boy debate club than anything else. It doesn't matter what the reality is, so long as you get some zingers in.
It is really sad to see comment threads like this that devolve into shallow and petty dismissals devoid of any actual content or substance!
1. Valid concern from the opposition
2. Rishi ignores the concern
3. Rishi says something about "the member from Islington North"
4. Jeering from the back benches (both sides)
5. Opposition moves on to another topic
1. Government back-bencher asks "Does the PM agree that we are doing a fantastic job on X?"
2. Rishi agrees
3. Rishi uses the time to grandstand about some other unrelated accomplishment
Still, I see no evidence that he is using his position of power to improve on this.
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The US regulators really frown on the big banks snatching up failed bank assets. They allow it when they have to but the median regulator driven take over is done by banks in the same tier as the one acquired. I actually wonder if that’s why the uk arm of svb was able to be purchased but the US one wasn’t. It’s probably just the relative size differences but I’m curious if the fdic got no bids for svb or didn’t get a…
The FDIC generally doesn't do "bids" based on this article https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-t... it seems that the FDIC basically just shows up at a competing bank, tells them their buying the failed bank, and that's the end of it.
https://www.bloomberg.com/news/articles/2023-03-12/fdic-auct...
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banks are not 'normal' companies. Their Liabilities and assets outmatch their 'profit' by 100x. They could be making a handy profit yesterday and be bancrupt today because the market has moved. Normal companies can't go bancrupt in one day
I'm not sure you understand what's happening here or the basics of business and liquidation. "Normal companies can't go bankrupt in one day" - They didn't go bankrupt. They went into liquidation. Massively different thing. You can have a company with billions of quid saved up in the bank that goes into liquidation. Liquidation is quite common and happens daily in the UK to 'normal' companies. Companies that were prof…
What you seem to be talking about about is cashflow insolvency. You can have a wildly profitable contract that pays in 120 days, but have no cash on hand to pay debtors. The work you are doing is profitable, you just can't afford to pay your debtors right now.
Profit != cashflow, that's why it's called cashflow insolvency instead of profit insolvency. You seem to be mixing up profit and cashflow.
But you're also talking about the wrong thing. These banks are not in cashflow insolvency. As far as I can see, these banks are going through what is called balance sheet insolvency. Their assets are worth less than their liabilities.
However, the assets are weird as the $100 bond they have is presently worth $78 even though in 10 years time it will be worth $100 again.This is because the interest the bonds pay is so low, no-one wants to buy it right now.
So their balance sheet doesn't add up, and as people started taking money out, they couldn't cover their liabilities. It LOOKED like their balance sheet was fine as they were valuing them at $100, but then they were forced to sell them and suddenly they have a big hole in their balance sheet.
So they're insolvent not because they've got a cashflow problem, but because their balance sheet doesn't balance. And the regulators stepped in to stop some creditors getting all their money out before that bank essentially went bust, leaving other creditors with nothing.
And now the regulators seem to be saying "we're going to guarantee that $100 bond is worth $100 even if you can only sell it for $78". By loaning people money up to $100 against it if they have one.
And they are claiming it won't cost the tax payer anything. But they're making 0% loans to banks when high inflation is happening, so the money they get back is going to be worth less than if they spent it on roads or healthcare, or whatever.
Maybe I'm wrong, and happy to be corrected, but it does seem what you're saying is wrong.
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It is really sad to see comment threads like this that devolve into shallow and petty dismissals devoid of any actual content or substance!
Fair point, so I will flesh this out a bit. The typical pattern we see in PMQs every week is this: 1. Valid concern from the opposition 2. Rishi ignores the concern 3. Rishi says something about "the member from Islington North" 4. Jeering from the back benches (both sides) 5. Opposition moves on to another topic Or perhaps this: 1. Government back-bencher asks "Does the PM agree that we are doing a fantastic job on…
But this has been like that forever, not very specific to any party or any PM.
Great play by HSBC. It's very interesting because some banks will make out very nicely in the comming weeks and some will be dragged down a lot by the general pull of the market. HSBC already found some "free money" right away. I think at least one of the big US banks will also print some money (I'd bet on JPM).
What is “free money” and how does a big bank print money?
Another is that SVB UK could be solvent so long as they don’t have to sell assets at a loss. Being part of hsbc stops the assets needing to be sold at a loss. And a separate thing is that even if the assets net liabilities are negative, the customer relationships could be valuable enough to hsbc to counteract that. Hsbc get a load of growing companies whom they can try sell banking services to. That assumes customers don’t all flee, but I don’t think they would because there isn’t a particular reason to fear hsbc in the way there was for SVB.
I don’t know what the commenter meant about JPM printing money.
HSBC itself is being sold to other banks, for Eg in Canada it's sold to RBC, in France it's sold to another local bank...
HSBC is a British bank with most of the profits being made in Asia (specifically Hong Kong). They may be selling off their unprofitable subsidiaries but the UK operations are pretty stable.
Funnily that's where their name comes from - Hongkong and Shanghai Banking Corporation Limited, HSBC for short (it's now the official name, HSBC does no longer stand for anything, probably to lessen the obvious imperialistic past in it's name).
Earlier quoted context omitted.
It is really sad to see comment threads like this that devolve into shallow and petty dismissals devoid of any actual content or substance!
Fair point, so I will flesh this out a bit. The typical pattern we see in PMQs every week is this: 1. Valid concern from the opposition 2. Rishi ignores the concern 3. Rishi says something about "the member from Islington North" 4. Jeering from the back benches (both sides) 5. Opposition moves on to another topic Or perhaps this: 1. Government back-bencher asks "Does the PM agree that we are doing a fantastic job on…