RBS – Page 3 – Infinite Unknown

Bailed-out banks to add £1.5 trillion to public debt

February 19, 2009 by Infinite

The U.K. is in ‘unbelievable’ bad shape:

– Britain’s AAA credit rating threatened by scale of bank bail-out
– Bank of England wants to print more money
– Britain faces £100bn cut in spending according to ‘Bankrupt Britain’ report
– Alistair Darling on BBC’s Newsnight:
“The problem was that last October the banking system was facing imminent collapse,” he said. “We had no alternative but to intervene quickly.We had a matter of days and then hours to stop the entire banking system collapsing. Since then many other countries have done the same thing. The alternative was to let HBOS go down and last October [at such a critical point] the damage would not have stopped there.”
– ‘This is the worst recession for over 100 years’:
‘Surpassing even the Great Depression of the 1930s’
Ed Balls, the PM’s closest ally, warns that downturn is ferocious and says impact will last 15 years
– Jim Rogers: ‘Sell any sterling you might have; It’s finished’
– Jim Rogers: Now it’s time to emigrate, says investment guru

Prepare yourself! Do not rely on your government and the Bank of England.

Royal Bank of Scotland and Lloyds TSB, the two banks bailed out by the Government, are to add between £1 trillion and £1.5 trillion to the public debt, the equivalent of between 70 and 100 per cent of GDP, the Office for National Statistics indicated this morning.

Britain’s public sector net debt is already a record high, hitting 47.8 per cent of GDP in January, official figures show. This is the highest level of debt recorded since the ONS started recording data in 1993.

RBS struggles to find way to pay £8bn bill for toxic asset insurance scheme

February 18, 2009 by Infinite

Royal Bank of Scotland (RBS) is struggling to find a way to pay for the Government’s insurance scheme because the scale of its toxic assets mean that it could face an a bill of up to £8bn.

Royal Bank of Scotland is struggling to find a way to pay £8bn bill for toxic asset insurance scheme

RBS is scrambling to form a plan that avoids either handing over more equity to the Government – which could bring it to the brink of full nationalisation – or destroying its capital ratio.

The bank, which is already 70pc state owned, is in intensive negotiations with the Treasury as the Government has stepped up its efforts to hammer out the details of the insurance plan, called the asset protection scheme.

An announcement had been planned for Thursday next week, to coincide with RBS’s results, but banking sources believe the Treasury will unveil details of the scheme more quickly in an attempt to put a floor under the stream of bad news from banks.

Related article: RBS Said to Boost Bonuses by Up to $850 Million (Bloomberg)

RBS separately announced yesterday that it would slash cash bonuses by 90pc following pressure from the Government. RBS said employees “associated with the major losses suffered in 2008” would receive no bonus. Staff considered “essential to the bank’s recovery” will receive an award for 2008, but it will be deferred.

RBS Said to Boost Bonuses by Up to $850 Million

February 18, 2009February 18, 2009 by Infinite

A pedestrian walks past the offices of the Royal Bank of Scotland in London, on Jan. 19, 2009. Photographer: Chris Ratcliffe/Bloomberg News

Feb. 18 (Bloomberg) — Royal Bank of Scotland Group Plc may give employees as much as 600 million pounds ($850 million) of bonds to supplement 2008 bonuses after the government-controlled lender said it cut the cash element of its incentive plan by more than 90 percent, a person familiar with the matter said.

The bank will give the bonds to employees as part of a deferred compensation plan, said the person, who wouldn’t be identified because the details haven’t been released. Edinburgh- based RBS will also give 165 million pounds to “lower paid” employees to replace a profit-share plan.

RBS said yesterday it would give workers 175 million pounds in cash payments, 90 percent less than 2.5 billion pounds paid for 2007. The lender last month reported a 28 billion-pound annual loss, the biggest by a British company. Governments across the world are putting pressure on financial services firms to limit pay after the industry racked up more than $1 trillion of losses in the credit crisis.

