"However the massive price fall was not thought to reflect big withdrawals from the bank's deposits, BBC business editor Robert Peston said."
Mr Peston's quite right. The withdrawals will follow the share fall !
Who's next for the money-go-round ? Is that you, Mr Bradford ?
(It's probably coincidence, but I saw billboards for Britannia today, pointing out the advantages of having no shareholders. Good timing.)
2 comments:
If there are no shareholders, there's only the depositors to pay the piper.
Presumably the A&L have been running the same model as NR - borrowing short-term money on the markets to fund long term lending for 25 year mortgages. Unfortunately the supply of this short term funding has dried up, leaving the A&L unable to roll-over its debt. The A&L then tried to get more money in through the front door by raising rates for 1 year deposits - but that has only flagged to the outside world that it is short of cash.
Bradford and Bingley, HBOS and some smaller lenders are in similar situations.
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