Friday, November 25, 2011

Is your bank safe?

Hoare's bank © fintag

News comments:
Banks that are too big to fail.

Not a phrase you hear very much these days because nobody has the money to bail them out. Tier 1 capital cushions banks from collapse but risk free capital (sovereign debt mostly), which often makes up a lot of this, is hard to come by these days.

Trawling through the pillar 3 disclosure of tiny UK private bank C Hoare & Co, I note its deposits are going through the roof. Its total regulatory capital is a whopping 18% (with tier 1 at a huge 15% compared to the fantasy ratios of most others). This bank has survived the ravages of the markets for over 350 years and is as risk averse as they get. So much so it has only recently allowed you to open up offshore bank accounts there.

Where are we going with this? A friend of mine who cashed out a couple of years ago has just received a large bullet payment (Ed: You mean you?) and wants to deposit this somewhere. Doing research he has learned most of the banks are suffering from nasty deposit runs. Like Northern Rock a few years ago.

Banks that are Spanish or Italian or French are struggling. Banks that are heavily exposed to Euro banks are also suffering. UK banks are starting to pull away from lending to Euro banks just in case they go pop when the Euro collapses later this year are not moving fast enough. Credit crunch 2.0 is truly here.

A rich man's problem.

So C Hoare & Co it is then. Of course you have to be introduced to the bank. Time for some lunches then.

Today's shorts:
Hungry and Portugal banks are now junk (bloomberg)

Today's longs:
Sweden to run the ECB (bloomberg)

Bank of England to open up a branch network.


Anonymous said...

Tell your friend they still have offshore numbered accounts in Swiss private banks. For everyday banking, nothing beats Shitti bank - branches all over the world even though technikally it's all seperate companies