£30 billion loss at RBS prompts savage job cuts

February 15, 2009 by Infinite

ROYAL BANK OF SCOTLAND boss Stephen Hester is to unveil a brutal cost-cutting exercise, alongside record losses of close to £30 billion, that are expected to lead to a further 10,000 to 20,000 job cuts.

Hester has told his most senior lieutenants to draw up a new business plan, measured against five key financial metrics.

The move will lead to hundreds of millions being stripped from the bank’s global cost base over the next three to five years.

The project is also expected to see the bank exit a number of countries in emerging markets, and sell off dozens of businesses now deemed to be non-core.

RBS is considering selling off parts of ABN Amro that it acquired in 2007 as part of a three-way consortium with Spain’s Santander and Belgian bank Fortis.

It has already begun talks with the Dutch government, which may acquire certain operations in the Netherlands and parts of the group’s international operations.

State-owned banks set to be sued by bankers over denial of bonuses

February 10, 2009 by Infinite

State-owned banks such as Royal Bank of Scotland and Northern Rock face being sued for millions of pounds by bankers who have been denied bonuses, it has been reported.

Claims are being prepared against several high street banks by lawyers representing dozens of financial sector staff, according to The Independent.

Ronnie Fox, a leading City employment lawyer, told the newspaper: “I have been advising senior bankers about their positions in the banks and the payment of bonuses.

“Bankers are now talking about suing for these bonuses. Some of them are very concerned and upset. The most aggrieved people are those who performed well and did make significant profits for the banks but have lost bonuses and sometimes their jobs.”

Taxpayer to insure Treasury’s £400bn toxic loan scheme

February 8, 2009 by Infinite

The Treasury’s scheme to ring-fence toxic loans made by British banks is likely to involve more than £400bn of assets being insured by the taxpayer, The Sunday Telegraph has learnt.

Submissions from banks including RBS suggest the total value of assets that will be included in the toxic loans scheme will be well over £200bn Photo: Getty

Although the details of the scheme announced last month are still being finalised, submissions from Royal Bank of Scotland and discussions with Lloyds Banking Group suggest that the total value of assets that will ultimately be included in the scheme will be significantly larger than the original estimate of £200bn.

Royal Bank of Scotland to pay staff £1 billion in bonuses

February 8, 2009 by Infinite

The Royal Bank of Scotland (RBS) is proposing to pay close to £1 billion in bonuses to its staff, just months after it was rescued by a £20 billion taxpayer bail-out, The Sunday Telegraph can reveal.

The bank’s board has begun discussions about the bonuses with UK Financial Investments (UKFI), the body set up by the Treasury to manage the Government’s shareholdings in Britain’s ailing banks.

The scale of the plan is likely to increase public anger as the recession deepens, and add to the frustration of ministers. It comes as Alistair Darling, the Chancellor, announces in The Sunday Telegraph today his plans for an independent review of the way banks are managed, including the bonus system.

RBS ‘toxic’ loans chief paid £40m

February 8, 2009 by Infinite

A ROYAL BANK OF SCOTLAND executive who led its investments into “toxic” sub-prime loans was paid close to £40m in just three years, The Sunday Times can reveal.

Jay Levine, 47, was the bank’s highest-paid employee, earning almost four times more than former chief executive Sir Fred Goodwin.

Levine, who ran the group’s American investment bank RBS Greenwich Capital, received the bumper pay deals over 2005, 2006 and 2007, according to sources close to the bank.

His pay has never been disclosed since he was not a main-board director. The pay deals came as the bank ramped up its exposures to sub-prime mortgages, asset-backed securities and collateralised debt obligations (CDOs).

Disgraced HBOS bankers received their goodbyes in cash

February 7, 2009 by Infinite

Disgraced banking boardroom executives at HBOS walked away with cash payments worth hundreds of thousands of pounds each, the Guardian has learned.

Executives were handed the cash after HBOS was rescued by Lloyds TSB and the takeover formally activated a “change of control” clause in their contracts.

