Santander - Next bank in line for mass withdrawals of savings?

[12gauge]

All these bust banks are bringing up memories of how things were a couple of years ago.

Gone are the days where half a dozen loan offers from Capital one, alliance and leicester etc etc were coming through the letterbox every day. Thank god.

[anonymous-user]

dxg said:

And so it begins.

At some point over the past few days, RBS have changed their online banking system so that you can't access those accounts that are heading to Santander without a 'new customer number.'

What is that new number? Anyone's guess.

Do you go to RBS or Santander with the problem? Anyone's guess.

You could always phone up and ask?

[munky]

anonymous said:

[redacted]

Which is why in all my posts I was careful to say "where covered by the FSCS". That means sub-£85k.

Even then, it's highly likely the govt will guarantee the lot, again, and send the bill to the Spanish. Which they did with Iceland, who eventually agreed to pay up.

[munky]

12gauge said:

All these bust banks are bringing up memories of how things were a couple of years ago.

Gone are the days where half a dozen loan offers from Capital one, alliance and leicester etc etc were coming through the letterbox every day. Thank god.

I'm still getting the 0% credit card balance transfer* leaflets regularly, notably from MBNA and Mint. They go directly in the bin!

• a 3% transfer fee applies, so it's not 0% at all

[Mermaid]

munky said:

...Even then, it's highly likely the govt will guarantee the lot, again, and send the bill to the Spanish. Which they did with Iceland, who eventually agreed to pay up.

It would be a fair few billions, and would they have the money to pay it? In this climate, I would not keep more than £82k (£3k for interest accrued) with Santander Group or with organisations like ING ( Dutch Government guarantees the money). When the weather changes, happy to change my mind,

[jbudgie]

Is it correct that it can be £85k in cash and also £85k in investments, that's what I was told by santander yesterday.

[Paul Dishman]

jbudgie said:

Is it correct that it can be £85k in cash and also £85k in investments, that's what I was told by santander yesterday.

maximum of £85K in total AFAIK

[jbudgie]

Well as I said that's what they told me yesterday.

They even said some investments differ from others so each type could have their £85k. ?

[munky]

DonkeyApple said:

I recall this reasonably well as I was right in the middle of it

Likewise although only from 2007. Additionally I know a few people rather well that were in the building, as it were. The head of CFD trading at KSF, the administrator at E&Y deadling with the equities business (it survived due to a management buy-out, and continues to this day as Singer Capital Markets), the PB risk guy at DB (the "turbanator" as we used to call him), and the 2 traders at DB financing most of KSF's CFD business (it was their balance sheet (and other banks) being used, not KSF's - it was cash positive for them) and also a barrister at the FSA is a good friend.

ALthough most CFD client funds were non-seg, about a week before they got shut down, KSF sent out letters to all clients advising them to convert to physcal shares (if they had the cash), or sell up and get out as margins were being raised to 100%.

I thought you were referring to a different "situation", which was that RT was on the board of Exista, a major shareholder of KSF's parent.

[Paul Dishman]

Take a look at

http://www.which.co.uk/money/savings-and-investmen...

[OlberJ]

In at a late stage here.

What happens with my Santander Loan and overdraft if they go under?

[Mermaid]

OlberJ said:

In at a late stage here.

What happens with my Santander Loan and overdraft if they go under?

They still come after you

[DonkeyApple]

munky said:

DonkeyApple said:

I recall this reasonably well as I was right in the middle of it

Likewise although only from 2007. Additionally I know a few people rather well that were in the building, as it were. The head of CFD trading at KSF, the administrator at E&Y deadling with the equities business (it survived due to a management buy-out, and continues to this day as Singer Capital Markets), the PB risk guy at DB (the "turbanator" as we used to call him), and the 2 traders at DB financing most of KSF's CFD business (it was their balance sheet (and other banks) being used, not KSF's - it was cash positive for them) and also a barrister at the FSA is a good friend.

