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What is the rate they borrow it at? The ECB rate ?
If it is,then they would only be making 1% or so.
I definitely don't think anyone would be happy with a 1% Return on investment (albeit guaranteed) - least of all a bank given all their investment expertise.
yes but if you have thousands of customers on all those 1 per cents you have a huge profit, they are not investors, they are a business.Tesco only make 5 p on a carton of milk so why would you do that?
Hang on - now that is the reply I have gotten from people in the past.
So when I said no one can answer it for me I should have said I no oner can answer it to my satisfaction.
I disagree that a lot of 1% adds up.
Banks are businesses - with shareholders.
WIth a major wing of ur business only making 1% profit is surely hard to believe.
WHat 1% adds up to in cash terms is surely irrelevant.
That may be fine for an individual.
But for a compoany with shareholders it's surely all about percentage returns ?
The assumption I am making is that I believe if a bank had all that money,instead of giving it out to customers for their guaranteed 1% profit,surely they would invest it in something else to return bigger returns than 1%?
Well if you disagree that's fine but that's how they make the money.
Jammacjam - I'm not saying you're wrong.
It does sound dodgy to me though.
Then again I am from an IT background so obviously i'm no expert.
I don't mean this in a smart way but what is ur own background ?
Yiu seem pretty certain you're right. ARe u in finance?
As in do you know for a fact - or it's an assumption you're making.
Again - I don't mean it in a smart way.
If you are from a banking background and can assure me 100% then I'm all the happier with that.
yes they have to sell some of them on to reduce their risk.
It may translate to what sounds like a lot of cash - but they also have an astronomical number of shareholders.
I heard some theory before about how apparently they immediately sell on mortgages to investors.
Does anyone know anything about that ?
I'm very bague on teh details of it.
Hang on - now you're saying that there is some risk.
I thought you said a while ago that they borrow at one rate and lend at a higher rate.
WHich begs the question,exactly what risk are they trying to reduce?
Ok - forgive my maths but analyse the following.
Last year Bank Of Ireland made €2bn.
I think I read someplace that 60% of their business is from mortgages. i.e. €1.2bn.
If that translates to their 1% then that would mean they gave out €120bn. in mortgages - or €10bn a month.
Is that a fair estimation so of how much BoI give out in mortgages?
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