Financial Crisis Hits Europe's Banks

Uncertainty in Europe's financial markets has seen London stock markets fall by 4-5%. Yesterday German Chancellor Angela Merkel (left) appeared to come out and give an unlimited guarantee for private savings -  Later a spokesman said this was not the case and had instead given only a "political commitment" that savers would not lose deposits.

Germany
Germany have increased to 50bn euro ($68bn; £38.7bn) the bail-out of Hypo Real Estate, the country's second-biggest commercial property lender, this has alarmed investors.

Iceland
Shares in Iceland's top six banks have been suspended. They are selling foreign investments and bringing the money back to Iceland.
Iceland's currency last week plummeted 20% against the dollar and the government was forced to bail out the country's third-largest bank, Glitnir

Benilux
Benelux bank Fortis shares too have been suspended, BNP Paribas have taken a controlling interest in the troubled finance group under an emergency deal with the Belgian and Luxembourg governments.

France & Spain
In France and Spain political leaders are meeting with bankers to discuss the crisis.

Denmark & Sweden
Denmark had  moved to offer full protection to savers, while Sweden massively increased the level of protection it offers.

RBS Loses Millions

The Royal Bank of Scotland reports a loss a quarterly loss of £44 million.

The Greening of Banking

Wind turbines in Europe, micro-credit in Africa, organic mango-growing in Asia Dutch bank Triodos only finances sustainable projects. The bank's returns on investment now make its struggling rivals green with envy as new clients queue up to put their money where their conscience lies.

HSBC Axes Jobs

HSBC are set to axe 1,200 staff, but reports suggest up to 2,900 could go.

First Person: Banks 'Don't Get It'

Demonstrations were held across the country at the offices of AIG, Bank of America, Citigroup, and other major banks to vent their anger over bailouts and the bonus scandals.

U.K. P.M. Gordon Brown will 'Clean Up Banking'

Gordon Brown talks about banking reform at Scottish Labour Conference.

Analyst: 'Zombie' Banks Weighing Down Economy

As the U.S. Government takes an even larger ownership role in Citigroiup, many economists are warning that the 'baby steps' being taken to fix the banking system are not having an immediate effect.

Antigua's PM Pledges Action in Stanford Case

Antigua's prime minister says parliament will reconvene to deal with fallout from allegations of fraud against R. Allen Stanford, the country's largest private employer.

Alleged Caribbean Bank Fraud Scheme Wreaks Havoc

Caribbean regulators took control of an Antiguan local bank owned by Texas billionaire R. Allen Stanford and froze the assets of a Stanford-owned investment bank. Stanford is accused of leading an $8 billion fraud scheme.

Lloyds TSB/HBOS Merger to go Ahead

Lord Glennie gives formal approval for the Lloyds TSB/ HBOS merger to go ahead.

Lebanese Bank offers Fertility Loan

A Lebanese bank is offering the world's first fertility treatment loan.

UK and Spanish Banks Caught in £33 Billion Fraud

Some of the world's biggest banks reveal they are victims of a US hedge fund which lost £33bn.
With Santander said to be have up to £2bn at risk.

Do Banks have a Moral Obligation to Pass On Interest Rate Cuts?

Consumer magazine Which? claims that banks and building societies have a moral obligation to pass on base rate cuts to consumers.

Royal Bank of Scotland (RBS) Extends Repossession Guarantee

The Royal Bank of Scotland (RBS) has doubled the time guaranteed not to repossess the properties of customers who fall behind on payments from three months to at least six months.

The bank, which owns NatWest, is Britain's fifth largest mortgage lender with a 7% market share.

The government has bought a 58% stake in RBS as part of its recapitalisation plan for the banking sector.

The RBS announcement will put pressure on the biggest mortgage lender, HBOS, which has also taken taxpayer cash.

RBS also said it would make sure customers had the opportunity to seek independent advice before starting any legal action.

The news was welcomed by Citizens Advice and also the charity Crisis, which represent homeowners struggling with arrears.

Last week, Treasury minister Ian Pearson said he would hold all banks' "feet to the fire" to ensure customers were treated fairly.


Repossesion Housing Stock
"At a time when house prices are falling, banks don't really want to do repossessions because all they end up with is no money coming in from the mortgage loan and they end up with a stock of houses, which they probably can't sell," said Jonathan Charley from the consultants EDS.

"So, for most banks they'd rather avoid having repossessions and actually just get some form of money coming in from people."

Barclays to raise £7.3 billion from Middle East

Barclays are set to raise up to £7.3bn in a proposed deal that will strengthen its balance sheet and maintain the banks independence.

The money will be mainly raised from the state investment funds and royal families of Qatar and Abu Dhabi.

If the deal is completed as expected, the Middle Eastern investors will have an almost 32% stake in Barclays.

