[roccman]

The Edinburgh-based bank is facing tough questions from City analysts and investors about whether it needs to conduct a rights issue or sell off assets to raise funds. There are also concerns that it might need to write off more losses from its exposure to financial instruments linked to the sub-prime mortgage crisis.

They need 25 Billion to fill a "gap" (read a huge ass hole on their books).

This bank belongs to the Group of 8 (you know Citi, GS, BIS etc...)

The top is being decapitated.

[mekrob]

$this->bbcode_second_pass_quote('', 'T')he top is being decapitated.

[dorlomin]

Seems to be a few red faces in the square mile again. The faint wiff of carrion and panic is starting to stalk the financial world.

Gods £12 billion, the big banks in the UK taking big loses are going to reverberate across the whole UK economy which is heavily dependent on the financial sector, less tax revenue, less pension money, dropping comercial real estate prices in the city and Isle of Dogs, it all links together.

[truecougarblue]

I guess the FTSE must be up because this is the last of the bad news.

[dorlomin]

The word that people have in London is that this rumour is not all that true, and its being spread to drive the price down so some big players can get a bite cheap.

[MrBill]

Ah, it is good to see posters refer to The City as The Square Mile. In the Globe & Mail last year some junior banker refered to Bay Street as The City. I had to laugh about that one! Do they go around calling Hog Town The Big Apple, too? ; - ))

To be honest my theory is that banks are taking the losses because they have made loads of money over the past years; they have large loan loss provisions; they can afford to; and they are trying to get all their dirty laundery out in the open now; so that if non-performing loans do not turn out as bad as expected that they can surprise on the upside later in the year. This may be simply wishful thinking on my part.

However, I am very worried about the losses tied to an imploding housing market and the credit crisis by non-bank financial institutions; private hedge funds; and investors that are not typically required to disclose their marked to market positions, and that can report non-trading assets at book-value instead.

Then you have a Japanese banking problem where non-performing loans were hidden from view for as long as possible, but it became a long-run drag on earnings as those losses ate into future profits.

Therefore, I would be very worried about the losses that are not turning-up at non-banks because they were the ones that were buying all the risk and asset backed securities that the banks did not want on their books. Where is that risk now?

$this->bbcode_second_pass_quote('', 'L')ONDON (Reuters) - Whether the European Central Bank likes it or not, Europe's banking system is in serious difficulties with a spreading credit crunch that will test and may finally break policy-makers' resolve to hold interest rates.