Sunday, February 01, 2009

City Bank Run

Mail Online: Revealed: Day the banks were just three hours from collapse
But shares continued to plummet, turning into a rout on the Friday when the FTSE crashed by ten per cent within minutes of opening.

Both Royal Bank of Scotland and HBOS were nearing complete collapse - but Lord Myners, who built up his fortune during a long career in the City, said the problems ran far wider.

'There were two or three hours when things felt very bad, nervous and fragile,' he said. 'Major depositors were trying to withdraw - and willing to pay penalties for early withdrawal - from a number of large banks.'
Lord Myners

Lord Myners: 'There were two or three hours when things felt very bad, nervous and fragile'

The threat to the system was so severe that the Bank of England was forced to contact RBS's creditors in New York and Tokyo to persuade them not to withdraw their funds, but it is not known which other banks faced a run on their reserves.

'We faced the very real problem of how banks could stop depositors from withdrawing their money,' a Treasury source said yesterday.

'The banks themselves were selling their shareholdings, accelerating the stock-market falls, and preparing to shut up shop.
Bloomberg: U.K.’s Myners Tells Times Bank System Nearly Failed on Oct. 10

Nothing to see here, keep going folks...

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