The decision to hand over the cash will fuel a mounting row over the pay of bankers in institutions being bailed out with taxpayer funds. There is growing speculation in Westminster that the government will be forced to follow Barack Obama in the US and impose pay restrictions on bank executives who have sought bailouts.

It comes as millions of pounds of bonuses are about to be paid to employees who remain at Royal Bank of Scotland. The cash payments at HBOS were made at the discretion of the bank, which has received £11bn of taxpayer funds and been folded into the Lloyds Banking Group.

The bank is understood to have allowed share-based performance schemes to pay out in cash rather than shares. Such schemes might more ordinarily roll into the shares of the new company.

The directors are thought to have received 10% of the value of the shares at the time they were granted, rather than their current value. Some of the shares were granted at £11 but were valued at less than 70p when the rescue takeover went through.

Bailed-out Royal Bank of Scotland bankers set for millions in bonuses

February 5, 2009 by Infinite

RBS to reward staff in spite of losses

The troubled Royal Bank of Scotland, rescued with £20 billion of public money, is planning large bonuses for thousands of its City traders and senior bankers, The Times has learnt.

The proposed payments are expected to reach tens of millions of pounds – possibly hundreds of millions – with some star bankers in line for six-figure payouts.

UK Financial Investments (UKFI), the Treasury-run body that holds the Government’s RBS stake, is understood to have given its blessing in principle to limited payments, although it has yet to see the details. “There’s no blanket objection to bonuses, but they are subjecting them to intense scrutiny,” said one well-placed source. “The [bonus] numbers will be very large and very difficult for the general public to understand.”

Paulson Fund Makes at Least $420 Million Shorting RBS

May 24, 2009January 27, 2009 by Infinite

John Alfred Paulson, president of Paulson and Co., speaks during a hearing of the House Committee on Oversight and Government Reform on Capitol Hill November 13, 2008. Photographer: Brendan Smialowski/Bloomberg News

Jan. 27 (Bloomberg) — Paulson & Co., the hedge fund run by billionaire John Paulson, made at least 295 million pounds ($420 million) since September by short selling Royal Bank of Scotland Group Plc.

Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson’s disclosure indicates he borrowed and sold almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.

Related article: Paulson reaps £270m ‘shorting’ RBS (Financial Times)

“They took positions in U.K. banks and their bearishness has been handsomely rewarded,” said Leigh Goodwin, a London-based analyst at Fox-Pitt Kelton Ltd. who has an “in-line” rating on RBS. “They timed their exit well.”

Paulson would have made 295 million pounds, assuming it still had a 0.25 percent short position on Jan. 23, when RBS closed at 12.1 pence. RBS, which said this month it will take as much as 20 billion pounds of writedowns in 2008 and post the biggest loss in U.K. history, is down 94 percent since Sept. 19. Paulson & Co. said its funds made more than $3 billion for the firm in 2007 by judging that the U.S. housing market and subprime mortgages would collapse.

City Minister Lord Myners: Banking System Was Close to Collapse

January 24, 2009 by Infinite

City Minister Lord Myners attacks bankers for greed and arrogance

A furious onslaught on banking’s “masters of the universe” has been unleashed by Gordon Brown’s City Minister.

Too many top bankers fail to realise they are grossly over-rewarded and have no sense of society, Lord Myners says in an interview with The Times.

With figures yesterday pointing to a longer and deeper recession than feared, lasting into 2010, Lord Myners says that banks have been mismanaged and delivers the strongest attack so far on those responsible.

He also reveals that the banking system was close to collapse before the first bailout was announced.

Financial crisis: just how big is Britain’s toxic debt?

January 24, 2009 by Infinite

An army of accountants is combing through the books, trying to establish just how much the toxic assets of the bailed-out banks are actually worth. At stake, says the Government, is the future of Britain’s economy.

Toxic asset: Sir Fred Goodwin of RBS has seen his reputation collapse Photo: REUTERS

Before he was unceremoniously fired as chief executive of Royal Bank of Scotland, Sir Fred Goodwin often said that he had turned the 280-year-old institution into “a sausage machine”.

