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Robert:
that is nice, that santander is to the rescue....

Robert,
I am very proud of you, you have broken many of these stories.!

CONGRATS!

Inevitable really

People knock David Icke, but to be fair to him, he appears to be a bit of a prophet.
He predicted all this in his books years ago.
We are headed down the road to one global World Bank where money is abolished and personal credit is on our ID cards and eventually our "implanted microchip"

I'm so sceptical about this deal with Santander. Is the treasury paying 20 billion as the guarantor of the deposits in the hope it will get it back eventually from the sales of the dubious assets? The taxpayer should be given much more information on what this deal means. A private sale is one thing but using taxpayers money without a full debate in parliament is just not on. Come on you Tories do your job.

can I post here?

Santander is canny. It has the largest branch network of any bank now, in the world. It has picked off the savers, to boost its deposit/loan ratios and will of course, benefit from good old fashioned cost savings all around.

We are in uncharted territory as a global society, but as events have unfolded over the past year, there are lots of opportunities. For those in cash, it is rich pickings.

For the rest of us, we just hope we all survive this to tell our children and grandchildren.

no one will talk about what they are terrified of in the US
It is the collapse of the credit card bubble.
the banks cannot afford to finance the cardholders daily expenditure.
the senate were offered a choice ....
give us money now and you can have Six months to withdraw the available credit in an orderly manner.
the alternative was the end immediately of the banking system.
this is going to hurt every single american and is a problem here too.
the uk has the same problem.
there are over 3oomillion americans.
work out how much they dpend on credit cards each day.
the payments to retailers are financed historically by the sale of cdo's that no one will nuy.
the game is up.
but there is no solution

ALI BAB A must have said OPEN SESAME to Santander, or was it the other way round

Perhaps Santander would like the other 40 as well

Robert, as far as I can work it out, I think it may be premature to call an end to the banking crisis in this country.

The first reason being that this is now a dynamic situation and the future is no longer deductible from 'facts' on the page and previous historical experience. If the financial crisis enters the 'real' economy, which it inevitably must do, then we'll have a re-inforcing loop. Recession will feed back into the financial world and so on. As this happens the funding of many banks perceived AT THE MOMENT as being secure could possibly change.

There is no reason why even the banks who have deposits greater than their debts cannot come under serious pressure and go bust. I can imagine a situation where deposits are removed to support families who have lost their jobs, to pay off debts, to businesses in trouble and just plain hoarding. (Think about the explosion of safety deposit boxes in Japan in the 90s.) So given that, who can confidently claim to be safe?

Debt will always, under fractional reserve banking, be much greater than the money in the system and so when credit decreases the debt starts to suck the cash out. That money has to come from somewhere. Some of it will come from deposits. I don't think we can call this yet by a long way. The Paulson plan will mean no collapse on Monday, but it cannot make debt disappear: the minute credit retracts, initiated by the banking system, we have a huge problem. Unless it gets back to what it was we are heading for recession. It's not going back to what it was. We are going into recession and the diverse sources of funding that you mention in your reports that should, should sustain banks will actually increase their fragility. A complex system is always more fragile than a simple one. Therefore, as they face problems in other areas they become more vulnerable.

Also, Santander, I imagine, although I don't know much about the bank, surely must be about to face some serious liabilities vis a vis Abbey, Alliance and Leicester and the collapsing Spanish property market. How big is it? Remember, we all thought Northern Rock was a success story; so was Fortis; so was...

Robert,

Great reporting. I have two comments:

(1) The bailout when expressed in US$ on top of the recent market funding is easily proportionate (in population terms) to the US $700billion bailout! Yet, our taxpayers and politicans are making far less fuss on behalf of "main strret". When are we gong to wake up!

(2) A week ago with HBOS, the "short sellers" were castigated by even the curch leaders. Who are they going to castigate this week? No short sellers, so it must be those "evil" shareholders selling up, who must have just lost a bundle!

Keep up the good work - this turmoil has many more chapters to run. The simple point is, UK and USA have lived beyond their means for a decade, spending money that grew on trees in the form of asset inflation. Noone has yet mentioned the upcoming "toxic" credit card debt.

There is only only one long term solution wichi is that the individuals and the nation(s) as a whole have to tighten their belts. They will be aided and abetted in the form of a very deep recession!

Tim Hayes

WILL SOMEONE PLEASE EXPLAIN WHERE THE UK £30B AND THE USA 3350B IS COMING FROM?!?!?

I am thinking of starting a new type of bank. It will take savers deposits and lend these out to people to let them buy houses. No shareholders, it will be owned by its savers and borrowers. Is this legal ?

Isn´t it lucky that the British Govt. is so dedicated to the interests of its electorate.

The good bits of Bradford and Bingley are going to Banco Santander and the bad bits are going to the British taxpayer.

Last week it was time to help out the French taxpayer via EdF and this week its time to help out nuestro amigos en España.

No doubt the United States have issued instructions to the British to lend a hand with the more general bailout. Expect news next week.

