HBOS: Bigger is better

HBOS’s embroilment in the credit crunch is proving a damp squib. Since two small German banks, IKB and Sachsen LB, were nearly sunk by the storm in asset-backed commercial paper (ABCP), credit markets have been waiting to see how bigger peers would cope. HBOS’s operation to prop-up its £18bn Grampian conduit shows the pain may not be too bad. Sure, Grampian’s need for funding highlights the pressures on conduits. Before US subprime, a class of ABCP, went bad, credit investors lent to conduits f...