RBS, like other banks, was buying and selling pre-packaged parcels of debt, which started out as mortgages and loans but were put through a corporate mincer and wrapped into packages containing small pieces of hundreds, if not thousands, of loans. Rather like sausages, no one could be entirely sure what was in them – but as long as they paid a decent rate of interest and the bonuses kept flowing, no one cared.

As we all now know, those parcels had been bulked up with sub-prime loans, which became effectively worthless “toxic assets” when the US housing market crashed.

Confirmation yesterday that the bankers’ avarice has officially plunged Britain into recession added to the growing bewilderment as to exactly why we are on the hook for almost £1 trillion in bail-outs and guarantees.

No one even knows exactly how many of these toxic assets British banks are holding, and how much more it might cost the taxpayer to get out of this unholy mess – which is why an army of accountants is about to begin the daunting, if not downright impossible, task of tracking down and putting a value on all the debts of all the banks in which the taxpayer has taken a stake.

Barclays, RBS and Lloyds need £80bn more in capital, analyst warns

January 23, 2009 by Infinite

Britain’s three top lenders need another £80bn of capital to end concerns about their solvency once and for all, stabilising the financial system, according to analysts at investment bank Nomura.

The warning will fuel fears that Royal Bank of Scotland, Lloyds Banking Group and Barclays may be fully nationalised, coming after a week in which share prices in all three banks have more than halved. Nomura added that the latest Government bail-out measures “do not change the key issue of the unknown and potentially unlimited losses of the banking system, and therefore whether it will ultimately require further capital injections”.

Investors in banks have been spooked by worse-than-expected losses at HBOS and RBS. Comparing the current recession with the 1990s, Nomura estimates that over four years Barclays will record credit losses of £33bn, Lloyds £56bn and RBS £61bn.

UK cannot take Iceland’s soft option

January 21, 2009 by Infinite

The British government faces an excruciating choice. It cannot let Royal Bank of Scotland and its fellow mega-banks go to the wall. Yet it risks being swamped by the massive foreign debts of these lenders if it takes on their dollar, euro and yen exposure by opting for full nationalisation.

Britain has foreign reserves of under $61bn dollars (£43.7bn), less than Malaysia or Thailand. The foreign liabilities of the UK banks are $4.4 trillion – or twice annual GDP – according to the Bank of England. The mismatch is perilous.

It is why sterling has crashed 10 cents from $1.49 to $1.39 against the dollar in two days. The markets have given their verdict on Gordon Brown’s latest effort to “save the world”.

Related article:
– Gordon Brown brings Britain to the edge of bankruptcy (Telegraph)

Credit default swaps (CDS) measuring risk on British debt have reached an all-time high of 125 basis points, just below Portugal. The yield spread on 10-year Gilts over German Bunds has doubled to 53 basis points since last week.

Standard & Poor’s has quashed rumours that it will soon strip Britain of its AAA credit rating – an indignity averted even after the International Monetary Fund bail-out in 1976. But there was a sting yesterday as it responded to the Treasury plan for the banks. “Market confidence in the sector has eroded to such a degree that it is not clear whether these measures by themselves will bring about a material improvement,” the IMF said. “As a result, full nationalisation of some banks remains a possibility in our view.”

Spain was relegated from AAA to AA+ on Monday, and Spain’s public debt is a much lower share of GDP.

Jim Rogers: ‘Sell any sterling you might have; It’s finished’

January 20, 2009 by Infinite

Outside frontline politics, few people can move financial markets simply by opening their mouths. One such is Jim Rogers, an American investment guru who yesterday pushed Britain deeper into gloom and austerity with apocalyptic words about the pound and the country’s economy.

Hours after the Prime Minister pledged hundreds of billions of pounds to sustain Britain’s banks, Mr Rogers added vinegar to the already souring international sentiment about the rescue plan, its impact on the public purse and its capacity to cure the sickening economy.

“I would urge you to sell any sterling you might have,” Mr Rogers advised his army of investment followers. “It’s finished. I hate to say it, but I would not put any money in the UK.”

