RBS credit rating cut

[Jammy T]

Posted on the football part of this as I think our interconnection to the banking sector may make this relevant to us

 

RBS has had its credit rating cut, its shares are down 30% this morning - there is a spread on their shares of somewhere between 90-120p

 

There appears to be a genuine threat to it continuing as an independent bank.

 

I know RBS have made some mistakes but I cant see how banks like UKIO can survive unscathed if our grand old lady risks going under

 

This is getting genuinely scary guys!

 

As an aside I also heard that Stewart Milne Construction are in big difficulties too

 

Mods - if the connection is too spurious please feel free to move

[cobbyshambles]

well everythings turned to ****-but its hardly the apocalypse is it?

[Seymour M Hersh]

Posted on the football part of this as I think our interconnection to the banking sector may make this relevant to us

 

RBS has had its credit rating cut, its shares are down 30% this morning - there is a spread on their shares of somewhere between 90-120p

 

There appears to be a genuine threat to it continuing as an independent bank.

 

I know RBS have made some mistakes but I cant see how banks like UKIO can survive unscathed if our grand old lady risks going under

 

This is getting genuinely scary guys!

 

As an aside I also heard that Stewart Milne Construction are in big difficulties too

 

Mods - if the connection is too spurious please feel free to move

 

The same reason saplings can survive a hurricane where large mature trees get blown over. They are small and can bend with the wind far more easily than the large entrenched institutions. I'm not saying they will survive or that RBS will go under but in these situations small can be beautiful.

[Jam Tarts 1874]

Posted on the football part of this as I think our interconnection to the banking sector may make this relevant to us

 

RBS has had its credit rating cut, its shares are down 30% this morning - there is a spread on their shares of somewhere between 90-120p

 

There appears to be a genuine threat to it continuing as an independent bank.

 

I know RBS have made some mistakes but I cant see how banks like UKIO can survive unscathed if our grand old lady risks going under

 

This is getting genuinely scary guys!

 

Mods - if the connection is too spurious please feel free to move

 

You have to remember that UKIO Bank is only a small part of the UKIO Group, so let's not start a panic.

 

You also have to look at UKIO Bank's business model. It has some exposure to what could turn out to be bad debts, but nothing like on the scale of lending that some of the major British and other European/American banks have.

 

The big problem for many banks around the world is that they can't borrow money to lend us money, that along with exposure to sub-prime debt is where the problem lies. UKIO Bank does not have this mortgage lending as a big part of it's normal business and therefore like many smaller banks that have bread and butter deposit and current accounts as their main business, UKIO may continue to increase their profits as they have done year to date.

[Jammy T]

well everythings turned to ****-but its hardly the apocalypse is it?

 

Lets reconvene in 12 months and we'll see where we are.

 

IMO we are in the middle of this century's financial apocalypse, and we havent even moved into the wider business circles of the collapse yet.

 

To the other replies on this thread - my concern is that the UBIG group of companies is highly leveraged. It is precisely these sort of businesses that are at risk

[Charlie-Brown]

Mammals survived the extinction of the dinosaurs because at that time they were virtually all very small creatures that lived much like many rodents live today whilst the dinosaurs were the dominant large beasts of the day - the catastrophes and environmentally changes that wiped out the dinosaurs affected the mammals much less many of whom lived underground and out of sight much of the time..the mammals then filled up many of the ecological niches the dinosaurs left behind.

[haggis58]

Trading in the Russian stock exchange was suspended yesterday because shares had tumbled. That country has not been exposed to a mortgage expansion like the US and Britain and yet their banks are in a great difficulty.

 

The stadium redevelopment will be mothed balled in my opinion during this recession.

[Jammy T]

Mammals survived the extinction of the dinosaurs because at that time they were virtually all very small creatures that lived much like many rodents live today whilst the dinosaurs were the dominant large beasts of the day - the catastrophes and environmentally changes that wiped out the dinosaurs affected the mammals much less many of whom lived underground and out of sight much of the time..the mammals then filled up many of the ecological niches the dinosaurs left behind.

 

....and mammals were adaptable to change and not stubborn 60 year old dictators!!

 

But your analogy to rodents is sound...

[Charlie-Brown]

Lets reconvene in 12 months and we'll see where we are.

