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Wednesday 3 October 2012

Casino banking to blame?

http://www.fcablog.org.uk/wp-content/uploads/2011/09/casino-bank-scaled.png

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3 comments:

Alex said...

As a very experienced banker with a deep knowledge of finance. markets etc. I would take issue with that diagram:

1. Barclays took a loan from the BoE when their funding got tight. Not an equity injection, but still a bailout.

2. NR & B&B were both casino banks inasmuch as their business model relied on them taking a lot of liquidity (funding) risk. They basically tried to improve profitability by playing the yield curve, lending long term and borrowing short term, in the expectation that they would be able to refinance. When the market stopped taking their paper they got burned.

3. HBOS took big risks in property (high gearing / low security cover / uncovered residual), and they took the same sort of risks in aircraft and ship finance, taking uncovered residual positions. That is fine if you are ILFC or any7 other experience operating lessor, but not if you are a bunch of plonkers from Yorkshire or Edinburgh.

5. Lloyds was a conservative bank but took the biggest risk of all when they took on HBOS, not knowing the extent of the possible losses. They bet the whole bank on black, and the ball landed on red.

3 October 2012 at 17:25
Not a sheep said...

Actually I did think it a bit simplistic. I wondered if you'd post a comment clarifying...

5 October 2012 at 20:06
copy check said...

Casino banking isnt simplistic. Most of the banks wont accept funds to transfer to casino sites. Only few sites like neteller, moneybookers only accept casinos.

If you have any questions, get back to me. I can explain you better.
Thanks.
regards,
Henry

13 January 2013 at 20:05

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