UK banks may need fresh bailout, thinktank warns

Poorly researched, premature and alarmist. Too many what if scenario peddlers still given too much access to the media. Fringe labour party stuff.

How were these figures calculated, given such a "shocking lack of information"? Not only are these "calculations" bogus, they appear designed to destroy the fragile confidence that society must have in the security of banks.

This isn't New Economics. It is fifth column economics, and third rate journalism.

Is it possible to get comparable figures from anywhere else?

Any one who believes that the banks are ok seriously need to look away from what the governments wants them to believe.

They are controlling the media, example; its only a few weeks ago banking stress tests were said to prove that almost every bank in europe would be strong enough to survive another downturn, but no one is really bothered about what was actually included in this testing process. Always do your own research, its not pretty.

Take it no one's read Bob Prechter's "Conquer the Crash" , no that could be classed as scare mongering, or is it?

Given that greed and lack of ethics by bankers have almost destroyed many states,it is about time the law reflected their degree of responsibility.

A law such as "a crime against the state" should be enacted,carrying the same penalty as high treason.

If these highly paid individuals were faced with the possibility of life imprisonment,or death by firing squad,should they abuse their duties and endanger their country,then i think they would suddenly develop a much increased level of moral responsibility.

I am no fan of the banks, their excessive pay and bonuses, or the appallingly lax regulation that allowed them to get themselves, and hence we taxpayers into such a financial mess. However, an article that warns that the banks will be unable to meet funding requirements of £25 billion a month, while simultaneously calling for a transaction tax that could levy £250 billion a year (or an additional £21 billion a month) is clearly nonsense. How on earth would they pay the latter if they cannot make the former. Come on Citywire - get a grip. I want to be woken up, but not with this rubbish.

I' m no economist, but these banks have just posted record profits, scaremongering at its best from this thinktank. Who incidentaly pays their wages?...

From the New Economics Foundation website:

""We work in partnership and put people and the planet first."" Says it all really. Another touchy-feely tree-hugging group of bien pensants.

There has been a deafening silence about how the banks are going to repay the huge amounts of money that were lent by the taxpayer to prop them up. At the same time property values (which banks invariably rely on for security) continue to fall. Not looking too good but no doubt the bonus cheques to these chumps will still be paid.

This is the sort of fact free article that is unecessary.

UK banks may well still be over-dependent on wholesale funding, which, the events of 2008 showed, can dry up in extremely stressed conditions. The only way to limit this dependence, short of actually slimming down, is to control balance sheet growth strictly and build up funding through retained profits. It is in this context that both government appeals to increase lending and suggestions of additionally taxing banks seem to be like whistling into the wind.

How does "may" in the first line of the article become "will" in the title? Poor journalism.

I agree with William Bishop. It is in the context of balance sheet building that the debate over bankers' bonuses should be conducted. Bonuses should be strictly limited or prohibited whilst that exercise is taking place. Oddly, the argument never seems to be put in those terms, press, people and politicians alike perhaps preferring the emotional approach.

The New Economics Foundation [formerly The Other Economic Summit] have their own agenda. They are in effect, anti-globalists.

You'd expect them to come out with scaremongering like this.

Anti-globalists who dare to crtiticise the almighty banks, and to suggest that they might not be doing all they should be doing with the money us taxpaying peons have been privileged to donate to them? Dear me, whatever next?

It must be obvious to any normal rational Citywire reader that the way things have gone over the last two or three years were completely unavoidable, and indeed all for the best in the best of all possible worlds-- as run by international piratical usurers and gamblers.

Now belt up, you ungrateful tree-hugging whingers, and concentrate on helping our rulers and owners march towards a brighter, better tomorrow by giving up some welfare benefits. Yours not to reason why when it comes to high finance-- yours but to applaud the success story of our great financial services industry and to marvel at our invisible earnings.

PS: If I signed my comments 'Adolf Hitler', would I be as welcome here as 'Joe Stalin' ?