 

IMO we are in the middle of this century's financial apocalypse, and we havent even moved into the wider business circles of the collapse yet.

 

To the other replies on this thread - my concern is that the UBIG group of companies is highly leveraged. It is precisely these sort of businesses that are at risk

 

IF UBIG got taken down as part of the wider malaise J_T then there really isn't very much anybody can do about that - 4 years ago the major creditors who were also significant shareholders were calling in their debts and wanted the stadium sold asap to recoup as much of their money as possible - UBIG sheltered us from that scenario and extended our line of credit - thus far they are not calling those debts in although they probably do want them significantly reduced.

 

Whatever will be will be and we will just have to deal with it.

[Jammy T]

 

Whatever will be will be and we will just have to deal with it.

 

Of course - just discussing the continuing demise generally. Whether pro or anti Romanov it is concerning

[Jam Tarts 1874]

IF UBIG got taken down as part of the wider malaise J_T then there really isn't very much anybody can do about that - 4 years ago the major creditors who were also significant shareholders were calling in their debts and wanted the stadium sold asap to recoup as much of their money as possible - UBIG sheltered us from that scenario and extended our line of credit - thus far they are not calling those debts in although they probably do want them significantly reduced.

 

Whatever will be will be and we will just have to deal with it.

 

Why would UBIG be "taken down"? Their main businesses are commodities and mining.

[Charlie-Brown]

Of course - just discussing the continuing demise generally. Whether pro or anti Romanov it is concerning

 

The real economy will always survive although of course it will be affected but people still need to eat & drink, wash, shave, sleep, get from A to B, have some entertainment etc. in all previous crashes / recessions / depressions of course people suffer & some are financially struggling or ruined but there is always an end to the dark tunnel.

 

In a Hearts or football club context these will always exist so long as people want them to exist - they might not remain the same company or legal entity - they might not even play in the same stadium in the worst was to befall us but Airdrie and Fiorentina are just two examples of why we should never think everything that really matters about our club will ever be lost or think that everything is forlorn and without hope....there is always some hope.

[Guest Scottish Cup Semi 2006]

The same reason saplings can survive a hurricane where large mature trees get blown over. They are small and can bend with the wind far more easily than the large entrenched institutions. I'm not saying they will survive or that RBS will go under but in these situations small can be beautiful.

 

can i have some of what you have been smoking - 1st of all we are a BIG club not a SMALL one, 2nd we have the largest debt outwith the OF & the cost of debt is increasing & 3rd our running costs (i would imagine) are huge compared to the other interests in the UBIG group so if cuts are to be made (which is only logical) then we will get it first.

 

I don't subscribe to the Hobonomics view that we will fold, cos i think we will always be around but i do think we will have a few years of wilderness with virtually no spending on players/wages. Hopefully our youth system is as good as its made out to be.

[Guest JamboRobbo]

....and mammals were adaptable to change and not stubborn 60 year old dictators!!

 

But your analogy to rodents is sound...

beat me to it. :)

[Seymour M Hersh]

can i have some of what you have been smoking - 1st of all we are a BIG club not a SMALL one, 2nd we have the largest debt outwith the OF & the cost of debt is increasing & 3rd our running costs (i would imagine) are huge compared to the other interests in the UBIG group so if cuts are to be made (which is only logical) then we will get it first.

 

I don't subscribe to the Hobonomics view that we will fold, cos i think we will always be around but i do think we will have a few years of wilderness with virtually no spending on players/wages. Hopefully our youth system is as good as its made out to be.

 

My response was entirely regarding the two banks Ukio and RBS. Read the thread please.

[Jammy T]

Why would UBIG be "taken down"? Their main businesses are commodities and mining.

 

There has been an increasing deflationary spiral on commodities culminating in an all out crash yesterday. You've got financial websites such as Bloomberg with headline articles saying "Commodities : RIP"

 

I dont think there could be a worse group of companies than a com prop / development subsid, a commodities / metal subsid, a bank, and a debt laden football club.

 

Genuinely.

 

Mining, banking and property related stocks have been masacred. The worst groups

[Geoff Kilpatrick]

I still expect RBS to disappear, merging with either Barclays or HSBC.

