...the main business headlines..........
Asian stocks fall again
Stocks in Asia fell for another day, after weakness in US markets on Friday and lower index future prices. Dow futures were down 160 points this morning to add to the 157 point drop on Friday, as renewed weakness in the credit markets meant new bail-outs in Europe for Hypo Real Estate and Fortis. The MSCI Asia Pacific Index fell 3.6 per cent in afternoon trade in Tokyo. Financial stocks in the region were particularly weak – in Japan Mitsubishi UFJ Financial Group dropped a record 9.9 per cent and Australia’s Macquarie Group slid 8.6 per cent.
Germany guarantees all savings
The German government said on Sunday that it would guarantee all private German bank accounts in a move designed to avert panic withdrawal of funds. The total value of these accounts is currently €568bn and the announcement came as officials announced that the bail-out of mortgage lender Hypo Real Estate had been raised to €50bn. The extra €15bn injection from the country's banks was made necessary after a funding gap had threatened the collapse of the original support scheme. There is speculation other EU countries will have to follow the move on savings.
Iceland races to aid financial sector
Iceland’s prime minister Geir Haarde is involved in a “race against time” to negotiate a solution to the country’s problem financial system, reported the Daily Telegraph. Media in the country are reporting that a merger is likely between two of the “big three” banks, Kaupthing and Landsbanki. Haarde said he was “optimistic” a deal could be reached, after emergency talks continued over the weekend in Reykjavik between banks and minsters. The negotiations came as worries grew over the health of Kaupthing and retail group Baugur.
Darling planning more UK aid
Chancellor Alistair Darling is considering a “dramatic taxpayer-funded recapitalisation” of the banking system, reported the Financial Times. Such a plan would amount to a “part-nationalisation” of the sector and is thought to have support from other political parties and the central bank. The move would see the taxpayer taking an equity stake in the banks which would allow them to start to lend again, with the public benefiting from any improvement in banking sector fortunes. The Swedish government launched a similar scheme in the early 1990s.
US banks face off for Wachovia
US banks Citigroup and Wells Fargo have become embroiled in a battle for ownership of troubled bank Wachovia, said the Daily Telegraph. Citigroup said it has been granted an injunction against Wells Fargo after the latter agreed a takeover with Wachovia on Thursday, three days after Citigroup appeared to have concluded its own government-blessed $2.1bn takeover bid. Citigroup offered to increase its bid “significantly”, but that was rejected, according to the Wall Street Journal. Wachovia and Citigroup have been ordered to appear in court on Friday.
HSBC winner in banking crisis
While banks in Europe fall like dominoes, HSBC seems almost immune to the credit crisis, reported Bloomberg.com. Europe’s largest bank is not without its own subprime problems: having bought Household International in the US in 2003 it became the world’s number one subprime lender and has had to write down $38 billion as a result. However what sets the lender apart is “its ability to hoard cash”. It is one of the only European banks that takes more deposits than it lends and as a result its shares are up 10 per cent this year, while most in Europe are down.
...in brief..................
BNP Paribas buys Fortis and IPOs lowest since dotcom collapse
BNP Paribas, France’s biggest bank, has agreed to take over Fortis in Belgium and Luxembourg, after the failure of a government rescue plan, said Bloomberg.com. Paribas has suffered smaller subprime losses than rivals and has been making acquisitions in the downturn…………
A large number of UK retailers could go to the wall in the new year, according to corporate insolvency specialist Begbies Traynor. The company said it has 323 UK retailers on its “critical watch list”, which have a 70 per cent chance or more of failure…………
John Lewis has reported an 8.3 per cent drop in weekly sales at its department stores, a result, it says, of bad economic news and unseasonably warm weather. Sales at its Waitrose supermarkets were down 0.7 per cent in the week to September 27th, continuing the shift to discounters…………
GuestInvest, the company that pioneered the idea of buy-to-let hotel rooms, has gone into administration. The group owned Blakes Hotel and was in the process of developing a number of other hotels in London. Initially the model was successful, but with sales poor lately, it was forced to the wall on Friday…………
The administration of Lehman Brothers could take “a decade or more”, according to Tony Lomas, the chairman of business restructuring at PricewaterhouseCoopers, the company in charge of the winding-up process. It has already been working on the Enron case for six years…………
The number of companies floated on the world’s exchanges has fallen to its lowest level since 2003, according to Ernst & Young. In the third quarter of 2008 there were 159 initial public offerings, a drop of 66 per cent compared to the previous quarter and the lowest since the dotcom collapse…………
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