the business headlines........
Bush ups ante on bail-out bill
US President George Bush emphasised the severe problems that would arise if the bank bail-out bill failed to pass through Congress yesterday. In a televised address he said the US faced a “serious financial crisis” and a “long and painful recession” if the bill was rejected. In a show of political solidarity Barack Obama and John McCain, the presidential candidates, issued a joint statement suspending campaigning until the issue was concluded. Key government members are scheduled to meet on Thursday morning to finalise the bill.
US Election: McCain calls time-out after Obama poll boost 
Welcome to Wall Street’s cash machine
Run on Hong Kong bank
The Hong Kong authorities were forced to step in after rumours over the financial health of Bank of East Asia led to it suffering a run on its deposits. Financial secretary John Tsang told investors that the rumours were without basis and that the bank has sufficient capital. The central bank governor Joseph Yam urged calm and presided over a $500m injection into the banking system. BEA shares rose 3.6 per cent in Hong Kong trading after Li Ka-shing, chairman of Cheung Kong Holdings bought stock in the bank in a show of confidence.
Question marks over BOE liquidity
Banks in the UK have deposited nearly £6bn with the Bank of England rather than lend it to each other, even at lower rates, reported the Financial Times. The BOE announced that £5.9bn had been put in its “safe but low-interest” deposit standing facility since Tuesday, due to continuing fears over the security of the banks. This “unusual” behaviour is compromising the effectiveness of the BOE’s liquidity operations, as banks are handing back most of the money pumped into the markets. The rate offered is four per cent versus a three-month lending rate of over six per cent.
Non-execs are the real villains of the financial crisis
UK rate cut chances dealt a blow
The likelihood of the Bank of England lowering rates next month has been dealt a blow by Andrew Sentance, a member of the Bank’s Monetary Policy Committee, reported the Daily Telegraph. In a speech to a business audience in Leicester he talked of policymakers not over-reacting, despite the turmoil affecting world financial markets. He also said that a “broader assessment” of the situation was required. There have been calls for the BOE to cut rates by a quarter of a point from 5 per cent to 4.75 per cent or even lower.
Retailers gloomy over outlook
The retail sector faces a “bleak Christmas” after another set of poor trading figures in the first half of September, reported the Independent. 48 per cent of retailers reported falling sales, according to a Confederation of British industry survey, leading the body to forecast that there would be no recovery in the economy until autumn 2009. Grocery numbers were the only bright spot, with 37 per cent reporting an increase in sales. Overall the numbers posted a marginal improvement on August’s record lows.
WaMu rating downgraded
US bank Washington Mutual’s credit rating was cut from BB to CCC, pushing it “deeper into junk territory”, said the Financial Times. The downgrade came as worries surfaced that a potential sale of the bank might not involve it as a complete entity, with parts being sold off separately, thus increasing the chance of default. Six banks, including Citigroup, HSBC and Santander, have emerged as the most likely buyers and are currently conducting due diligence, as part of the auction process being carried out by Goldman Sachs.
...in brief..................
Bradford & Bingley share boost and Banesto giveaway
Beleagured mortgage lender Bradford & Bingley saw its shares jump 11 per cent yesterday after news that it had renegotiated terms with a General Motors financial services firm GMAC. Analysts continue to question the company’s survival however…………
The Co-operative Group said yesterday that the price of supermarket staples like bread and meat could begin to fall in the next three months. Peter Marks, the chief executive, said that the worst of food price inflation had probably been seen, in a boost to hard-pressed consumers…………
Centrica plans to buy a quarter of British Energy in a deal worth about £3.1bn, which will give it the right to 25 per cent of its uncontracted output and 25 per cent of its profits. The news comes as French state-owned company EDF prepares to buy the nuclear generator for £12.5bn…………
UK homebuilders have agreed on a voluntary code of conduct to protect consumers, said Bloomberg.com. The agreement comes as a result of a long-term government probe into the industry to investigate falling quality levels and higher prices on the back of lowered output…………
Daimler is set to sell its remaining stake in US carmaker Chrysler to private equity group Cerberus, ending its ten year relationship. It had previously been thought that Daimler would keep its stake, but the weak US auto market has led to Chrysler becoming a drag on Daimler’s shareprice…………
Spanish bank Banesto is offering its customers free cars in exchange for opening long-term deposits, said the Financial Times. The bank is offering savers no interest on their capital but instead will offer them Citroen cars or Piaggio scooters with costs thrown in…………
Posts