ALthough most CFD client funds were non-seg, about a week before they got shut down, KSF sent out letters to all clients advising them to convert to physcal shares (if they had the cash), or sell up and get out as margins were being raised to 100%.

I thought you were referring to a different "situation", which was that RT was on the board of Exista, a major shareholder of KSF's parent.

But the key here is that KSF retained the counter party risk of the underlying client, not DB. DB's risk was to KSF and they raised the margins to get KSF out as a client. Most clearers jacked up margins to the brokers as they suddenly woke up to the fact that many of the equity positions they held were not diversified across many small clients but single, large, offshore clients who had previous track record of not honouring margin calls. KSF had been hoovering all the positional filth up from about '05. Staff were linked to GT247 who had previously failed due to positional risk.

The smart brokers had been offloading these toxic clients for some time and KSF had become the last resort for these clients.

[croyde]

Lots of adverts for Santander on the telly at the mo'.

[munky]

DonkeyApple said:

But the key here is that KSF retained the counter party risk of the underlying client, not DB.

Obviously.

DonkeyApple said:

DB's risk was to KSF and they raised the margins to get KSF out as a client.

Yes, they panicked, based on the parent's (very illiquid) CDS price alone.

DonkeyApple said:

the equity positions they held were not diversified across many small clients but single, large, offshore clients

most were onshore, including RT and VT, but there was a rather large Russian multi-billionaire.

DonkeyApple said:

who had previous track record of not honouring margin calls.

disagree. They closed out and binned any client not paying up in 3 days, and margins were set very high, factoring in the client, position size vs liquidity, diversification and volatility, and positions held at other brokers by the same client. There was apparently one troublesome Dutchman that always paid but often late, and was accordingly charged higher margins. That's what margins are for.

DonkeyApple said:

KSF had been hoovering all the positional filth up from about '05.

Also disagree, unless FTSE-100 is filth. The majority was FTSE-100, some FTSE-250, Norilsk Nickel. The exception was one client with many but small positions in illiquid crap, which I note was all financed by DB, the rest of us wouldn't touch it

DonkeyApple said:

The smart brokers had been offloading these toxic clients for some time and KSF had become the last resort for these clients.

You mean apart from most of them that still had (usually larger) positions at IG, among others.

[DonkeyApple]

munky said:

DonkeyApple said:

But the key here is that KSF retained the counter party risk of the underlying client, not DB.

Obviously.

DonkeyApple said:

DB's risk was to KSF and they raised the margins to get KSF out as a client.

Yes, they panicked, based on the parent's (very illiquid) CDS price alone.

DonkeyApple said:

the equity positions they held were not diversified across many small clients but single, large, offshore clients

most were onshore, including RT and VT, but there was a rather large Russian multi-billionaire.

DonkeyApple said:

who had previous track record of not honouring margin calls.

disagree. They closed out and binned any client not paying up in 3 days, and margins were set very high, factoring in the client, position size vs liquidity, diversification and volatility, and positions held at other brokers by the same client. There was apparently one troublesome Dutchman that always paid but often late, and was accordingly charged higher margins. That's what margins are for.

DonkeyApple said:

KSF had been hoovering all the positional filth up from about '05.

Also disagree, unless FTSE-100 is filth. The majority was FTSE-100, some FTSE-250, Norilsk Nickel. The exception was one client with many but small positions in illiquid crap, which I note was all financed by DB, the rest of us wouldn't touch it

DonkeyApple said:

The smart brokers had been offloading these toxic clients for some time and KSF had become the last resort for these clients.

You mean apart from most of them that still had (usually larger) positions at IG, among others.

Sorry but I can't duplicate the quoting stuff

DB, Calyon etc all 'panicked' as they suddenly woke up to the fact that they were pricing the risk of many brokers incorrectly, but they didn't over react, they simply closed off the most toxic clients and changed the magins and comm/funding charges on others.

The clients' assets were not onshore. The key mechanism behind these clients was to hold sufficient assets onshore to cover innitial and some variation margin but they ran a 'st or bust' approach and were able to walk away if it went wrong and leave the broker to wear the damage.

