Banking Crisis – Could 4 Major Banks Be Nationalised Next Week?

Hollywood script writers could not make up the events that have happened since the credit crisis hit the financial markets. No western government can be blamed for not doing enough since the crisis erupted to end it as soon as possible. However all steps taken have been not entirely effective – so far.

Markets are driven by sentiments. The fear element arising from the unknown has been at the fore front of diving stock markets.

Even the announcement of £500 billion injection into UK banking system has not been enough. Pundits are predicting stock price loses next week.

And rightly, the government has made plans to prepare for that. They are prepared to take bigger (even majority) stakes in 4 biggest UK banks, namely Royal Bank of Scotland and big holdings in Lloyds TSB, HBOS and Barclays.

Analysts are so fearful of further stock price loses that they firmly believe that a further 20 per cent fall in bank shares this week would leave the Government with little option but to nationalise virtually the entire sector.

And banks are using every possible trick in the book to come up with cash. They are approaching insurers and pension funds lately in an attempt to use their surplus cash on their books to improve liquidity in the banking system.

 

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Will this have any effect on housing market? Will this stop repossession numbers or will it add misery to those home owners worried about their jobs and financial security? Who knows because only time can tell in this fast moving crisis.