 

From a footballing perspective, I can see club overdrafts etc. being cut or pulled as the banks try to bring in cash from every place possible. The implications of that for ALL clubs, not just HMFC, are pretty horrendous.

[Geoff Kilpatrick]

There has been an increasing deflationary spiral on commodities culminating in an all out crash yesterday. You've got financial websites such as Bloomberg with headline articles saying "Commodities : RIP"

 

I dont think there could be a worse group of companies than a com prop / development subsid, a commodities / metal subsid, a bank, and a debt laden football club.

 

Genuinely.

 

Mining, banking and property related stocks have been masacred. The worst groups

 

It depends how leveraged these companies were going into this vortex.

 

If these companies need to refinance debt at any point over the next 2 years, they have BIG problems.

[Guest Scottish Cup Semi 2006]

My response was entirely regarding the two banks Ukio and RBS. Read the thread please.

 

sorry - just read the thread re RBS !!! still think your on the wacky backy if you think Ukio will escape this cos their small !!!!

 

Share price value has fallen 60% in the last 2 months - sorry but to me thats not saying small is beautifull !!!

[Charlie-Brown]

sorry - just read the thread re RBS !!! still think your on the wacky backy if you think Ukio will escape this cos their small !!!!

 

Share price value has fallen 60% in the last 2 months - sorry but to me thats not saying small is beautifull !!!

 

This would be more worrying if that was happening in isolation - how much have Banking stocks as a whole lost as a percentage? Has anybody kept track .... whatever it is I'll wager it's a horrific loss in terms of capital value at current market prices.

[Jammy T]

It depends how leveraged these companies were going into this vortex.

 

If these companies need to refinance debt at any point over the next 2 years, they have BIG problems.

 

I get the impression they are heavily leveraged - although this is not based on me having had sight of their accounts, more on the nature of the businesses.

 

The reality is that most businesses are heavily leveraged and also cash poor eg money in assets but not in the bank

 

There is virtually no asset class going up in value at present (apart from gold for the time being), therefore the combination of needing finance and/or realising assets (which are depreciating - eg com prop) to maintain cashflow is likely to be real issue for UBIG.

 

That and the fact that although they diversified, they diversified into just about every sector that is crashing at the moment!

[Jammy T]

This would be more worrying if that was happening in isolation - how much have Banking stocks as a whole lost as a percentage? Has anybody kept track .... whatever it is I'll wager it's a horrific loss in terms of capital value at current market prices.

 

Any bank that hasnt lost at least 50% has the midas touch. So in context it doesnt look that bad.

 

What I would say though, is it is a wave. America first, us and western europe next, eastern europe a little further behind the curve...

 

One concern is Russia - I am not sure how much UKIO is vested in or reliant upon Russia but they are a shambles at the moment

[Coco]

I get the impression they are heavily leveraged - although this is not based on me having had sight of their accounts, more on the nature of the businesses.

 

The reality is that most businesses are heavily leveraged and also cash poor eg money in assets but not in the bank

 

There is virtually no asset class going up in value at present (apart from gold for the time being), therefore the combination of needing finance and/or realising assets (which are depreciating - eg com prop) to maintain cashflow is likely to be real issue for UBIG.

 

That and the fact that although they diversified, they diversified into just about every sector that is crashing at the moment!

 

Their end Q2 results suggested that UBIG had roughly 1/3 of their total liabilities to refinance (short term 'financial debt').

[Geoff Kilpatrick]

Any bank that hasnt lost at least 50% has the midas touch. So in context it doesnt look that bad.

 

What I would say though, is it is a wave. America first, us and western europe next, eastern europe a little further behind the curve...

 

One concern is Russia - I am not sure how much UKIO is vested in or reliant upon Russia but they are a shambles at the moment

 

 

Thankfully, in a lot of senses, Russia can no longer bully in the same way over energy given the drop in commodity prices. That's why their markets are falling.

[Charlie-Brown]

Their end Q2 results suggested that UBIG had roughly 1/3 of their total liabilities to refinance (short term 'financial debt').

 

Would you know if or do you think this was debt to UKIO Bankas or external lenders?

 

The reason I ask is that for example Hearts owe a big overdraft to UKIO which UBIG are guaranteeing......

[Coco]

Would you know if or do you think this was debt to UKIO Bankas or external lenders?

