Monday, 26 January 2009

More scary banking numbers

From today's Telegraph:

The Bank of England says the average ratio of debt to equity within British banks is more than 30 to 1. In other words, the bank balance sheets are roughly 440 per cent of Britain's GDP.

As a result, the government is too small to help, in trying to bail out the banks, is in danger of chucking not just good money after bad but the entire economy after the banks.

RBS alone has a balance sheet larger than UK GDP.

Here is the paradox; UK banks need to downsize, but the smaller they get, the tighter the credit conditions. Smaller banks means a bigger recession.

1 comment:

Mark Wadsworth said...

"Smaller banks means a bigger recession."

Nope, wrong, that's a Big Lie that they are forcefeeding everybody. See my comment on your bail out post.