Closing out and binning is fine. 3 days is too long and bad risk management on equity positions. Variation needs to be settled daily, plus good risk is to not hold more than you can push out into the market in a day, preferably less. KSF got their risk management totally wrong.

The troublesome Dutchman was simply one of many clients structured the same way. Known individuals who no well run firm would accept default risk on.

Of course FTSE 100 positions are filth when they are not margined correctly and the counter party risk is determined by a bad client

None of them had positions at IG post 2006, all that business was shut down and they moved to the only firms which continued to facilitate, City Index (pretty much bankrupted by bad debts from these clients), Cantors (although even they were more risk averse by this time having had the US parent increase client margins on a couple of occassions), MF Global (but they had to wind down as they wrote their own CFDs and lent out their physical basket for funding and overnight that lending dried up so they margined out all their clients) and KSF.

[Ribol]

anonymous said:

[redacted]

Surely what he has said is just a sum up of the facts as we know them today, isn't it?

[munky]

DonkeyApple said:

Sorry but I can't duplicate the quoting stuff

DB, Calyon etc all 'panicked' as they suddenly woke up to the fact that they were pricing the risk of many brokers incorrectly, but they didn't over react, they simply closed off the most toxic clients and changed the magins and comm/funding charges on others.

The clients' assets were not onshore. The key mechanism behind these clients was to hold sufficient assets onshore to cover innitial and some variation margin but they ran a 'st or bust' approach and were able to walk away if it went wrong and leave the broker to wear the damage.

If the margin is correct, there is no damage to be worn. That's the point of a margin.

DonkeyApple said:

Closing out and binning is fine. 3 days is too long and bad risk management on equity positions.
Variation needs to be settled daily

Funny. Guessing you're in Ops or maybe a VaR team / risk control rather than management? I'm guessing not private banking, prime brokerage risk or anything client facing. Margin is called daily, but if your client is on a plane or on a yacht and doesn't get the message within 24 hours, do you close him out? What if it's a bank holiday where he is? You'd be out of clients in the blink of an eye. Nobody automatically closes out in 24 hours, db certainly doesn't, but if the client is a bank, fund or family office then there has to be a damn good reason. Even then, you just factor in 3 days (ideally more to be on the safe side) into the margin calculation with Sqrt(t), it's not difficult.Notfactoring that in is bad risk management.

DonkeyApple said:

KSF got their risk management totally wrong.

You know nothing about their risk management I suspect. How many meetings did you have at their offices? Did you meet their CFD credit risk analyst? I've seen their margin model, it's very similar to what we use for PB clients.
I do know they never lost a penny on defaults so it can't have been that wrong.

DonkeyApple said:

The troublesome Dutchman was simply one of many clients structured the same way. Known individuals who no well run firm would accept default risk on.

Of course FTSE 100 positions are filth when they are not margined correctly and the counter party risk is determined by a bad client

Come on, think about it. Contracts with full recourse to client's assets. Just looked him up, The Dutchman's assets are largely in Guernsey, not too hard to get to, indeed assets anywhere in the EU shouldn't be hard to get at.
IG margins all FTSE-100 at a flat 10%. That's what I call "not correctly".

DonkeyApple said:

None of them had positions at IG post 2006

Well that's odd, because I dug out our old files and I'm sat in front of a IG statement for the account of a well-known KSF customer, from April 2008.

Seems like our DD was a bit more dilligent but even so, we wouldn't finance the stuff db did.

[munky]

anonymous said:

[redacted]

Hmm, pretty sure he's wrong in para 5. If a bank goes bust, you don't get let off the debt, as the appointed administrators will go after it, even if the loan book is not sold off.

[Ribol]

munky said:

Hmm, pretty sure he's wrong in para 5. If a bank goes bust, you don't get let off the debt, as the appointed administrators will go after it, even if the loan book is not sold off.

Isn't he just saying if a bank goes skint today someone won't be asking you for all the money you borrowed back tomorrow?

I don't think he is suggesting Christmas will come early