Revealed: Day the banks were just three hours from collapse
By GLEN OWEN
Last updated at 11:21 PM on 24th January 2009
Narrow escape: The Bank of England was forced to contact RBS's creditors abroad to persuade them not to withdraw their funds
Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed.
City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse.
The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals.
Only frantic behind-the-scenes efforts averted financial meltdown.
If the moves had failed, Mr Brown would have been forced to announce that the Government was nationalising the entire financial system and guaranteeing all deposits.
We are not out of the woods yet,' she said. 'I fear for Barclays, after the fall in its share price, and Lloyds has been damaged by the HBOS takeover.'
She added: 'If it was panning out in that way, then the Government would have had no choice but to step in and nationalise the entire financial system.'
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Who are these 'major depositors' i wonder?
ReplyDeleteMy bet would be banks in the US and Japan , based on the article , since the term creditor and not client or customer was used . However , one of their business lines is Corporate and Institutional - within this line , services / products including prime brokerage for hedge funds are provided. In addition to the prime brokerage function , a range of structured finance products and other services are on offer to hedge funds , private equity and asset management firms. They could be clients or creditors - I would guess Eurozone and London clients / creditors received calls as well from the BOE. Just my 2 cents based on a quick scan of the RBS website
ReplyDeleteI am becoming more convinced that the end result will be nationalisation of the banks not just in the UK but in the US as well. How many more billions must we spend in the interim to avoid the inevitable. It may cause significant pain to do so, but it would end the uncertainty once and for all and lay the foundation for a new financial order. No matter how you look at it, the taxpayer will pay in the end.
ReplyDeletenumber to nationalize the banks here could hit three trillion.... how do we finance that ? I don't think the GCC with oil where it presently stands , China with their own domestic woes , or Japan will buy the treasuries needed .
ReplyDeletethe endgame will be guarantee all the bank deposits and let all other kind of financial instruments go bust.
ReplyDelete