Banking shares plummet on economist’s warning

by Gill Montia

Story link: Banking shares plummet on economist’s warning

Banking shares in the US and UK took a pounding today as the former head of the International Monetary Fund warned that the worst of the credit crunch may not have passed.

Professor Kenneth Rogoff, who is now an economist at Harvard University, was speaking to an audience of delegates in Singapore when he predicted that the crisis would not pass without at least one high profile collapse in the US.

Professor Rogoff also spoke about the need for consolidation in the financial sector and revealed that he expects US mortgage institutions, Fannie Mae and Freddie Mac, to cease to exist in their present form.

In related news, Alliance & Leicester (A&L) is in the process sending shareholders details of its acquisition by Banco Santander.

Matters will be decided at an Extraordinary General Meeting scheduled for the 16th September.

A&L’s board is unanimously recommending the £1.3 billion bid and its acting chairman, Roy Brown, has said the business will be exposed to the worsening economic slowdown if it fails.