12 replies to this topic

[Dunkey]

Everyone transferred their money all at once to a specific bank?

We were having this discussion at work of how we could pick a bank we didnt particularly like and all at once thousands of people transferred all of their funds out of it. What would happen? Could we kill them off? or from the other side, we picked a bank and all put our money in it.

[ldn-j]

Dunkey, on 2 Nov 2011, 16:36, said:

Everyone transferred their money all at once to a specific bank?

We were having this discussion at work of how we could pick a bank we didnt particularly like and all at once thousands of people transferred all of their funds out of it. What would happen? Could we kill them off? or from the other side, we picked a bank and all put our money in it.

In a word yes. It's called a "run on a bank". Think Northern Rock

[Dunkey]

ah, was that not as a result of something (ignorance here) happening first though?

Or was it a purposeful attack of sorts?

[Greg Warnes]

I think it would a usefull exercise, a good show of consumer power.

Whether or not it would 'kill' the bank i am not sure

[Dunkey]

at least it would do some damage. It would be a nice way of getting even over the whole bank charges thing

I'm sure someone would put a stop to it and the result would just be that no one can transfer more than 25p out of their account at one time.

[theshrekster]

You worry me sometimes

[Chilli Red]

He needs something to do to keep his mind busy

[ldn-j]

Bank runs are often what cause failure. Not normally through malice but fear of return of funds, hence government compensation schemes. It is still a show of consumer power as it is the vote of confidence as people rush to take their money and put it somewhere that is seen as safer. Not sure they could "put a stop to it" unless the existing terms don't allow transfers above a certain amount - some accounts, particularly online, do have limits on transfers, Tesco is an example from memory. I personally would never use an "instant access" account that didn't give you full instant access (to your money) ... but some people prefer the higher interest rates it can bring.

On the other side, picking a bank would be positive from its point of view as it would imply a lesser reliance on market funding unless that deposit base was seen as very short term.

Northern Rock borrowed a lot in the markets and when this source of funding essentially dried up for it in the financial crisis it needed liquidity support from the Bank of England which raised fears deposits weren't safe, leading to the bank run.

[andy.j]

I assume we are talking hypothetical here? I think it could cause some damage. not as much as if the government gets its way and separates the investment and commercial arms of banks.

If someone tried to actually organise this, they would have to close their eyes and pretend that the 1000's of people who would loose their jobs and the 1000's of people who would loose their savings will all be fine and the countless millions that the government won't get in tax isn't needed anyway....

<rant>I'm glad the word greedy hasn't come up yet. I hate it when people start to slate banks for being greedy. No one was complaining or caring that the same greed is what has made such a small island with little exports such a big economic power. Also, every other commercial institution is just as greedy as the banks. All businesses do things for the cheapest they possibly can and maximise profits. The only reason banks are different is that we actually rely on them to keep the country going. As for the Greedy bankers themselves, yes, they have a lot of money, but they do a job which most of us couldn't do (I know I couldn't) and they pay one hell of a lot of tax for the privilege. Then they buy themselves nice cars, and pay VAT on their nice possessions. Then they pay to send their kids to private school taking one less place in the public system. They pay for their own health and dental, saving the NHS cash to help the rest of us. I don't see anything wrong with it.</rant>

[Dunkey]

hypothetical yes.

interesting info!

[andymc]

This is bad - on many levels but probably not on ones you are thinking of

Firstly - choose your bank wisely. After our recent 'recession' - don't *we* the humble tax payer own a part share in most of the major banks

Secondly - emptying a bank of funds will only drive the bank to ask for short term support from the BoE and government. Obviously the banks will negotiate a great contract for them and in the process screw the government over (again - and because our government do not employ accountants - they employ e-diots). The Government will realise, after some months that they've been screwed and seek more taxes from us to dig them out of that hole.

Therefore - we loose - on all levels.

<eject>

[WoREoD]

Andy - you're such a realist it can be depressing (you have all the makings of a really grumpy old man....)

[Chilli Red]

I think you will find this was a Dunkey exercise. He has the knack of making people talk, debate and discuss. Well done Dunk, you done it again