Banks' funding needs: Total liabilities

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Posted by Margaret 349 days ago (http://www.economist.com)
Category: Banking | Tags: banks funding needs total liabilities

Getting banks to improve their funding profiles will not be easyAN AMERICAN judge once said that it was hard to define pornography, but “I know it when I see it”. Something similar is true of doomed banks. It is difficult to establish any archetype for failure from the past two years. Banks with high capital ratios, such as Lehman Brothers and Iceland’s lenders, imploded, while those with lower ratios survived. Plain-vanilla retail banks blew up while some black-box trading shops prospered. Both small and big firms collapsed. Spotting a doomed bank, it seems, may only be possible once it is going to hell.Yet there was a common ingredient in most failures: an over-reliance on wholesale borrowing. As the Western banking system has expanded over the past two decades its assets have grown to about 2.5 times its deposits, forcing firms to seek other types of finance. Bear Stearns and Northern Rock, largely reliant on short-term borrowing, faced the modern version of a “run” when their counterparties refused to roll over debts. Most other banks suffered some loss of confidence, forcing them to turn to funding from the state. ...
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Written by Hofferber0
191 days ago

Very cool.Thanks!

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Written by Schloop11
190 days ago

I'll have a look later.

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Written by Belcastro1
189 days ago

I'll have a look later.

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