 

The reason I ask is that for example Hearts owe a big overdraft to UKIO which UBIG are guaranteeing......

 

Unfortunately there were no notes to the accounts on the UBIG website report found by Dexter. So no I don't know where it comes from.

 

It would seem likely that refinancing short term debt of 1/3 of the capital of the company in the current environment will be an expensive task wherever it could be found.

[John Gentleman]

There has been an increasing deflationary spiral on commodities culminating in an all out crash yesterday. You've got financial websites such as Bloomberg with headline articles saying "Commodities : RIP"

 

I dont think there could be a worse group of companies than a com prop / development subsid, a commodities / metal subsid, a bank, and a debt laden football club.

 

Genuinely.

 

Mining, banking and property related stocks have been masacred. The worst groups

 

.....and the worst has yet to come. Australia is a big mine. A really, REALLY BIG mine for all sorts of commodities. They've been protected from the commodity crash for the time being because of fixed (mostly) one year contracts with their two major customers - China and India. But when the next round of price negotiations come around........nae prizes for what'll happen.

 

Globally, we've all been floating in a big bubble for a good number of years and now somone has stuck a pin in it. BANG!.....and the pack of cards within come tumbling down on each other. Make no mistake; this is a global financial Tsunami and we're still early doors.

 

In a rare moment of foresight, a couple of years ago, I 'retired' from a very well paid contractual position to join the relatively 'safe' Australian Public Service (Civil Service) and took a big hit in remuneration. Why? Because I saw the writing on the wall; house prices were escalating at a rate way above the ratio of affordability - a sure-fire first sign that trouble was on the horizon. Sure enough, like everywhere in the West, prices are now divebombing. I'm presently living in modest, comfortable and affordable rental accommodation. But when the market bottoms out (I have my own ratio of affordability for that), then I'll be in the market and screwing hard on price. Aye, my 'win' will be somebody else's 'cost' - but who said capitalism was fair and even-handed?

 

In the meantime, strap up the seatbelts! There's a rough ride ahead.

[topcat]

Tue Oct 7, 2008 4:03am EDT

 

VILNIUS, Oct 7 (Reuters) - Lithuanian central bank governor Reinoldijus Sarkinas said on Tuesday the bank was ready to lend up to 1 billion litas ($394 million) to raise the liquidity of banks, but no support was needed at the moment.

 

More than 60 percent of Lithuania's banking sector is dominated by Scandinavian banks SEB (SEBa.ST), Swedbank (SWEDa.ST) and DnB Nord (DNBNOR.OL). Local banks include Snoras (SRS1L.VL), Ukio (UKB1L.VL) and Sialiu Bank (SAB1L.VL).

 

"The Lithuanian central bank can lend a substantial sum of money to support the liquidity of the country's banks, if needed," Sarkinas told a meeting of businessmen and banks. "As of today, that sum would be about 1 billion litas."

 

However, the bank system remained sound, he said.

 

"Based on today's indicators, none of the banks face bankruptcy," Sarkinas said.

 

Sarkinas said banks' mandatory reserves deposited at the central bank were 3.4 billion litas, while the minimum level was 3 billion litas.

 

The capital adequacy ratio was 12 percent as of Sept. 1, while the minimum requirement was 8 percent. The special reserves for non-performing loans were 0.73 percent of the total loan portfolio of 70 billion litas, Sarkinas added.

 

Officials in Latvia and Estonia have also said that their banks are safe, with reserves above the required level and low levels of bad debt despite an economic downturn. (Reporting by Nerijus Adomaitis; editing by David Stamp)

[The Don]

Trading in the Russian stock exchange was suspended yesterday because shares had tumbled. That country has not been exposed to a mortgage expansion like the US and Britain and yet their banks are in a great difficulty.

 

The stadium redevelopment will be mothed balled in my opinion during this recession.

 

 

Russia has had billions in hand outs and loans from Europe and the US, thats where they are vulnerable

[Geoff Kilpatrick]

.....and the worst has yet to come. Australia is a big mine. A really, REALLY BIG mine for all sorts of commodities. They've been protected from the commodity crash for the time being because of fixed (mostly) one year contracts with their two major customers - China and India. But when the next round of price negotiations come around........nae prizes for what'll happen.