Barclays shares initially rose on the news, but later reversed course as investors worried about the cost of the funding. Rumours in the city say the interest rates charged may be up to 14%.

In late morning trade, the shares were down 9.14%, or 18.75p, at 186.5p.

Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family, is investing up to £3.5bn in Barclays.

It is also raising up to £2bn from Qatar Holdings and £300m from Challenger, controlled by Qatar's Royal Family.

That could leave the two Qatari investment vehicles, which already have small holdings in Barclays, with stakes of 6.2% and 2.8% respectively.

Barclays is also seeking to raise an additional £1.5bn from existing institutional investors such as pension funds.

'Independent'
Barclays said the plan allowed the bank to fulfil the capital raising requirements stipulated by the UK government.

"The board believes that this maintains Barclays as a strong, independent and well-capitalised bank," said Marcus Agius, Barclays chairman.

£37 Billion UK Banks Rescue Deal

The UK government is to inject up to £37bn of taxpayer cash into Royal Bank of Scotland (RBS) Lloyds TSB and HBOS.

The Royal Bank of Scotland
RBS is to raise £20bn, with chief executive Sir Fred Goodwin quitting the firm after his bank was forced to go to the Treasury for the bail-out.
The takeover of ABN Amro in October 2007 is said to have pushed the bank over the edge.


Refinancing
RBS announces an offer of ordinary shares to raise £15 billion of core tier 1 capital. The offer will be underwritten by HM Treasury at a fixed price of 65.5 pence per share.
Existing RBS shareholders will be invited to subscribe for all or part of their pro rata entitlements. New institutional shareholders may also be permitted to subscribe for new shares under the offer.
In addition, HM Treasury will subscribe for £5 billion of Preference Shares, further increasing RBS's Tier 1 capital ratio.

HBOS & Lloyds TSB
A further £17bn will be put into HBOS and Lloyds TSB.

Barclays
Barclays intends to raise £6.5bn without government help.

Government Stakes
The plans mean taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS.

The Treasury investment in the banks forms part of the government bail-out announced last week.

UK Government Bank Rescue Plan

The UK Government has announced a £400 billion pound aimed at rescuing the banking system.

Initially extra capital has been made available to eight of the UK's largest banks and building societies in return for preference shares in them.

It is "designed to put the British banking system on a sounder footing", said Prime Minister Gordon Brown.

Shares in HBOS, the UK's biggest mortgage lender, ended up 24.5%, and Royal Bank of Scotland was 0.8% higher - trimming earlier gains. Shares in Lloyds TSB fell 7% and Barclays was down 2.4%.

The fall on the FTSE 100, which ended down 5.18% at 4,366.69 points, also came despite co-ordinated interest rate cuts from the Bank of England, European Central Bank and Federal Reserve.

The key points of the plan are:

• Banks will have to increase their capital by at least £25bn and can borrow from the government to do so.
  
  
• An additional £25bn in extra capital will be available in exchange for preference shares.
  
  
• £100bn will be available in short-term loans from the Bank of England, on top of an existing loan facility worth £100bn.
  
  
• Up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend to each other.
  
  
• To participate in the scheme banks will have to sign up to an FSA agreement on executive pay and dividends.
  
  

• Abbey
• Barclays
• HBOS
• HSBC
• Lloyds TSB
• Nationwide Building Society
• Royal Bank of Scotland
• Standard Chartered

Bradford & Bingley to be Nationalised

UK Mortgage lender Bradford & Bingley (B&B) is to be nationalised.
The government will take control of the bank's £50bn mortgages and loans.
Spain's Santander is to buy B&B's £20bn savings unit and branches.

Under the move, all B&B savings accounts are protected, and taxpayers are being shielded from any losses.

Washington Mutual Closed by Regulator

US mortgage lender Washington Mutual (WaMu) has been closed and sold by The Office of Thrift Supervision (OTS).
The OTS closed the mortgage lender before selling its assets to JPMorgan Chase for $1.9bn (£1.0bn).

The OTS said it was concerned that WaMu would run out of cash as $16.7bn of deposits had been withdrawn since 15 September.

WaMu was one of the mortgage lenders worst-hit by the collapse of the US housing market and soaring number of mortgage defaults.

OTS Statement:
"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.

The bank had about $307bn of assets but only about $188bn of deposits.

WaMu raised an extra $7bn of capital from a consortium led by the private equity group TPG in April.

Sacked CEO
WaMu dismissed its chief executive Kerry Killinger less than three weeks ago. The bank blamed Killinger for the bank's expansion into sub-prime and other comparatively risky lending.

Sub-prime mortgages are offered to borrowers with inferior credit records or unpredictable incomes.

JP Morgan
WaMu is JPMorgan's second large fire-sale acquisition since the start of the credit crunch. It bought Bear Stearns in March.

The transaction means it is now the second largest US bank, with 5,410 branches in 23 states.

Contact Us

Site Statistics