The reaction was instant – though it is impossible to say how much was attributable to Mr Rogers. The pound slumped, by almost 4 per cent at one point, falling to a seven-year low against the dollar and an all-time low against the Japanese yen.

Not since Black Wednesday in 1992, when the currency was expelled from the European Exchange Rate Mechanism, had there been such a steep fall in a day.

Banks bailout: Bonds tumble as Government admits no cap on taxpayer risk

January 19, 2009 by Infinite

Bank shares plunged and Government bonds tumbled after Gordon Brown announced plans to insure lenders for losses on bad loans which could amount to billions of pounds.

The Prime Minister announced a scheme to allow banks to exchange cash or shares for a Government guarantee on their “toxic” debts, transferring any losses they suffer from the banks to the taxpayer.

But the Government has conceded that it can’t estimate how much taxpayers’ money will be on the line in the latest bank assistance package.

UK bond prices fell sharply as the financial markets digested the prospect of further Government borrowing. Bank stocks also tumbled with shares of Royal Bank of Scotland losing more than half their value. Lloyds, Barclays and HSBC also fell.

Ministers say the new package, which comes only three months after another £500 billion bailout, is vital to restore bank lending and help companies get credit and stay in business.

Global Economic Crisis Accelerating

January 19, 2009January 19, 2009 by Infinite

U.S. President-elect Barack Obama waves after speaking during the “We Are One: The Obama Inaugural Celebration at the Lincoln Memorial” event in Washington on Jan. 18, 2009. Photographer: Andrew Harrer/Bloomberg News

– Obama Issues Call to Service to Help Repair Nation (Bloomberg):
Obama is using the latest state of the art manipulating techniques. Don’t fall for this puppet of the elite, rather listen to some of the few people – like Ron Paul, Peter Schiff, Marc Faber and Jim Rogers – that are telling you the truth:
Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression or Peter Schiff: We are the United States of Madoff

More change: Obama Reaches Out for McCain’s Counsel (New York Times)

– California Finds Public-Works Spending No Unemployment Cure-All (Bloomberg):
“What infrastructure spending can do is bolster employment in a group of industries, like construction, with workers who are ready to go,” said Brad Kemp, director of regional research at Beacon Economics in Los Angeles. “What it can’t do is stop the unemployment rate from rising currently because there are a lot of forces coming at consumers, who are holding back on spending.” California is totally broke: Here

– ! Bonds tumble as Government admits no cap on taxpayer risk (Telegraph)

– Brazil Cut Record 654946 Registered Jobs in December (Bloomberg)

– Brussels sees Eurozone economy shrink 1.9% (Financial Times)

– Taxpayers are spending over $1 billion to send refined fuel to the Israeli military — at a time when Israel doesn’t need it and America does (Salon)

– Spain Downgraded by S&P as Slump Swells Budget Gap (Bloomberg):
Jan. 19 (Bloomberg) — Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit.

– China GDP Growth May Cool to Slowest Pace in 7 Years (Bloomberg)

– Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year (Bloomberg):
Jan. 19 (Bloomberg) — The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued for the sixth time in seven days to protect reserves.

– Fifty jobseekers chasing every vacancy in some parts of the country (Telegraph)

– Treasury Yields Flattened as Fed Fights to Cut Mortgage Rates (Bloomberg):
Fed Chairman Ben S. Bernanke helped spark a rally by reiterating Jan. 13 at the London School of Economics that he’s considering buying long-term Treasuries to reduce borrowing rates as the recession deepens.
(Bernanke helped to create the ultimate Bond Bubble: Here, here and here.)