 

Globally, we've all been floating in a big bubble for a good number of years and now somone has stuck a pin in it. BANG!.....and the pack of cards within come tumbling down on each other. Make no mistake; this is a global financial Tsunami and we're still early doors.

 

In a rare moment of foresight, a couple of years ago, I 'retired' from a very well paid contractual position to join the relatively 'safe' Australian Public Service (Civil Service) and took a big hit in remuneration. Why? Because I saw the writing on the wall; house prices were escalating at a rate way above the ratio of affordability - a sure-fire first sign that trouble was on the horizon. Sure enough, like everywhere in the West, prices are now divebombing. I'm presently living in modest, comfortable and affordable rental accommodation. But when the market bottoms out (I have my own ratio of affordability for that), then I'll be in the market and screwing hard on price. Aye, my 'win' will be somebody else's 'cost' - but who said capitalism was fair and even-handed?

 

In the meantime, strap up the seatbelts! There's a rough ride ahead.

 

We could see a worldwide inflation of Mugabe style money printing as Governments chicken out of facing the consequences, however. That would just delay things for another day.

 

World War III anyone?

[Charlie-Brown]

Unfortunately there were no notes to the accounts on the UBIG website report found by Dexter. So no I don't know where it comes from.

 

It would seem likely that refinancing short term debt of 1/3 of the capital of the company in the current environment will be an expensive task wherever it could be found.

 

Okay thanks for at least trying to answer Coco Borrowing from what was ulimately UKIO Depositors funds would of-course be cheaper than trying to raise external finance .... do Ukio accounts provided any detail on how much they might have lent to UBIG companies? sorry for all the questions.

[hmfc_steve]

We could see a worldwide inflation of Mugabe style money printing as Governments chicken out of facing the consequences, however. That would just delay things for another day.

 

World War III anyone?[/quote]

 

that might not be far from the truth.... going by previous human history

[Colonel Kurtz]

This would be more worrying if that was happening in isolation - how much have Banking stocks as a whole lost as a percentage? Has anybody kept track .... whatever it is I'll wager it's a horrific loss in terms of capital value at current market prices.

bought RBS at 101 this morning

If you can keep your head......to quote kipling

[Charlie-Brown]

We could see a worldwide inflation of Mugabe style money printing as Governments chicken out of facing the consequences, however. That would just delay things for another day.

 

World War III anyone?

 

Thanks Geoff ..... there's nothing of value worth warring over in south edinburgh except lots of rain for reservoirs........

[Jammy T]

bought RBS at 101 this morning

If you can keep your head......to quote kipling

 

brave - should get you a return, but brave.

 

if you get 20-30% return i'd bail out. I scooped 25% on HBOS last week, and bailed before the weekend. The contrarian in me knew the bail out approval would result in a dive.

 

Anyway HBOS are now 15% below what I initially bought them, but profit was banked

[Geoff Kilpatrick]

Thanks Geoff ..... there's nothing of value worth warring over in south edinburgh except lots of rain for reservoirs........

 

There's a drought over here! Water's valuable!!

[Coco]

Okay thanks for at least trying to answer Coco Borrowing from what was ulimately UKIO Depositors funds would of-course be cheaper than trying to raise external finance .... do Ukio accounts provided any detail on how much they might have lent to UBIG companies? sorry for all the questions.

 

I don't have details to hand on Ukio/UBIG relations.

 

With regard to raising deposit money ... as of end June 08 Ukio Bankas had deposits of the equivalent of ?673m; and net loans of ?694m. In the first half it would seem that the Bank has been successful in bringing in deposits - there is much less (?150m or so) of a reliance on wholesale markets.

[John Gentleman]

brave - should get you a return, but brave.

 

if you get 20-30% return i'd bail out. I scooped 25% on HBOS last week, and bailed before the weekend. The contrarian in me knew the bail out approval would result in a dive.

 

Anyway HBOS are now 15% below what I initially bought them, but profit was banked

 

Hope you 'banked' your profit in a safe place JT

 

I'm seriously thinking about buying one of yon 'precious metals' detecting devices. Could well turn 'oot to be a well paying hobby!

 

I'll be looking for gold. Australia's full of it. It's finding it that's the tricky bit, well in large chunks anyways.

