UK-denominated Sovereign Debt GILTs could be at risk of not finding bidders and not finding a price for GILTs debt, as access to the Global Debt market could freeze. The UK Treasury has a notable fiscal deficit and funding shortfalls that are already difficult to finance, to this, it’s important to understand the very weak balance sheet of major banks in the UK, that are buyers of GILTs. In fact, UK Banks are woefully undercapitalised and badly leveraged on their balance sheets:
Barclays Bank (£/00) 135.52 pennies
Barclays bank from a risk management standpoint is a global systemic risk bank, marketmaker, that operates with 1098.37% Debt/ Equity ratio, with assets and liabilities of over $1.0 trillion dollars, compared to a market cap of only $ 20.4 Billion, the Quick Ratio 0.68 also empirically defines the shortfall of assets on the bank balance sheet, compared to the enourmous liabilities of over $1.0 Trillion dollars. That make the bank shares highly risk and most probably Barclays would not be able to fund its operations and to bid for UK Sovereign debt GILTs.
HSBC Bank (£/00) 605.30 pennies
HSBC also has a very high debt/equity ratio 382.24% and a very low quickratio 0.47 these are empirical data that indicate how also HSBC balancesheet is very risk and in any case the bank having liquidity shortfalls to cover its liabilities, would not be able to finance UK Sovereign Debt.
Lloyds bank already a partially Treasury owned bank, has a very troubing and risky balance sheet, with Net Loans £463,4 Billion compared to Deposits £ 478 billions, exposes a scarce £14 Billion buffer on the bank balance sheet, where potentially Llloyds customer deposits are at risk of being wiped out. Tha bank operates on a badly leveraged balance sheet 361.79% Debt/Equity ratio while the Quick ratio 0.29 signals an abysmal low liquity and shortfall in assets compared to liabilities.
Another already bailed out bank, NatWest with a very high Debt/Equity ratii 435.74% and a very low Quick ratio 0.47, both indicates a very risk bank balance sheet and a shortfall of assets copmared to liquidity and the bank would not have nowhere near enough liquidity to service its liabilties, customer deposits and let alone UK GILTs.
Standar Chartered as HSBC are banks that operate from Asia and this already makes a global systemic risk; the bank has leveraged the balance sheet with 340.85% Debt/Equity ratio and the quick ratio 0.5 also signal a shortfall in assets and liquidity compared to liabilities.
Banco Santander also has a very high Debt/Equity ratio 398% and a low quick ratio 0.33, signal very risky balance sheet considering $1.81 Trillion in assets compared to $1.71 Trillion in Liabilities. That makes the bank balance sheet risky, leveraged and a systemic risk for the Euro Area.