HSBC - falling apart?

[Kent Border Kenny]

loafer123 said:

Their problem is that people like me will never use them again.

I have quite a broad range of roles and specifically ensure those businesses do not use HSBC because they present a direct business risk not endured elsewhere.

So you are doing exactly the same as HSBC then, and avoiding doing business with those that they think pose too great a risk.

[loafer123]

Kent Border Kenny said:

loafer123 said:

Their problem is that people like me will never use them again.

I have quite a broad range of roles and specifically ensure those businesses do not use HSBC because they present a direct business risk not endured elsewhere.

So you are doing exactly the same as HSBC then, and avoiding doing business with those that they think pose too great a risk.

Interesting way to look at it. The difference is that they have really pissed me, and alot of other people, off by the way in which they did it, and so we will actively aim to ensure people don't work with them.

By contrast, they couldn't give a st about me!

[ATM]

Scootersp said:

ATM said:

I didn't hear about it until 2009 2010. And only because someone was trying to explain the credit crunch to me in layman's terms. Up until that point I believed the money they gave to borrowers was one to one with the money from savers.

I guarantee a lot of readers here dont know this is standard practice. Hence why they call me a troll. They don't know banks can just make this magic money and some are not even willing to believe it.

Maybe not a lot of readers here in the finance section, but yes I agree in the general populace etc there is a massive lack of understanding. In all areas of life there are things we assume is 'basic' knowledge and this varies massively, you might know all about fractional reserve banking, but zero about something else that another person (ignorant of the banking system) thinks is equally incredulous!

Unless you're an egghead or chaser you can't know everything. Arguable more people should know this as it's perhaps more important although most just have some money in the bank and occasionally want to borrow some more, and banks are custodians and facilitators. The whole banking world beyond the simple current accounts loans etc is not easy to explain to even the intelligent layman.

I'll admit that when I first heard it I thought the person telling me was a loon. But this person seemed perfectly normal. So I did some digging. It was not easy to find corroboration on the internet at that time. I dont know when the BoE added the explanation on their website but it definitely gives extra weight when trying to explain this to newbies. Telling people banks can just make up money still gets me funny looks.

[Kent Border Kenny]

loafer123 said:

Interesting way to look at it. The difference is that they have really pissed me, and alot of other people, off by the way in which they did it, and so we will actively aim to ensure people don't work with them.

By contrast, they couldn't give a st about me!

But people who look very like you in business terms pissed them off too, and cost them billions of pounds in fines. They’d quite possibly mug every last one of you off if it meant never being hit with fines like that again.

It’s the regulators and government who’ve lead to banks doing this.

[Kent Border Kenny]

ATM said:

I'll admit that when I first heard it I thought the person telling me was a loon. But this person seemed perfectly normal. So I did some digging. It was not easy to find corroboration on the internet at that time. I dont know when the BoE added the explanation on their website but it definitely gives extra weight when trying to explain this to newbies. Telling people banks can just make up money still gets me funny looks.

I notice that you quietly ignored the question of someone who traded through the credit crunch asking you how you think that you know better.

I’m starting to suspect that your knowledge was mainly gained on the internet, and is very disjointed. Is that a fair summary?

[loafer123]

Kent Border Kenny said:

loafer123 said:

Interesting way to look at it. The difference is that they have really pissed me, and alot of other people, off by the way in which they did it, and so we will actively aim to ensure people don't work with them.

By contrast, they couldn't give a st about me!

But people who look very like you in business terms pissed them off too, and cost them billions of pounds in fines. They’d quite possibly mug every last one of you off if it meant never being hit with fines like that again.

It’s the regulators and government who’ve lead to banks doing this.

I used to work for a major bank. I have accounts with several banks for both personal and commercial reasons. None behaved like HSBC.

Do you work for them?

[ATM]

Kent Border Kenny said:

ATM said:

I'll admit that when I first heard it I thought the person telling me was a loon. But this person seemed perfectly normal. So I did some digging. It was not easy to find corroboration on the internet at that time. I dont know when the BoE added the explanation on their website but it definitely gives extra weight when trying to explain this to newbies. Telling people banks can just make up money still gets me funny looks.

I notice that you quietly ignored the question of someone who traded through the credit crunch asking you how you think that you know better.

I’m starting to suspect that your knowledge was mainly gained on the internet, and is very disjointed. Is that a fair summary?

I'm not claiming to be an expert. I'm an average joe who didn't know banks made up money until around 2010 when it was explained to me. It was also explained to me that if the banks couldn't make up money then the credit crunch probably wouldn't have happened. I was pretty shocked when I found out that brand new money can be created by banks. And it's clear that a few readers here have tried to say that banks can't just make up money and that is why I'm a troll. But a few have recently agreed that they can. So please let us know if you agree or disagree.

[Kent Border Kenny]

ATM said:

I'm not claiming to be an expert. I'm an average joe who didn't know banks made up money until around 2010 when it was explained to me. It was also explained to me that if the banks couldn't make up money then the credit crunch probably wouldn't have happened. I was pretty shocked when I found out that brand new money can be created by banks. And it's clear that a few readers here have tried to say that banks can't just make up money and that is why I'm a troll. But a few have recently agreed that they can. So please let us know if you agree or disagree.

It’s not possible to say whether I agree or not as you haven’t said which measure of money that you are referring to, and the answer depends on that, but also because you are implying to people in the business who are experts that you know better than them.