How can people possibly believe that there may be low or no cost to the taxpayer when every time there is anything of value it is immediately disposed of to some private sector entity.

Your Government holds you all in complete contempt!!

Not an easy deal to understand.

British banks are failing because the British housing market is in decline. Spanish banks are able to cherry pick from the dregs because the Spanish housing market is in decline (probably a more serious decline than in the UK).

Still perhaps some Spanish practices will be imported into the UK and account holders will be offered free cars in lieu of interest.

Robert, would you agree that stagflation is on the cards? I can't see commodities (crude, coal etc.) going too low so inflation will remain high. However, central banks need to keep rates low to help people in trouble with the stagnating economy. Therefore it would seem a great time to be paying off a house. As long as you can afford to service the mortgage your debt burden will get relatively cheaper as inflation eats away the value of money and your take-home pay rises.

Is Santander really the right choice? I do not think so.
The Spanish economy is the most troubled in Europe. It has high and increasing unemployment, and a significant property and personal borrowing bubble. It is the one economy in europe that is more troubled than the UK.
Does Santander have a strong balance sheet that has been appropriately adjusted for its domestic asset impairements? I really hope so, otherwise if this deal goes through, the British taxpayer is just helping to bail out or delay the collapse of a Spanish bank.
Which actually begs the question - As the Treasury is taking away all the toxic loans, why have they not sold the valuable remaining assets and cash deposit base of +£20B to a UK bank that needs the assets and liquidity?

As a result of the taking on board of all this debt, the majority of which is mortgage debt on buy to let property or second homes, should we not consider a tax on buy to lets and second homes to cover the likely losses that the government. ie the taxpayers are now left with....it would certainly make people think twice about getting into buy to let in the future.

Hello No. 12 You ask where the money is coming from.

Basically it´s coming from government created debt that will be repaid by future taxpayers.

Of course maybe it won´t cost anything as the "assets" acquired in return for hard cash may ultimately turn out to be really valuable assets, and maybe the Government will make money on the whole deal in which case future tax payers will reap the benefit.

Debt of this magnitude will have all manner of unwanted (but entirely predictable) consequences.

General recession is the sum of these consequences. Although in this particular instance depression is also a fair bet.

One potential way of heading off depression is if enough people believe the fantasy of these nationalised "assets" actually ultimately turning a profit.

Unfortunately no-one who counts (i.e. the mega rich)actually believes a word of this. If they did then they would buy these assets themselves. Therefore the fantasy serves its secondary purpose of keeping the general population hopeful and hence forestalling any serious civil disobedience.

It also serves a third function of providing politicians with a potential get out argument based on their using reasonable judgement etc. They are not going to tell you the truth - that they are simply carrying out the instructions of the rich - and that those instructions are to load all of the debt onto the shoulders of the poor.

Maybe I'm missing something but isn't the savings business essentially a large pile of creditors / bank without the assets. Why would someone pay to acquire this, or will the taxpayer be paying santander to take on liability for deposits.

Ihave been been saying for years that banking is Hyped Investment Vehicle positive and will develop Automaticaly Induced Dept Syndrome as a result missusing the AAA.s

Some will say inocently "How can that be we had protection "

And I say "Well it wasnt up to the job was it"and "You should have tried it on piggy bankers first "

W'eve sold the golden eggs ,w'eve eaten the golden goose and spent the future on our credit cards

Without causing a panic run on the ATM'S could anyone tell me where we are heading with this

And how are we going to pay for the cake when we run out of doe

@13 - nice idea, shame co-operative banks already beaten you to it!

the question will have to be now, if the BB mortgage book is going to be dumped into northern rock does that mean the recently redudndant staff will be asked to come back to deal with the fallout?

In the UK, when management acts stupid, and a bank goes under, the Treasury steps in, creates a 'shotgun marriage' with a well-managed bank, liquidates the other bits for as much cash as can be made, dusts its hands and moves on.

In the US....Congress hands them billions of borrowed dollars, pats them on the backside, and makes them promise to be good boys and girls in the future!

Not great reporting. What about the nationalisation story? Indeed, the web page still carries gives the impression that nationalisation will occur.

Welcome to the Great Firesale of London.

Pension Fund assets sold out cheap !

We challenge you to find another deal so low !

You've bought our Industry !
You've bought our best scientific minds!
Now grab the rest !

Please remember Peso's only, to our Panama account.

Reading the comments, there's obviously a lot of anger. People blaming other people and looking for scapegoats.

It is not just the bankers who are greedy. It is not just the politicians who are stupid. Anyone who has a credit card; anyone who stretched themselves too thin to buy that dream house; anyone who borrows to buy a car they can't afford; anyone who invested in a buy-to-let: these people are greedy too, some more so than others; and many are stupid (or maybe ignorant) too.

There is the notion that we can afford as much debt as we can afford to pay interest on. Someone actually said this to me in 2001, and too many people seem to believe it.