I hate subscribing to conspiracy theories, but when I read stories such as this being circulated and broadcast by the media, I do wonder what the Govt. rumour mill is up to. It would seem that their press office is interested in mushroom cultivation. i.e. Keep 'em in the dark and feed 'em bullsh*t

Only last week I read that Northern Rock Asset Management. The company that was formed to recoup revenues from the NR's toxic debt. (Bad Bank) was doing far better than had previously been invisaged and was in fact able to repay the Govt. £1Bn ahead of schedule. The person who has now been put in charge of the business. The aptly named Mr Banks also indicated that a considerable amount of outstanding debts are likely to be recovered in the next five years, although it may take ten to fifteen years before the exercise can be finally wound up'

As regards the refinancing and day to day running of the so called Good Banks; I should have thought that it was just a case of applying proven business practices. e.g. Bookmakers use a system to manage risk and continue to run profitable and viable businesses. Perhaps Wm Hill could be appointed as advisors to the Bank of England.

I'm sure they would advise that regulations similiar to those that were imposed under the American Glass Steagal legislation should be readopted as soon as possible.

The problem going forward is two fold. (1) Capital reserves: i.e. the proportion of customers deposits which is not put at risk by lending should be in the order of 10% at the moment the banks are struggling to maintain a 6% ratio. (2) Viable cash flow: i.e. the dynamic volume of cash that is being deposited and is being re-lent in relation to the size of bank branches and the theoretical volume they could adequately manage.

Selling off RBS and NATWEST branches to Santander was the wrong move. (imposed by Brussels I think) They should have been simply closed and the accounts transferred to the nearest branches of the same group.

Similiarly you have Lloyds and Halifax branches practically next door to each other fighting for business which simply isn't there anymore.

I know critics will say to consolidate will increase unemployment, and will not stimulate further borrowing wereas increasing competition will be of greater convenience and could lead to more jobs. I disagree on the grounds that a plethora of branches is a luxury we can no longer afford.

not a penny more,they can all go to timbuktu as far as i am concerned.

what a lot of rubbish! Banks are posting profits now arent they?... getting ready to pay back money to govt?... alarmist is correct

I agree with Hotrod.

Consolidation will occur in any case, but under Santander, with all its assocaited customer services problems.

Soon Santander will be too big to fail in the UK, never mind everywhere else, in Europe, not just Spain, and the USA.

I am surprised that the EU is not looking into the risks of allowing Santander to grow at the current rate.

Irrespective of whether banks are making a profit or not, they are still in very dodgy territory. This morning BBC Business News announced that the Swiss Expert Commission announced that Credit Suise and UBS as they are too large to fail, require ratios much higher than those under EU Stress Tests.

-Common Equity at 10%, ours 7%.

-Capital Ratio raised to 19%, much higher than Basel's 10.5%

We are not out if the woods yet.

Some EU banks are struggling to meet Basel Ratios, never mind the ones above.

For a very considerable time before the UK was hit by the banks dismal failure there were many who warned us of their reckless, incompetent practices and the likely consequences thereof. And they were ignored.

Now we have seen the consequences, we are feeling the consequences but the banks have been patched up, given a light slap on the wrist and seem set to continue their rakes progress.

Yet still their band of apologists try to tell us it wasn't their fault; it was out fault; it was the governments fault; it is the public sectors fault, but oh no, it wasn't the banks' fault.

Wrong. It is the banks' fault and they must not be trusted to reform themselves or rely further on the taxpayers.

Tinkering around with capital ratios will change nothing. The arbitrary imposition of minimal requirements on banks too big to fail are little more than a knee-jerk response to events already passed. In reality they are unlikely to prevent a future challenge to the financial system as the challenge is unlikely to come from the same direction. The last crisis was due to a lack of liquidity as banks were reluctant to reveal positions held - so the system just dried up add a few well-targetted rumours and some ill-informed and sensationalist media coverage and you have a fully blown crisis. The system almost failed because the regulators did not know what to do to calm the markets. Dreaming up some ratios will not change matters, to the contrary they create mistrust making banks reluctant to lend. While the banks continue to face the flak the rating agencies and regulators are getting off scot-free

Re Joe Stalin.