– Bonds no safer than houses (The Financial Standard)

– Denmark agrees on 13.4-bln-euro line of credit to banks: govt (AFP)

– How the Treasury Bubble Will Burst and Why (Seeking Alpha)

– Investor puts pressure on HSBC to let US sub-prime unit go bankrupt (Times)

– Tory chief’s firm cost councils £470m (Independent)

– RBS on the brink as shares plummet by 69% and City is warned: ‘You’re about to become
Iceland-on-Thames’ (Mail Online)

– RBS ready to write off £1bn loan to Russian oligarch (Scotsman)

– RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)

– RBS shares dive 70% on mounting debt fears (Times Online)

– Tax rise for rich won’t make society fair, says Mandelson (Guardian)

– More Americans Joining Military as Jobs Dwindle (New York Times)

– Circuit City to close remaining 567 stores in US (Los Angeles Times):
The failure of the No. 2 electronics retailer means the loss of 34,000 jobs.

– BASF warns of possible job and production cuts (Houston Chronicle)

Brown gives the Bank of England unprecedented power to buy securities

January 19, 2009January 19, 2009 by Infinite

As I said before:
The Bank of England is destroying the pound and the government is taking care of the rest. If I would live in the U.K., then I would most probably flee from the coming meltdown. It seems difficult – to me – to hide from the coming collapse there. Please stock up food, water, clothes, gold, silver etc., especially if you can’t run from what is about to happen. Do not live in the cities. Don’t panic, prepare!

Brown Tightens Grip on Banks as Recession Worsens

Jan. 19 (Bloomberg) — Prime Minister Gordon Brown’s government tightened its grip on Britain’s financial system, guaranteeing toxic assets and giving the Bank of England unprecedented power to buy securities.

The Treasury authorized the central bank to buy 50 billion pounds ($73 billion) of assets and plans to raise its stake in Royal Bank of Scotland Group Plc to spur 6 billion pounds of lending. It’s also backing hundreds of billions of pounds of securities hurt by market turmoil.

Related articles:
– British banks are ‘technically insolvent’ (Independent)
– RBS shares dive 70% on mounting debt fears (Times Online)
– RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)
– Royal Bank of Scotland Sees $41 Billion Loss as Government Increases Stake (Bloomberg)
– ANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS (Daily Express)
– UK is in freefall, warns think-tank (The Observer)

“In return for access to any government support, there will have to be an increase in lending, and that will be legally binding,” Brown said at a press conference in London today. “I will not sit idly by and let people and businesses go to the wall.”

The measures extend the U.K. government’s October rescue plan, which included 50 billion pounds to recapitalize banks and a 250 billion-pound credit line for banks. Brown said he is “angry” institutions are rationing loans, pushing the economy deeper into its worst recession since World War II.

Royal Bank of Scotland Sees $41 Billion Loss as Government Increases Stake

January 19, 2009January 19, 2009 by Infinite

Pedestrians walk past a branch of Royal Bank of Scotland in London on Oct. 13, 2008. Photographer: Jason Alden/Bloomberg News

Jan. 19 (Bloomberg) — Royal Bank of Scotland Group Plc said it may post a loss of as much as 28 billion pounds ($41 billion), the biggest ever reported by a U.K. company, as the credit crisis worsens. The stock slumped as much as 46 percent.

Britain’s biggest government-controlled bank may post a full-year loss before exceptional goodwill impairments of as much as 8 billion pounds, Edinburgh-based RBS said in a statement today. In addition, the bank may write down the value of past acquisitions by as much as 20 billion pounds.

Related articles:
– RBS shares dive 70% on mounting debt fears (Times Online)
– RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)
– British banks are ‘technically insolvent’ (Independent)
– ANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS (Daily Express)
– UK is in freefall, warns think-tank (The Observer)

The loss would eclipse Vodafone Group Plc’s 22 billion- pound net loss in 2006. RBS has been crippled by its acquisition of ABN Amro Holding NV’s investment banking assets three months before the credit crisis began, a takeover Chancellor of the Exchequer Alistair Darling today called “disastrous.” The Treasury said today it may raise its stake in RBS as it announced the second British bank rescue in three months.

“I am angry at the Royal Bank of Scotland and what has happened,” Prime Minister Gordon Brown told reporters in London today. The bank took “irresponsible risks,” in investing in U.S. subprime mortgages and ABN Amro, he said.

