HBOS (Halifax Bank of Scotland) Rumours

Oracle

Hot on the heals of the Anglo Irish Bank rumours are these new rumblings about HBOS (Halifax Bank of Scotland.) The rumour is that HBOS has liquidity problems and has requested emergency funding from the Bank of England, in a move similar to Northern Rock. To make matters worse the Bank of England are officially denying these rumours, always a sign that they're probably true. For example, from the BBC News article:

"And the Bank of England also denied that any UK banks were in trouble, and said it had had no meetings with banks."

Of course they wouldn't need to have a meeting to request assistance from the Bank of England. I'd say both HBOS and the Bank of England have access to that cutting edge technological device called the telephone, not to mention email and fax. The story is also reported on the RTE web site.

I'm very disappointed true or not, that a bank that has made such a big effort to offer better value and innovative products in Ireland, has rumours like this out about them. I think most consumers would agree we need more competition in the Irish Banking sector. If they do experience any difficulties, I'd be sad to see them leave Ireland anyway.

stepbar

It's not suprising, they'd be second to Anglo in what I would call "desperate" business i.e doing business no other bank would touch.

Then again pretty much every bank is subject to speculation, some more than others.

orbital83

stepbar wrote: »

It's not suprising, they'd be second to Anglo in what I would call "desperate" business i.e doing business no other bank would touch.

Then again pretty much every bank is subject to speculation, some more than others.

Stepbar, these Halifax digs just get more honourable by the day. There's other jobs out there, you know

The British authorities are investigating suspicions that traders are short-selling certain bank stocks, and then spreading rumours in the hope the stocks will fall and they'll make a profit.

I'm not commenting on whether HBOS are safe or not - but all stories need to be viewed with an open mind.

tHE vAGGABOND

To make matters worse the Bank of England are officially denying these rumors, always a sign that they're probably true

They cant really win then can they

stepbar

John J wrote: »

Stepbar, these Halifax digs just get more honourable by the day. There's other jobs out there, you know

The British authorities are investigating suspicions that traders are short-selling certain bank stocks, and then spreading rumours in the hope the stocks will fall and they'll make a profit.

I'm not commenting on whether HBOS are safe or not - but all stories need to be viewed with an open mind.

Meh, it would be gas if I actually did work for them.....

mvpr

Oracle wrote: »

To make matters worse the Bank of England are officially denying these rumours, always a sign that they're probably true. For example, from the BBC News article:

"And the Bank of England also denied that any UK banks were in trouble, and said it had had no meetings with banks."

With respect, I disagree. If I ring up the FSA and ask them to comment on whether they believe HBOS is in trouble when it is simply not true, all they can do is deny the statement. This is the work of (as the great Eamon Dunphy once put it) "gutter journalists" - making stories out of nothing. "FSA denies HBOS in default rumour" - anyone can write that without getting sued and sell a few papers while they're at it.

There is no doubt in my mind that what is happening to HBOS (and others) is the work of some of the larger investment banks (i aint naming names), taking up huge stocks in companies like HBOS and shortselling, then spreading rumours hoping the price of the stock will fall. This is deceit/trickery - the definition of 'fraud'.

dotsman

It was complete BS and is being investigated by the Financial Regulators both in the UK and here (similar rumours were being spread about Anglo). Right now, Investors are very easily panicked and if anyone wants to make a quick buck (by selling short), starting a BS rumour will start a major panic, making those that spread the rumour a massive profit.

As regards the telephone/fax etc. No matter who you are, you don't just ring up the Bank of England asking for a couple billion! As with Northern Rock, there would be very intense meetings between high level persons on both sides, going through the books and investigating how much money is required, on what terms and to what gain etc.

daveirl

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Colonel Sanders

daveirl wrote: »

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agree with this post 100%. Very similar to the the VI spin thats rampant in our media to try prop up a falling housing market. Keep the party going for the chosen few and encourage ordinary joes to buy into a falling market

uberwolf

daveirl wrote: »

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you can expect a rumour to have an effect. The rumour came out, 20% drop in price. Rumour denied, half of that drop is recovered. No fundamentals changed in that time.

In a market which has such a confidence problem at the moment, all the players are easily spooked. As such manipulation is easy.

Not to say there is or isn't a problem.

dotsman

daveirl wrote: »

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It all depends on who's spreading the rumour...
At the moment, (more than ever) the market is being driven purely by sentiment and panic, and not fundamentals. Rumours can kill a bank in this atmosphere.

As far as I am concerned all the major Irish banks are in perfect health, and am unaware of any "underlying problems".

The problem here is self-fulfilling prophecies. No matter how healthy a bank is, if a significant amount of people believe that it will fail- it will fail! It wasn't the "credit-crunch" that killed off Northern Rock. The "credit-crunch" caused the bank to request emergency funding. Immediately, with the media lapping up every minute and forecasting doom for the customers, savers queued at every branch for hours just to get their money back. It was this run on the bank that killed it. This run was caused by panic and nothing more. Even when Gordon Brown is telling everyone that their money is safe and even if Northern Rock can't pay, the government will, people still queued. That's the real "BS". It's all a panic.

Never underestimated the power of a rumour...

daveirl

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Oracle

dotsman wrote: »

As regards the telephone/fax etc. No matter who you are, you don't just ring up the Bank of England asking for a couple billion! As with Northern Rock, there would be very intense meetings between high level persons on both sides, going through the books and investigating how much money is required, on what terms and to what gain etc.

Yes I agree there would have to be meetings for funding to actually take place. But what the Bank of England (BoE) did was the classic PR device of denial by answering the wrong question. They "....denied that any UK banks were in trouble, and said it had had no meetings with banks." The rumour wasn't that HBOS had had meetings with the BoE. The rumour was that HBOS had requested emergency funding from the BoE. The BoE never actually denied that. My point was that a bank wouldn't have to have a meeting with the BoE to request emergency funding. As you've rightly said, being granted the funding, and on what terms, would be a different matter.

The BoE also denied that "any UK banks were in trouble". That's an incredible thing for them to say. What about Northern Rock? They must consider a bank that they had to provide emergency funding to, that the UK Treasury had to issue an indemnity for, subsequently could not be sold and finally had to be nationalised by the UK Government as not being in trouble. Northern Rock is currently not in trouble only because it's now nationalised. Clearly their definition of "trouble" is a very narrow one. What exactly do they mean by trouble? It's not a very precise financial or legal term anyway. It's simply more PR fudge, designed to reassure the public and maintain confidence in the banking system, that's their job.