Bad British Banking News Risks the Pound
Lloyds TSB, the biggest mortgage bank in Britain, was nationalized this weekend by the British government. This is bad news for the British Pound.
HBOS “inherited” the bad assets to Lloyds, and now it pays the price. The British government now guarantees the banks money, but the bank, which was once successful, is now in the hands of the government. Here’s someone who doesn’t like it at all, calling it the “biggest bank robbery in British history”.
This is bad for the British Pound. Traders don’t like these moves of bank nationalization. Two weeks ago, the US dollar plunged on fears of nationalization. CitiGroup and Bank of America were then on the American government’s watch.
The British economy is deeply suffering from the global economic crisis, especially due to it’s big financial sector that is now getting more bruises.
Bad Banking news isn’t exclusive to Britain this weekend: In Georgia USA, the Freedom bank isn’t free anymore. It has been closed by the government, being the 17th bank to be closed in America since the beginning of the year.
Also in Europe, new bad news comes from banks in Belgium, but in a smaller magnitude.
The big news of nationalization in Britain might cause a bad start for the pound, which showed some relative strengh last week.
Will there be a weekend gap in GBP/USD?
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The bank has had its government holding increased from 45 to 70. Still not fully nationalised but certainly one step closer. I beleive they will at all costs try to prevent another fully nationalised bank after Northern Rock
Yup, I guess the negative press and public opinion will cause the British government to refrain from making the full nationalization moves.