Who is to blame? We must share a common culpability. Those who are too much in debt or who own too many houses (thereby making the shortage in housing worse) or who are trying to make money out of others' misfortune (buy-to-lets) - but also those of us who are safer with money, who haven't over-stretched ourselves - we are to blame too if only because we haven't let our voices be heard loud enough.

Restraint and prudence.

Gordon Brown as chancellor encouraged people to get 25 year mortgages - long-term , fixed-rate. But people chose not to listen.


Don't blame others until you are first willing to blame yourself.

Robert,

Two things I'd like to have you analysis of...

If BandB (and even NR) had been already been owned by foreign companies when they hit trouble -- how would this have impacted the way they are bailed out? Would it have been the same? or would their own Government have been expected to step in? or What?

Also - I only ever gamble what I can afford to lose, so my stock related investments are limited and their loss would not matter too much. In this case, why should I (any anyone else in a similar position) care if these banks were left to go bust?

Robert

Get your techi egg heads to sort out their XML parsing - comments need to be parsed to substitute entities (i.e. &) or the need to be parsed as CDATA.

Comments with amperstands are being rejected -- not good when BandB are in the headlines...

I was under the impression that Santander was a junior partner to RBS in their joint quest for expansion. With their other associate Fortis having to be rescued what does the aquisition of ABN now mean? Who picked the plumbs and who picked the prunes? I supposed the answer lies in who is currently going down the pan. Apart from their share price falling, where is RBS, we hear nothing from them? Is Sir Fred "I'll pay cash" Goodwin asleep once more?

Santander is a very, very canny bank and always has been. They introduced phone banking in Spain over a decade before anybody else in the world, and they have quite a track record of buying up competitors in distress and patching them up. During the last crisis, in the early '90s, they bought up a domestic competitor, Banesto, which was in dire straits, and is now quite the success story. They also had a "merger of equals" with Central Hispano, which, to the astonishment of the Central Hispano management, ended up as a complete takeover by Santander management.
The ABN-Amro saga has also showed their canniness: whereas Fortis has hit the rocks, and RBS isn't doing too brilliantly, Santander, which took over the Italian and Brazilian subsidiaries of ABN-Amro, sold off the Italian part for a tidy profit before the ink was even dry and only kept the Brazilian part.
As for the impact of the Spanish real estate bubble on Santander, I wouldn't worry too much about that either: the clearest sign that it was about to burst was when, over one year ago, Santander announced that it was selling off its real estate assets including (in a sale and lease-back scheme) its own HQ!
There is a golden rule in Spanish business: never, EVER bet against the Botíns (the family still very much at the reins of Santander).

RE: 27 rhysgp

"Who is to blame? We must share a common culpability."

"but also those of us who are safer with money, who haven't over-stretched ourselves - we are to blame too if only because we haven't let our voices be heard loud enough."

No, I'm not having that. By all means spread the blame among short-sighted, greedy bankers, empty-headed politicians and people who can't do enough arithmetic to understand interest payments - but those of us that managed our finances more-or-less sensibly are _not_ to blame, not in any way at all.

How do you suggest that we should have "let our voices be heard"? For quite a while now, all right-thinking economists have scoffed at old fashioned ideas like "paying your way" and "earning your keep". Some still are. How could I have voted in recent elections to reject the general political consensus that endlessly rising debt is no problem? Please show me the newspapers, radio and television programmes that were airing views contrary to the fantasy of self-indulgence.

No, I am not to blame for this shambles, and I resent any suggestion that I might be.

To rephrase a point one or two others have made: how can we rely on ANY bank coming in to buy failing banks when, due to the nature of the sub-prime crisis, no bank knows the full extend of the losses it has incurred so far? Okay, some banks have more diverisified portfolios of revenue stream than others but if they do not know the full scale of their losses how are they in a position to take on the liabilities of others? It seems to me that banks are playing the same game of roulette that got us down this road in the first place.

@27

"It is not just the bankers who are greedy. It is not just the politicians who are stupid. Anyone who has a credit card; anyone who stretched themselves too thin to buy that dream house; anyone who borrows to buy a car they can't afford; anyone who invested in a buy-to-let: these people are greedy too, some more so than others; and many are stupid (or maybe ignorant) too."

Do you expect any better of the common (wo)man? Debt has been built into our culture. We're deliberately not taught financial sense - quite the opposite.

Credit cards, low interest rates, adverts by banks, interest free student overdrafts (until graduation), and worst of all, the Student Loan have created a climate where it not just acceptable but expected for you to be in stupid amounts of debt.

Anyone got a graph of the PSNCR over the past 12 years? Its obvious that the government hasn't been leading by example. I see no prudence anywhere, except in my own home.

I'm in a good position. My credit card gets paid off in full every month and, as a debt manager, my job is getting more secure by the day, but without my parents and their "only buy what you can afford" attitude, I'd be one of these poor, uneducated people

The fact of the matter is, the people who are suffering with unsecured debt are most commonly in the 18-25 bracket, people who've been bought up on plastic and only known the bubble - people who are really going to struggle adjusting to what I hope to see now - reality.