Nice Loans.co.uk > News > Confidence in UK Loans
UK loans industry receives vote of confidence.
The resignation of two of the highest profile executives in the US banking industry has sparked fears of a wider spread problem amongst the world's loans and mortgage providers. But the british chancellor, commenting on Radio 4, stated that he thought the british economy was strong enough to see us through the difficult period. He said he expected loan providers in the UK to be more cautious than previously, but the UK companies in the marketplace had developed very strong balance sheets after years of high profits. He said more cautiousness in the loans industry was not a bad thing.
The stepping down of top executives in Citigroup and Merrill Lynch over the past 2 weeks is seen as a possible sign that many more firms will be seriously impacted by the problems in the loans marketplace across the world. Fears are that british loan providers will be similarly affected but are not yet aware of the exposure they face or are yet to make announcements.
The complexities on the worlds finance markets is blamed for the size of the problem. The process of collateralising debts, or rolling up a mix of many types of loans into one larger loan - the spreading of risk it was previously claimed - has been the catalyst for the creation of debt vehicles that were far lower in quality than was claimed. The complex process of creating these huge loan vehicles, made it difficult for investors in them to work out what they actually comprised of.
The unfortunate truth is that they were of much lower quality than was claimed, being made up of large numbers of sub-prime loans that were at risk of not being repaid.
Many companies have already made large adjustments to their loans and reduced the risk quite considerably of this happening again.
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