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Page last updated at 06:07 GMT, Friday, 3 October 2008 07:07 UK

Adam Shaw

Here is something I never thought I would write - and I don't suppose you thought you would read.

I have found a fascinating spreadsheet which I urge you to look at.

Now, I know spreadsheets are not normally the stuff of ripping yarns but this one explains why some banks have been getting into more trouble than others. If there was one page which explains the current crisis - this is it.

The figures below show how much of the loans of different banks are funded by their deposits. This is an important measure of the banks stability in these troubled times.

If the money they lend out has come from the deposits of other customers, then they can to a large extent ignore the trouble in the wholesale money markets.
A woman is pictured at a cash machine outside a Halifax Bank of Scotland branch in London
Banks dependent on wholesale funding find themselves vulnerable

The problem is that many banks have been lending money out the front door and have been busy trying to borrow it back through the back door from wholesale financial markets.

These markets have dried up as banks and institutional investors have become increasingly unwilling to lend to each other. As a result, the banks which are most dependent on wholesale funding, find themselves in a very vulnerable position.

The following table was compiled by the investment group Collins Stewart. At its extremes, it shows how much Northern Rock was dependent on wholesale funding and how Bradford and Bingley, Alliance & Leicester and HBOS are also vulnerable to problems in the credit market.

By comparison HSBC and Standard and Chartered actually have more money coming in then going out.

This isn't a table of banks most likely to fail - but it does provide an insight into what city investors are getting worried about and why some banks are facing more scrutiny than others.


Standard Chartered 118%

HSBC 111%

RBS 89%

Barclays 81%

Lloyds TSB 71%

Alliance & Leicester 58%

Bradford & Bingley 58%

HBOS 57%

Northern Rock 31%

Proposed Lloyds TSB/HBOS group 61%

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