That's exactly what Fred the Shred said to Alistair Darling when he went cap in hand to the Treasury. Typical bluff by a person who was staring failure in the face. The men from the ministry were not impressed, and refused to bail him out on that basis. However the stuffed shirt's initial plan was almost as dunderheaded. i.e. to take a stake in the bank in the form of preference shares carrying a 12% coupon. It soon became apparent that the bank would never recover if it was hobbled by such a crippling drain on its cash flow. Therefore a second plan had to be implemented whereby the Treasury would increase its stake by means of ordinary shares which would be fully risk bearing and dividend payments would be curtailed forthwith.

So far so good. But I think the American scheme, which was devised under T.A.R.P. legislation has proved to be a better solution.

Under that scheme the Govt. has the right to confiscate the assets of the banks who signed up to it, (little wonder that some U.S. banks have repaid their Govt. loans early) whereas the British Taxpayer, who, as an ordinary shareholder carries all the risk and would be tail end Charlie in the line of creditors if liquidation was the final solution.

I suppose that in a FREE speaking/thinking society we must expect daft ideas like this being put forward by totally biased and narrow minded groups. A pinch of salt and a quiet laugh is all that is required. One serious point to make is that if Banks are required to hold more and more capital in order to offset future risks, not a bad idea either, then their ability to increase lending is curtailed to some degree. In addition the more capital that is required then the interest margin between taking deposits and lending must also increase to compensate for the virtually non-productive capital held. It is all simple mathematics

yes it is simple mathematics so how come they keep getting it wrong and we end up paying?.

am i copletely stupid or is it the polticians that just dont get it or wont get it for some strange reason. wwhy the dickens can we not tie these banks up properly to their responsibilities.

our political leaders must be absolutley useless no i am sorry they are. useless and ineffective and especially this tory lot who are wedded to these banks

The real worry is that there are no longer any banks "too big to fail" in the UK. There will not be another bail-out (how could we possibly afford it?) and if banks fail, they fail. Goodness knows what the consequences will be, but it will be our own fault for ignoring the warning signs and, as Robert Munro rightly says, allowing them to continue on their rake's (possibly rapist's) progress.

Anyone know where Santander are going to get their £17 billion extra capital from, by the way? (see this morning's Times). Can anyone tell me with a straight face that Santander have escaped Spain's property catastrophe unscathed?

Re the Rod. I agree wrt to TARP it has worked out a lot better although it was an extremely difficult concept to sell to Joe Public. As with respect to Fred the Shred we must not forget that Diamond Bobby was also trying to get hold of that cloggy bank Abn Amro - instead our Bobby managed to pick up lehman from the gutter for peanuts. The other issues that made our bank rescue a bit more problematic were the bent referees from Europe. The final issue for both Lloyds and RBS was the Govt was taken advice from Standard Chartered who saw a clear opportunity to have the most draconian terms possible imposed on both RBS and Lloyds whimpering that they did not deserve any punishment as they had not done anything wrong. Just ask any investors into their SIVs what they think about that. The sooner the muppets in charge take the boots off Lloyds and RBS' necks the sooner the taxpayer will be in a position to get a major windfall and then we might have to resort to the rediculous penny-pincing imposed on the Government by Vince Cable and his delusionary followers.

Santander have been expanding aggressively. Most recently they have been buying banks in the USA and Poland for example, besides England.

From comments about their customer services clearly they are not capable of managing their expansion effectively, and could fall on their face, thus bringing problems for Spain, UK, and Europe.

Too big to fall - the Swiss have considered this and increased their banks ratios significantly.

The same does not apply to Santander. This is a lingering concern.

Come on EU wake up before it is too late.

I am sure that banking & bankers are only too aware that the recent bail out was a one-off even! Tax payers would not accept that their hard earnt money could be used in this way, again. Bankers, FSA & Chancellors, be aware.