As the FT reports:
Some of Britain's biggest banks have begun quietly ridding themselves of billions of pounds of assets they have found difficult to sell following the financial crisis, moving them off their balance sheets and into staff pension funds.
The moves — designed with the dual purpose of clearing unwanted assets from the banks' own books while at the same time closing pension fund deficits — have been made as exceptional top-up payments into the pension schemes over recent months.
I often wonder how low the senior management of banks can stoop and they always exceed expectations.
This move shows the straightforward contempt of the directors and senior management of these banks for everyone else in the banks and in the world at large.
Are you really surprised that I want these banks nationalised when they fall over again, probably quite soon? And that the nationalisation should require a clear out of the people who do this sort of thing, for good?
If modern banking depends on ethics like these we can easily do without it. We need banking, for sure. But not like this.
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“Are you really surprised that I want these banks nationalised when they fall over again, probably quite soon? And that the nationalisation should require a clear out of the people who do this sort of thing, for good?”
Yes Richard, because nationalized banking is what this country needs. I defy you to list ONE instance of a nationalized bank globally that has ‘worked’.
Oh, shall we try the Bank of England?
What I find unnerving is that something that should come as a kind of shock now is not even a surprise. Moreover it is not even that, it is what one comes to expect from these people.
What would the ramifications be, for those with money invested in these pension funds, if the banks did fall over. Could these funds be so full of unfunded liabilities that they bankrupt or severely damage the pension payouts?
I think you can safely say the fall out for pensions would be dire
Which is why it is madness to base pension provision on such investments
What makes you think that these assets are “bad”? They are obviously illiquid, but that does not mean that they are necessarily of poor quality. In fact many illiquid assets such as private quity interests or real etate have consistently generated the highest returns for pension funds.
Is there no abuse you cannot excuse?
Is there no question you won’t answer?
Richard
any more detail on how this one works ?
If the banks transfer the assets at their true value then presumably they are chrystallising huge losses at that point which they’ve always been keen to avoid. If they’re doing that why not just fess up that their mortgage asset portfolio is sunk also ?
If, by contrast, they are trying to transfer the assets at some over-rated value, possibly at cost, how could either their auditors or the pension fund trustees accept that ?
Excellent points
I have no answers….sorry
Yes, there are some legal implications here surely? If I was an investor that had a portfolio of assets that was basically rated junk and transfered it into some pension fund, could I not be charged with fraud? If the pension funds are aware of this and, assuming they wanted to, could they not take some form of legal action over this?
Any comments by pension trustee and the regulator.I would expect it to have to clear at least some hurdles,however low.
Might be a good idea for trustees to insist on cash, the stuff normally used for transactions.It is an objective way of doing it.
If not why not? Cash is cash. Subjective valuation is just that.
The problem may be the unwillingness to convert it to cash at a market clearing rate, which could be a liquidity issue or it could be a reflection that the price is too high?
.