Libor rises to 6% despite central banks’ billions
by Gill Montia
Story link: Libor rises to 6% despite central banks’ billions
The London interbank lending rate (Libor) has risen to 6%, its highest level for 12 months and well above the current 5.25% base rate.
Libor is a crucial indicator of the severity of the credit squeeze because it is the rate at which banks lend to one another. A rise reflects increasing liquidity pressures in funding [...]
BoE governor hints at early base rate cut
by Gill Montia
Story link: BoE governor hints at early base rate cut
The Governor of the Bank of England, Mervyn King, has hinted at an imminent cut in the base rate, while making it clear that the Bank will not follow the US Federal Reserve in making aggressive cut in interest rates.
When questioned by MPs on the Treasury Select Committee, Mr King described the credit squeeze as [...]
FSA admits Northern Rock shortcomings
by Gill Montia
Story link: FSA admits Northern Rock shortcomings
The Financial Services Authority (FSA) has today published a report in which it admits to certain shortcomings in the regulation of Northern Rock.
Four key areas have been identified as significant in the process which led to the mortgage bank having to seek emergency funding from the Bank of England.
These include a lack of sufficient supervisory [...]
Allco REIT shares more than double in value
by Richard Kilner
Story link: Allco REIT shares more than double in value
Allco Finance Group saw its share value soar by more than 100% yesterday, in response to news that partially owned Allco Commercial Real Estate Investment Trust had been granted permission to extend a loan repayment.
The deadline is extended from July 31 (2009) to December 31 (2009).
Allco holds a 16% stake in the Real Estate Investment [...]
Federal Reserve auctions another $50bn to help loosen credit markets
by Richard Kilner
Story link: Federal Reserve auctions another $50bn to help loosen credit markets
Yesterday the US Federal Reserve disclosed the results of its eight auction of short-term loans, worth $50bn.
The interest rate offered was 2.615%, the lowest of any of the auctions held thus far, and seen as a positive sign, and bids were offered for $88.9bn of loans.
Since the credit crunch began, the Fed has pumped $260bn [...]
Two Chinese banks take financial hit from subprime crisis
by Richard Kilner
Story link: Two Chinese banks take financial hit from subprime crisis
Yesterday saw the Industrial & Commercial Bank of China and Bank of China record improved performances for the fourth quarter, despite being damaged by exposure to the US subprime mortgage market.
Bank of China is the country’s most exposed financial institution, with $5bn in asset-backed securities at the end of the last calendar year.
However, the [...]
HBOS shares soar by 15%
by Richard Kilner
Story link: HBOS shares soar by 15%
After taking a battering in recent days, HBOS enjoyed a surge in its share value which soared by 15% over the course of a single day.
The multi-billion pound additional value is due to the £6m of shares purchased by senior executives at the bank, led by Andy Hornby, to reinvigorate confidence in the firm.
The move [...]
Bank of Israel slashes rates by 50 basis points
by Richard Kilner
Story link: Bank of Israel slashes rates by 50 basis points
Governor Stanley Fischer, the head of the Bank of Israel, has defied expectation by lowering the nation’s interest rates to their lowest ever.
Fischer decreased the central bank rate to 3.25%, a cut of 50 basis points, and attributed his move to the necessity of maintaining stability in prices.
The prime interest rate also dropped by [...]
Exim Bank of India agrees credit line to Africa
by Richard Kilner
Story link: Exim Bank of India agrees credit line to Africa
The Exim Bank of India and African Export-Import Bank (Afreximbank) have come to an agreement whereby a credit line worth $30m will be extended to finance exports from the subcontinent bound for Africa.
The deal was struck five days ago at the New Taj Palace where the India-Africa Project Partnership was being hosted.
Present at the ceremony [...]
European shares up 3%
by Richard Kilner
Story link: European shares up 3%
Europe’s shares, weakened in the recent financial turmoil, were eagerly snapped up today after the offer for Bear Stearns by JP Morgan was increased fivefold.
Across the continent stock markets rose in value by around 3%.
Banks enjoyed the best of boosts, with Barclays seeing their shares soar by 11%.
In addition, the situation seems to have been [...]
