BoE demands probe as rumours hit UK banks
By Philip Aldrick, Banking Editor
Last Updated: 12:28pm GMT 19/03/2008
The Bank of England has demanded the Financial Services Authority investigate inaccurate rumours sweeping the market that a British lender is in crisis after being forced to issue a vehement denial that it has been called into emergency meetings.
Sources said the Bank was livid with what it believes are short sellers attempting to turn a profit by spreading false stories about distressed lenders that could undermine the stability of Britain's financial system in these fragile markets. (AtW's comment: and sadguru's is nowhere to be seen on here today...)
A Bank spokesman said: "No meeting has taken place or been scheduled with any financial institution in the UK."
It added that it made no loans through its standing facility yesterday.
HBOS appeared to be the main target of this morning's speculation. Its shares tumbled up to 11pc on rumours that it had applied for emergency central bank funding despite a clear denial.
An HBOS spokesman said: "There is not a shred of substance whatsoever in these unfounded and malicious rumours. This is a classic case of a lie being half way round the world before truth has its boots on. It is deeply concerning these rumours are circulating the markets.
"HBOS is one of the strongest financial institutions in the world with a balance sheet of £660bn the group has also had the largest deposit base in the UK. We are one of the most respected names in the wholesale and capital markets. HBOS is a very strong financial institution."
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The rumours have been fuelled by the dramatic actions of the US Federal Reserve's dramatic actions over the past few days, both orchestrating the cut-price sale and rescue of Bear Stearns and cutting interest rates by three quarters of a percentage point. Britain's central Bank also took the unusual step of quashing a number of other rumours.
A spokesman said: "It's a fantasy that all leave for Bank staff has been cancelled over Easter. There is also talk going round that the Governor has had to cancel a trip to the Far East. There was no trip, that's complete fantasy."
Mervyn King, the Bank's governor, did cancel a trip to the west Midlands scheduled for Monday and Tuesday and his deputies Sir John Gieve and Rachel Lomax have also cancelled follow-up trips due today and tomorrow.
"These trips were cancelled so that they could be in London to monitor conditions in the wake of Bear Stearns," the spokesman said. Britain's banks all suffered large fshare price falls in morning trading on the rumours.
The FSA last year said it would be paying close attention to all hedge fund or short-selling practices in the current extreme conditions to keep an eye out for market abuse. Well-placed insiders said the Bank has requested the FSA step up its attempts to crack down on the sources of the latest rumuors. The Bank declined to comment.
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It's those speculant types that should be digging Uranium ore right now
By Philip Aldrick, Banking Editor
Last Updated: 12:28pm GMT 19/03/2008
The Bank of England has demanded the Financial Services Authority investigate inaccurate rumours sweeping the market that a British lender is in crisis after being forced to issue a vehement denial that it has been called into emergency meetings.
Sources said the Bank was livid with what it believes are short sellers attempting to turn a profit by spreading false stories about distressed lenders that could undermine the stability of Britain's financial system in these fragile markets. (AtW's comment: and sadguru's is nowhere to be seen on here today...)
A Bank spokesman said: "No meeting has taken place or been scheduled with any financial institution in the UK."
It added that it made no loans through its standing facility yesterday.
HBOS appeared to be the main target of this morning's speculation. Its shares tumbled up to 11pc on rumours that it had applied for emergency central bank funding despite a clear denial.
An HBOS spokesman said: "There is not a shred of substance whatsoever in these unfounded and malicious rumours. This is a classic case of a lie being half way round the world before truth has its boots on. It is deeply concerning these rumours are circulating the markets.
"HBOS is one of the strongest financial institutions in the world with a balance sheet of £660bn the group has also had the largest deposit base in the UK. We are one of the most respected names in the wholesale and capital markets. HBOS is a very strong financial institution."
advertisement
The rumours have been fuelled by the dramatic actions of the US Federal Reserve's dramatic actions over the past few days, both orchestrating the cut-price sale and rescue of Bear Stearns and cutting interest rates by three quarters of a percentage point. Britain's central Bank also took the unusual step of quashing a number of other rumours.
A spokesman said: "It's a fantasy that all leave for Bank staff has been cancelled over Easter. There is also talk going round that the Governor has had to cancel a trip to the Far East. There was no trip, that's complete fantasy."
Mervyn King, the Bank's governor, did cancel a trip to the west Midlands scheduled for Monday and Tuesday and his deputies Sir John Gieve and Rachel Lomax have also cancelled follow-up trips due today and tomorrow.
"These trips were cancelled so that they could be in London to monitor conditions in the wake of Bear Stearns," the spokesman said. Britain's banks all suffered large fshare price falls in morning trading on the rumours.
The FSA last year said it would be paying close attention to all hedge fund or short-selling practices in the current extreme conditions to keep an eye out for market abuse. Well-placed insiders said the Bank has requested the FSA step up its attempts to crack down on the sources of the latest rumuors. The Bank declined to comment.
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It's those speculant types that should be digging Uranium ore right now
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