Lehman Brothers bankrupt
One of the world's biggest investment banks, Lehman Brothers, has filed for bankruptcy, sending world stock markets tumbling. The collapse of the US bank is one of the biggest in financial history. And, meanwhile, it was announced that Bank of America will save Merril Lynch from the same fate by... [continued]
NUMBER TEN
Ministers refuse to back Brown
Gordon Brown still faces calls for a challenge to his leadership, after ministers refused to criticise rebel MPs who have called for a contest. Earlier in the day, foreign secretary David Miliband insisted Brown would lead the part into the next election, but last night business secretary John Hutton said... [continued]
...the main headlines..........
Lehman files for bankruptcy
Lehman Brothers today announced that it is filing for bankruptcy in one of the “worst banking collapses in history”, said the Guardian. After a weekend of talks, a buyer failed to be found, with Bank of America and Barclays Bank walking away from a deal in negotiations spear-headed by the US authorities. It is thought that the government’s unwillingness to provide a guarantee for the company’s assets was behind its inability to sell the bank. 4,000 jobs are at risk in London alone, with the financial system braced for turmoil.
Opinion Digest: Max Hastings on the odious financial sector 
Credit crunch will get worse before it gets better
Bank of America buys Merrill Lynch
Bank of America has agreed to acquire Merrill Lynch, the world’s biggest broker, for $50bn. After pulling out of talks to buy Lehman Brothers, the bank agreed to pay $29 per Merrill share in a share swap, after the broker suffered $19bn in losses as a result of US mortgage problems. Bank of America has already bought Countrywide, the US mortgage lender, making it the country's largest home lender and it now not only gains the pre-eminent broker but a half stake in Blackrock, the fund management company worth $24bn.
AIG fights for survival
American International Group, the largest US insurer, plans to raise capital and divest parts of its business, in an effort to avoid potentially fatal credit downgrades. The insurer has gone to the US Federal reserve for a $40bn "bridge loan" after rejecting a private equity deal from J. C. Flowers, according to the New York Times. Shares in the company have collapsed nearly 80 per cent this year after it suffered three quarterly losses amounting to $18.5bn. Concern over AIG centres on writedowns on credit-default swaps it wrote as insurance for failing companies.
Fed attempts to stabilise system
The US Federal Reserve has broadened the collateral it accepts for loans to securities firms to include stocks, as the financial system suffers a series of bankruptcy shocks, reported Bloomberg.com. It also increased its Treasury bond lending by $25bn. A group of ten Wall Street banks also formed a $70bn fund to stabilise the market by providing sufficient liquidity. The developments led to speculation that the fed may "take further action" including lowering interest rates as the financial crisis worsens.
Alitalia in rescue effort
The Italian government is in "last ditch talks" to save embattled airline Alitalia amid recrimination and funding shortages, said the Daily Telegraph. The consortium bidding for the bankrupt carrier has demanded pay cuts of 30 per cent and longer working hours in return for fresh investent, but the company's unions are holding out for improved conditions. Alitalia is losing three million euros a day and is reported to have only three weeks' cash reserves left, having exhausted a 300 million state loan. Without a deal it now faces "imminent liquidation".
CBI predicts recession
The Confederation of British Industry has lent its weight to the "chorus of voices" predicting recession in the UK, reported the Independent. The employers' group says that in 2009 the economy will enter a "shallow recession", with very weak growth and unemployment reaching two million. Economists at the organisation say that as a result the Bank of England should have the ability to cut interest rates when inflation peaks in the autumn, with a 0.5 per cent decline forecast in November, followed by another two 0.25 per cent cuts in early 2009.
...in brief..................
BASF buys Ciba and Fink returns
BASF, the world’s biggest chemicals company, agreed to buy Ciba Holding for 6.1 billion Swiss francs. BASF will pay 50 francs cash for every Ciba share, a 32 per cent premium to Friday’s closing price, as it attempts to move further into the specialty sector…………
Gold has been the major beneficiary of today's stock market woes. After the collapse of Lehman Brothers, bullion has leapt two per cent with silver also moving up in value. Meanwhile oil continued its slump, falling two per cent on recession fears............
Where do you put your money now?
Colonial, one of Spain’s largest property companies, is set to unveil a debt restructuring scheme involving asset sales and debt swaps, in an effort to stave off bankruptcy, said the Financial Times. It will be the biggest such plan in a sector hit hard by the credit crisis…………
Private equity company Apax Partners is seeking to sell a stake in itself to a group of investors from the Far East and Australia. The company is to announce the sale of 10 per cent by the end of the month, giving it an estimated value of £1.5bn............
Cable & Wireless is set to accelerate plans to break itself up by announcing the £4.5bn demerger of its international business, said the Daily Telegraph. The announcement could come at the end of the month and it would be the biggest since BT split with Cellnet............
Stanley Fink, the founding father of the UK hedge fund industry, has returned to the industry, after retiring from Man Group two months ago. He has been appointed chief executive of International Standard Asset Management, a hedge fund company managing £200m…………
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