Alliance Bank Malaysia plans expansion
by Richard Kilner
Story link: Alliance Bank Malaysia plans expansion
Alliance Bank Malaysia Bhd has announced its intention to increase its number of branches by six over the course of the next three years.
At present the bank operates from 14 branches in Johor, and 170 across the country.
Datuk Bridget Lai, group CEO, attributed the plans to the Iskandar Development Region, which has caused rapid economic [...]
JPMorgan increases Bear Stearns’ offer to $10 a share
by Gill Montia
Story link: JPMorgan increases Bear Stearns’ offer to $10 a share
JPMorgan Chase is increasing its offer for Bear Stearns, the Wall Street bank that came close to collapse earlier this month, from $2 to $10 a share.
The move follows news that Joe Lewis, the British billionaire who lost almost $1 billion when the Bear Stearns rescue was announced, is planning to block the takeover.
JPMorgan has [...]
S&P reviews credit ratings for Goldman Sachs and Lehman Brothers
by Gill Montia
Story link: S&P reviews credit ratings for Goldman Sachs and Lehman Brothers
Standard & Poor’s (S&P) is considering downgrading its ratings on Goldman Sachs and Lehman Brothers.
The credit rating agency is concerned that volatile markets will reduce profit at both investment banks this year.
S&P is predicting that in 2008, the banks could post profit that is between 20% and 30% lower than in 2007. It has already [...]
Banks face losses as commercial property stocks fall
by Gill Montia
Story link: Banks face losses as commercial property stocks fall
Capital Economics is warning that UK banks could face large losses as a result a sharp fall in the value of the UK’s commercial property.
The economic forecasting consultancy is warning that £7 billion could be wiped off commercial property stocks in the next two years and that the figure could rise to £18 billion should [...]
London jobs to go as Citigroup cuts a further 1,800 posts
by Gill Montia
Story link: London jobs to go as Citigroup cuts a further 1,800 posts
Citigroup, the world’s largest bank, has announced further job cuts.
The group is reducing staff numbers in its banking and markets operation by around 1,800 worldwide.
Citigroup spokesman, Adam Castellani, said the bank expects a larger-than-usual number of job cuts in its institutional clients group. This group includes investment banking and trading, plus alternative investments (which provides [...]
Relief at Goldman and Lehman results
by Dave Nixon
Story link: Relief at Goldman and Lehman results
New York was cloaked in dark on Tuesday but bankers and investors were basking in an uncommon ray of sunshine.
Following days dominated by the collapse of Bear Stearns and rumours of additional financial bloodshed, better-than-expected results from Goldman Sachs and Lehman Brothers helped Wall Street breathe a huge sigh of relief.
Goldman Sachs recorded [...]
UK banking jobs to be cut by 15%
by Dave Nixon
Story link: UK banking jobs to be cut by 15%
Job losses accounting for around 15 per cent of the US and European investment banking industry have become a near certainty in the initial half of this year following the latest turmoil on Wall Street, senior bankers have cautioned.
The US is anticipated to see the utmost cutback in headcount, at about 15 per cent, reflecting [...]
UBS chief’s pay slashed to fraction of 2006 level
by Dave Nixon
Story link: UBS chief’s pay slashed to fraction of 2006 level
UBS, the principal European casualty of the US subprime calamity, confirmed on Tuesday that its struggle with securitised residential mortgages had affected the very top of the company.
Marcel Ospel, UBS’s expert chairman and the focus of many shareholders’ anger, saw his 2007 recompense reduce in size to SFr2.57m ($2.58m), less than a 10th of the [...]
Shore Capital profits hit
by Dave Nixon
Story link: Shore Capital profits hit
Shore Capital, the boutique investment bank, held responsible falling market values of two of its chief assets for a 29 per cent fall in pre-tax profit last year.
Shares in the company, previously down 60 per cent from its 12-month high, fell an additional 8 per cent to a new low of 35p after it [...]
China predicts financial turmoil throughout 2008
by Richard Kilner
Story link: China predicts financial turmoil throughout 2008
China’s central bank yesterday forecast that the global financial turmoil is set to continue throughout the course of the year, with oil and gold prices remaining high.
The People’s Bank of China also stated that overseas financial institutions will be encouraged to play a fuller role on the Chinese financial services scene.
The reasoning behind the prediction [...]