 

Here's a wee (true) story from yesteryear: I did a bit of 'panning' for gold in a stream in north eastern Victoria about 15 years ago. After 8 hours, I'd panned 4 ounces. Trouble was, gold was worth feck all at the time!!

 

The more things change, the more they stay the same!

[Jammy T]

Hope you 'banked' your profit in a safe place JT

 

I'm seriously thinking about buying one of yon 'precious metals' detecting devices. Could well turn 'oot to be a well paying hobby!

 

I'll be looking for gold. Australia's full of it. It's finding it that's the tricky bit, well in large chunks anyways.

 

Here's a wee (true) story from yesteryear: I did a bit of 'panning' for gold in a stream in north eastern Victoria about 15 years ago. After 8 hours, I'd panned 4 ounces. Trouble was, gold was worth feck all at the time!!

 

The more things change, the more they stay the same!

 

At todays rates that would have earned you around ?1800 for a days work. Not too shabby

[132goals1958]

The same reason saplings can survive a hurricane where large mature trees get blown over. They are small and can bend with the wind far more easily than the large entrenched institutions. I'm not saying they will survive or that RBS will go under but in these situations small can be beautiful.

 

What an excellent analogy

[badly drawn boy]

You have to remember that UKIO Bank is only a small part of the UKIO Group, so let's not start a panic.

 

You also have to look at UKIO Bank's business model. It has some exposure to what could turn out to be bad debts, but nothing like on the scale of lending that some of the major British and other European/American banks have.

 

The big problem for many banks around the world is that they can't borrow money to lend us money, that along with exposure to sub-prime debt is where the problem lies. UKIO Bank does not have this mortgage lending as a big part of it's normal business and therefore like many smaller banks that have bread and butter deposit and current accounts as their main business, UKIO may continue to increase their profits as they have done year to date.

 

 

Lenders do have the money , they just dont want to lend

 

Ukio Banks exposure to domestic lending in the region is greater than the 6 bigger banks

[Sydney from Sydney]

Why would UBIG be "taken down"? Their main businesses are commodities and mining.

 

So you haven't noticed the shift in commodity stocks ?

[david mcgee]

RBS is close to insolvency, they need a rapid capital injection.

 

They only need about ?12 billion, since not many people have that much in loose change, it looks inevitable that the Government will step in.

 

The RBS will in effect be part Nationalised.

[droid]

the reason why rbs are in trouble opposed to ukio isnt so much to do with there banking interests,but the fact that major banks like rbs have gambled there customers money for years especially in the troubled american mortgage market and had there fingers seriously burned.

 

i could be wrong!!!!

[h-e-a-r-t-s]

if people spent more time doing their jobs rather than wasting hours posting and responding to rumours on Kickback, the economy would be much healthier.

 

of course, I see the irony in me posting that at 14:38 on a Tuesday.

[Coco]

bought RBS at 101 this morning

If you can keep your head......to quote kipling

 

Current price 95p

[Seymour M Hersh]

bought RBS at 101 this morning

If you can keep your head......to quote kipling

 

Or perhaps more apt be fearful while those around are greedy but be greedy while those around are fearful. A bit of paraphrasing there but you get the gist.

[Jammy T]

Current price 95p

 

Nearly got up to the 20% profit mark for CK before bombing.

 

Gets the blood pumping though, eh?

[Jammy T]

Or perhaps more apt be fearful while those around are greedy but be greedy while those around are fearful. A bit of paraphrasing there but you get the gist.

 

Its a good paraphrase though. You just have to be good at judging the actual mood of others, and it needs to be the depth of fear and the climax of greed.

 

I'd go with buy when there is complete panic and capitulation, and sell when nobody thinks a market can fail eg when you can get 10 times salary for a mortgage!

 

Not that I followed that line of thinking, sadly....

[Ellycopter]

well everythings turned to ****-but its hardly the apocalypse is it?

 

I really don't understand why all these banks are folding and share prices are crashing but it's scary.

 

I do know, however, that if the US government goes against all its right wing principles and piles in $700 billion of tax payers money, a few weeks before a presidential election, something very big is in the offing.

 

I genuinely think all hell is about to let loose economically and many families are going to suffer.