Chapter 1140 Countermeasures

'Twenty-three hundred and ten million pounds.'

As soon as this figure was announced, everyone couldn't help but frown.

According to the current data just mentioned by Evelyn Lochhead, Barclays Bank now has total assets of 48 billion pounds.

However, the amount of liquid capital is only 2.311 billion pounds, equivalent to less than 5% of the total assets, which is an extremely low figure.

Generally speaking, for large commercial banks in Europe and the United States, the proportion of liquid capital to total bank assets should ideally be maintained between 10% and 15%, although the exact figure will vary depending on the situation of the bank.

In general, the amount of liquid capital held by commercial banks should comply with three principles.

First, the principle of moderation in the total amount of cash asset management.

This means that the total amount of a bank's cash assets must be kept at an appropriate level. An appropriate level refers to the amount of cash assets that a bank needs to maintain in order to minimise the opportunity cost of holding cash assets, while ensuring the liquidity requirements of the bank's business processes, as determined by the functions and characteristics of the bank's cash assets.

The principle of an appropriate total amount is also the most important principle of cash asset management for commercial banks.

Second, the principle of timely adjustment of cash assets.

This means that banks must adjust their cash-short positions in a timely manner according to changes in cash flow during business processes to ensure that the size of cash assets is appropriate.

Third, the safety and security principle.

The cash assets of commercial banks mainly consist of their deposits with the central bank and interbank banks and cash on hand. Among these, cash on hand is the necessary working capital for commercial banks to make payments during the course of their business operations, and it is distributed in various business outlets of the bank. In the management of cash assets, especially cash on hand, banks must necessarily establish a sound safety and security system and strictly follow operational procedures to ensure the safety and security of funds.

To summarise the three principles, it is about making the best use of bank funds while ensuring the safety of bank operations as much as possible!

If a bank has too much liquidity, in this era of extremely high savings rates, the cost of using the bank's funds will be very high. Security is assured, but a poor business performance can easily lead to losses for the bank.

Families like the Rothschilds, which have been in the banking business for hundreds of years, undoubtedly have a lot of experience in running a bank, so they have always pursued high turnover and high profits.

The Rothschild family also has a large business, so it is easier for them to mobilise funds. This is why the liquidity ratio of Barclays Bank is less than 10%.

Under normal circumstances, it doesn't matter if it is less than 10%. With the reputation of the Rothschild family consortium, it is easy to turn over funds.

But now, Barclays Bank is still facing the predicament of continuous capital loss, and other banks are also in a quagmire, so they will definitely not turn over funds to Barclays Bank.

The Rothschild family had another financial pillar – the French bank Edmond de Rothschild.

But this year it was also nationalised by the French government. The newly restructured Edmond de Rothschild is still very weak and is unable to support Barclays Bank.

There is only one way out now, and that is for them to find a solution themselves.

Based on past experience and cases in the banking industry, there are two simple and effective ways.

The first is for Barclays to sell off its liquid assets and recover loans and return capital as much as possible.

The second is for the Rothschild family to mobilise the entire family and the consortium's liquid capital and inject it into Barclays, so that Barclays will not be drained of funds by depositors withdrawing their money.

And Jacob Rothschild has called the heads of the Rothschild family branches here, except for the American branch, for these two purposes.

Work together to overcome the difficulties!

Looking at the ugly faces of the crowd, Jacob Rothschild, sitting at the head of the table, finally spoke.

'The situation is clear to everyone. We have now reached a critical moment. Barclays Bank is the central pillar of our family and must be preserved at all costs!'

'In the past nine days, Barclays Bank has also lost 1.55 billion pounds in assets. Although this is a lot, we must also realise that this is already a very good situation. I know that Evelyn has spent a lot of energy trying to stabilise those big clients.'

'It can be said that 80% of the assets lost now come from ordinary depositors, otherwise it would not be so low!'

'But unfortunately, what happened in Latin America in recent days is something none of us wants to see, a full-blown sovereign debt crisis in Latin America.'

'This means that starting today, the crisis will escalate to the next level!'

Upon hearing this, everyone nodded in deep agreement.

Evelyn Lochiel couldn't help but say, 'Jacob is right. Since yesterday, the rate at which we are losing funds has more than doubled.'

'On the 12th, we lost more than 155 million pounds in cash, and on the 13th, we lost 320 million pounds. It's not over yet today, but we've already lost more than 280 million pounds.'

'If this trend continues, I think when I go to the bank tomorrow, someone will report that the bank lost 400 million pounds in cash today!'

'If we continue to let things go, then with the current liquidity in the bank, it will definitely not last more than a week before the funds run out!'

The eldest Edward Rothschild immediately objected, 'Selling off is not a solution either. Now countless pairs of eyes are watching us. Once we urgently sell off our assets, then it will be confirmed that there is a problem with the bank's capital chain, which will trigger a huge panic. The speed at which we sell off assets to return funds is not as fast as the speed at which depositors withdraw funds.'

'The best way is to curb it at the source and appease the emotions of depositors.'

Hearing this, Charles Rothschild, who had come from Xiangjiang, suddenly said, 'I think I have a way to try.'

Everyone looked at him.

Charles Rothschild took a deep breath and said, 'Last year, there was a stock market crash in Xiangjiang, and a large number of banks faced a run on deposits. Then Jiuding Bank in Xiangjiang made an unprecedented move and placed one billion Hong Kong dollars in cash in the bank lobby.'

'This move was simple, crude and vulgar, but it was undeniable that the effect was particularly good. On that day, Jiuding Bank broke the crisis of bank runs.'

'Later, HSBC and Hang Seng Bank also imitated it, and also eliminated the crisis of bank runs.'

'We can refer to it and try this method.'

Everyone's eyes lit up and they began to speculate.

A moment later, Evelyn Rothschild, the president of Barclays Bank, shook his head and said, 'This method is not quite suitable for us.'

'Hong Kong is a small place, not even as big as London, but with a very high population density. So Jiuding Bank only needs to display the funds at its headquarters, and the news will quickly spread, making it easy for depositors to verify.'

'But our bank has branches all over the UK. Simply displaying cash at the London headquarters, even if it's £2 billion, won't allay the concerns of depositors in other cities.'

'And the news spreads very slowly.'