Bank of England warns of risk posed by Worlds Asset Management like those of the Banking Industry

Bank warns of trillion dollar asset management 'run' risk
Andy Haldane, Bank of England's financial stability head, warns that risks posed by world's asset management firms are starting to resemble those of the banking industry

Andrew Haldane, director of financial stability at the Bank of England, has warned about the growing risk posed to markets by the asset management industry
Harry Wilson By Harry Wilson, Banking Editor10:00AM BST 04 Apr 2014 Comments30 Comments
Asset managers could pose as big a risk to the world’s financial system as banks, according to the top Bank of England official responsible for stability.
Andrew Haldane, director of financial stability, warned the $87 trillion (£52 trillion) fund management industry was becoming more “run-prone” and said he was concerned problems at one or several big managers could cause wider problems for markets.
“Future illiquidity pressures in financial markets, generated by asset management distress or wholesale portfolio reallocation, may be larger and more potent. In other words, Black Swan risk in asset management may be real and rising,” said Mr Haldane in a speech at the London Business School.
Mr Haldane pointed to the risk that a fund management firm could be forced into a “fire-sale” of its assets if investors were to lose confidence in it, similar to the runs seen on banks when savers become worried about the safety of their money.
“Falling asset prices may be the prompt for withdrawal or sales. In some respects, this would mimic a banking “run”, albeit operating through non-conventional channels. This could itself induce a further round of asset sales in an amplifying loop,” he said.
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The world’s 10 big biggest fund managers control just under 30pc of total assets, a greater concentration even than among the largest banks, which together hold about 20pc of global assets.
Blackrock, the biggest manager, is a third larger than the world largest bank, China’s ICBC, and Mr Haldane said the rapid growth of the asset management industry raised the spectre of the “too big to fail” problem identified with major banks in the financial crisis.
US assets under management have risen by a factor of five since 1946 and now represent 240pc of American GDP, while the UK has recorded a similar increase in just over three decades.
As yet, problems at fund management companies have tended to be localised and have rarely been of wider concern, but Mr Haldane said the changes seen in the industry meant that little comfort could be taken from this.
This could have major implications for the City, as along with being one of the world’s largest banking centres, London has in the past decade has become a major home for international asset management companies. Forty percent of European assets are now managed out of Britain, according to The City UK, a lobby group for the financial services industry.
The Financial Stability Board, the representative body for the world’s main central banks and regulators, is consulting on widening the list of so-called “globally systemically important financial institutions” to potentially include big fund managers and insurance companies.
Mr Haldane said the conclusions of this work would be “interesting”, adding that the analysis of the risks posed by the asset managers was still in its infancy.
“The risks and opportunities asset management poses, while different, could be every bit as important. To avoid the pitfalls of the banks, this greenfield sit will need to be cultivated carefully,” he said.

THE MIND BOGGLES AS TO WHAT THE IMPLICATIONS OF THIS WOULD BE.

Badboy wrote:THE MIND BOGGLES AS TO WHAT THE IMPLICATIONS OF THIS WOULD BE.

Yes Badboy, the Financial World is looking a bit sick , it wouldn't take a lot to tip into depression.

could there BE MASS UNEMPLOYMENT ETC
MAYBE THERE IS SOMEONE WRONG IF THE FINANCIAL SYSTEM HAS SO MANY TIMEBOMBS UNDER IT.

Badboy wrote:could there BE MASS UNEMPLOYMENT ETC
MAYBE THERE IS SOMEONE WRONG IF THE FINANCIAL SYSTEM HAS SO MANY TIMEBOMBS UNDER IT.

It's greed Badboy , Britain had a good reputation around the World but it is in tatters because of all the Banks greed. Now the Investment market is under threat which means shares may decrease in value, Insurance rise , let's just hope it doesn't happen.

THINGS MIGHT GO WHAM BANG THANK YOU MAAM IF THAT HAPPENS.

Badboy wrote:THINGS MIGHT GO WHAM BANG THANK YOU MAAM IF THAT HAPPENS.

Economies around the World are very fragile Badboy , everything is based on CREDIT these days, it's crazy.

ITS DOES APPEAR THAT CREDIT LEADS TO BOOM AND BUST.

Badboy wrote:ITS DOES APPEAR THAT CREDIT LEADS TO BOOM AND BUST.

I keep telling everyone Badboy to download Zeitgeist Addendum from YouTube, It is fascinating and shows how the very first printing of $ bills created a debt.

INVESTEC,A ASSET MANAGEMENT FIRM IS IN POTENTIAL TROUBLE AFTER A GUERNSEY COURT RULED AGAINST IT CONCERNING A TCHENGUIZ TRUST CONCERNING DEBTS OWED TO KAUPTHING BANK.

Badboy wrote:INVESTEC,A  ASSET MANAGEMENT  FIRM IS IN POTENTIAL TROUBLE AFTER A GUERNSEY COURT RULED AGAINST IT CONCERNING A TCHENGUIZ TRUST CONCERNING DEBTS OWED TO KAUPTHING BANK.

Yes Badboy, there will be a few Asset Management Companies losing money , yesterday the FT Index dropped 70 points . a lot more than many other Countries.