[Kent Border Kenny]

loafer123 said:

I used to work for a major bank. I have accounts with several banks for both personal and commercial reasons. None behaved like HSBC.

Do you work for them?

None of them have been fined like them either, and so none would be walloped as hard as they would be were they found to be in breach of the regulations again.

And no, I don’t work for them, I work for one of their competitors.

[NRS]

loafer123 said:

ATM said:

67Dino said:

It is true that deposits are not the only form of liquidity that banks need to lend. The wholesale markets are another source. I wonder if this is what is causing you to think it’s infinite?

I didn't say it is infinite. I understand there are rules and its not simple. I know there is a fractional reserve where banks need to have about £3 for every £100 they want to make in new money. I'm just trying to get the point across to those who didn't know about this already. If the conditions are met and the rules are followed then a bank can make new money to give someone as a loan. Most people believe a bank can only lend out what it already has. This isn't true because a bank can make new money if it follows the rules. Banks can make new money. Banks do make new money.

How about this;

Firstly, it is £100 for every £10 of capital;

Secondly, they can create as much money as they like as long as they can borrow it from depositors and other banks, and keep within the first rule.

I think ATM is basically saying that when lending £10 of capital then the other £90 is basically made up by the loaning of that £10 out multiple times. In a simplistic view it is the case, as it's not £10 in an account, and £10 loaned out, but £100 instead (so the rest is "made up"). However, it's not unlimited money printing overall.

[CrgT16]

This making new money out of ‘nothing’ is probably not very accurate. The bank can probably borrow a certain amount from the Bank of England or other banks as kind of a ‘facility’. How much they can borrow to lend is probably linked to the banks assets, etc. I think saying it makes money out of thin air is disingenuous.
The banks have investment arms, otherwise they would just make all the money they needed to take over everything...
Otherwise I am starting my own bank!

[anonymous-user]

Hate HSBC with a passion. Incompetent and utterly self absorbed. I took away my business and personal accounts when they decided to use cheap foreign labour who struggled with English, let alone company structure documentation, to undertake KYC checks. Wouldn't piss on them etc...

[BertBert]

RonaldMcDonaldAteMyCat said:

Hate HSBC with a passion. Incompetent and utterly self absorbed. I took away my business and personal accounts when they decided to use cheap foreign labour who struggled with English, let alone company structure documentation, to undertake KYC checks. Wouldn't piss on them etc...

I'm in the process of moving away from HSBC as their service is appalling in many ways. The most recent KYC debacle was the final straw. I get that they had to do it, but it was a shambles of a process. Trying to answer questions over a poor internet phone line to someone who could barely speak English and didn't seem to understand anything about basic financial concepts was completely ghastly. Premier was great when I started 12 years ago, appalling now.
Bert

[anonymous-user]

The best bit was when they decided, just before one Christmas, that they'd decided to close the business account because they couldn't understand our simple shareholding structure (all uk based, mix of individuals and personal pension schemes). They agreed a shut-down date, then closed it mid January, 10 days before agreed and about 5 days before our replacement account was ready. HSBCs response? "Where would you like the cheque for the £350,000 balance sending?". Never mind the 20 people who might not get paid.

[ATM]

CrgT16 said:

This making new money out of ‘nothing’ is probably not very accurate. The bank can probably borrow a certain amount from the Bank of England or other banks as kind of a ‘facility’. How much they can borrow to lend is probably linked to the banks assets, etc. I think saying it makes money out of thin air is disingenuous.
The banks have investment arms, otherwise they would just make all the money they needed to take over everything...
Otherwise I am starting my own bank!

The BoE website is clear -

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

https://www.bankofengland.co.uk/knowledgebank/how-...

[NickCQ]

ATM said:

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

I feel like I have asked this 100 times, but what do you think happens when you want to withdraw the £100 you borrowed?
Not many people borrow £100 from the bank just to leave it on deposit with that same bank.

[ATM]

NickCQ said:

ATM said:

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

I feel like I have asked this 100 times, but what do you think happens when you want to withdraw the £100 you borrowed?
Not many people borrow £100 from the bank just to leave it on deposit with that same bank.

It just comes out of the ATM so you can spend it.

[LFB531]

Just heard that our 'Business Relationship Manager' at HSBC is being made redundant and isn't going to be replaced. He's looked after us for the last two years (although I've been a customer from the old Midland days) and will be genuinely sorry to see him go.

Ongoing, it seems we'll be dealing with a call center, managers being reserved for businesses deemed to be vulnerable. I guess it makes business sense for the bank to do that in terms of overheads but they'll lose any loyalty from customers who appreciate the facility to deal with someone direct, I know I'll get pretty bored with that option.

Reading much of the above makes me wonder if I've been quite lucky (although some of the RM's over the years have been frankly useless!) but I suspect that could happen wherever I bank.

[NickCQ]

ATM said:

NickCQ said:

ATM said:

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

I feel like I have asked this 100 times, but what do you think happens when you want to withdraw the £100 you borrowed?
Not many people borrow £100 from the bank just to leave it on deposit with that same bank.

It just comes out of the ATM so you can spend it.

Yes, and where does it come from?

[ATM]

NickCQ said:

ATM said:

NickCQ said:

ATM said:

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

I feel like I have asked this 100 times, but what do you think happens when you want to withdraw the £100 you borrowed?
Not many people borrow £100 from the bank just to leave it on deposit with that same bank.

It just comes out of the ATM so you can spend it.

Yes, and where does it come from?

The magic money fairies?