A life on the ocean waves
Quote:
Originally Posted by
Snoopy
I see your three ratios with 'On Demand', '0-6 months', '0-12 months' ratios...
...So you are saying that I am 'double counting' in my addition because the 'Cash & Cash Equivalents' includes the 'Undrawn Committed Bank Facilities"?
SNOOPY
When I was young and lived in Cote d'Ivoire my sole source of English language TV was CNN. Apart from the legendary Dave the Dog advert there was also another one where some guy in the USA watching the Sun going down phones his friend half way round the world who is watching the same Sun rising.
We are currently in the same boat.
Well, I am in the boat, and you are at the dog end of the Earth.
Anyway, so you have dug yourself into a deep hole and I keep sending you ladders so that you can climb out.
After a good nights sleep I awake to find that you have converted the ladder into another digging implement and are that little bit closer to the center of the earth.
So going back to basics - assume everything you think you know on this subject is wrong - then you will be right. Especially drop the abuse of the term cash flow.
Because HBL says "The banking group does not manage its liquidity risk on a contractual liquidity basis" this does not mean you ignore the figures from the contractual table and make something up instead.
Anyway I am sure you will continue to make a dog's breakfast of your analysis and I will chase the sunrise.
Must cast off
Paper Tiger
Is that all that there is to it
For those of you that are actually interested in banking I suggest you watch the movie 'It's A Wonderful Life' which shows what I am going to be talking about in action. But I do warn you now to make sure you have your hanky handy for the weepy bit.
For percy and other HBL groupies then it is best that you not read this post at all.
For Snoopy we are going to stick to On Demand only, OK?
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So what is the worst thing that can happen to a bank?
Well has you have asked I will tell you that it is probably a loss of confidence in the bank such that everybody wants their money out of it as soon as possible:
A run on the bank.
At 31st December 2016 people had the contractual right to walk into a bank, or up to an ATM, or connect to the website etc and suck $754.6M dollars out of HBL.
To make it worse HBL have promised to loan another $99.1M to people who may still insist they hand over the cash so that they can buy that new boat.
That is $853.7M that HBL would have to provide pronto - can they do it?
NO.
There is ready money they can lay their hands on consisting of $69.7M of cash and cash equivalents and another $49.3M that the ABCP Trust 'Water Bottle (see a previous post) can provide for a grand total of $119.0M.
So they could actually meet 13.9% of the demand. That is the liquidity ratio.
Now what is much more likely to happen? What has they say, is expected?
Well people take money out and people put money in and some days there may be a few million more out than in and other days a few million more in than out and each day will be different.
But expect the unexpected.
So they have the facilities in place to cope with a sudden 'biggish' run.
Best Wishes
Paper Tiger
England to port and Denmark to starboard
There must have lived in dread of you at the puppy farm, Snoopy!
I will see if I can get a photo of a dog peeing on the statute of Captain Cook for you if I ever make it into harbour at Whitby.
Best Wishes
Paper Tiger