RBS shares dropped as low as 18.9 pence and traded down 43 percent at 20 pence at 1 p.m. in London trading, their lowest value since at least September 1988. Barclays Plc dropped 10 percent to 88.2 pence. Lloyds Banking Group Plc dropped 25 percent to 74 pence, as the bank said it still plans to repay the government’s preference shares by the end of the year.

‘Full-scale Nationalization’

Global Economic Crisis Accelerating

January 18, 2009 by Infinite

– Richest apartment block in US becomes a house of horrors (Guardian):
The lavish apartments of 740 Park Avenue are home to 30 of America’s wealthiest and most influential families. At least they were until the historic confluence of financial disasters struck, lopping billions of dollars off their combined net worth. Now the formerly untouchable denizens of this famous apartment building look like they could lose it all.

– French aristocrats the Wendels forced to put North Sea assets on the block (Times Online):
THE Wendel family, one of France’s most prominent industrial dynasties – which once made cannons for Louis XIV – has put its North Sea oil company up for sale in a desperate bid to raise cash after debt-fuelled investments soured, threatening to make it one of the most high-profile casualties of the global financial crisis.

– State employees stunned by request for $250 million in concessions (Cleveland.com):
COLUMBUS — The state has asked workers in its largest labor union to accept a 5 percent across-the-board pay cut, a shorter work week and unpaid holidays to help balance the state’s troubled budget, according to a document obtained by The Plain Dealer. The list of cuts and changes Gov. Ted Strickland’s administration has asked the workers to accept, which also includes mandatory furloughs and paying more for their health insurance, would amount to $250 million in concessions, according to a members-only e-mail from Ohio Civil Service Employees Association president Eddie L. Parks.

– Eastern Europe braced for a violent ‘spring of discontent’ (Guardian):
Riots and street battles are set to spread through Bulgaria, Romania and the Baltic states as inflation, unemployment and racism fuel tension, reports Jason Burke

– Obama team weighs government bank to ease crisis (Reuters):
(Obama team weighs government bank to loot taxpayers’ even more.)

– Obama Bank Rescue May Make New Effort to Resolve Toxic Assets (Bloomberg)

– VeraSun to put 7 plants up for auction (Forbes):
VeraSun Energy Corp., the nation’s second largest ethanol producer, is putting seven of its biorefineries up for auction as part of a bankruptcy court financing agreement.

– Brown’s fury at Royal Bank of Scotland’s £2.5bn loan to Russian oligarch (Daily Mail)

– Recession drills deep into oil and gas (Independent)

– Gulf Shares Fall on Concern That Earnings May Lag Expectations (Bloomberg)

– Oil demand to fall again in 2009 (BBC News):
(Oil demand dropped very little … compared to oil prices. This makes no sense whatsoever, unless what Lindsey Williams said is actually happening right now.)

– Monetary union has left half of Europe trapped in depression (Telegraph)

– Iraq reconstruction’s bottom-line (Asia Times)

– UK is in freefall, warns think-tank (Guardian)

– Florida’s Nadel Missing as FBI, SEC Investigate Funds (Bloomberg)

ANOTHER £100BN BAIL-OUT FOR ‘INSOLVENT’ BANKS

January 17, 2009 by Infinite

The emergency bail-out will total more than £100 billion

GORDON Brown will announce a further emergency bank bail-out totalling more than £100billion next week, it emerged last night.

The desperate measure, which will raise the taxpayer’s liability to more than £250billion, came as a report warned that Britain’s banks are technically insolvent.

The report, from analysts at Royal Bank of Scotland, said the credit crunch showed little signs of easing. In an indication of the extent of the problem, the report was titled Living on a Prayer.

Banks had so little capital to lend, they were effectively insolvent, it said. It was a situation “not unusual” in an economic downturn, but showed little sign of abating in the coming months.

The Treasury and Downing Street refused to discuss the bail-out plan yesterday.

But details leaked out after the Prime Minister met Bank of England governor Mervyn King and Financial Services Authority chairman Lord Turner at Number 10.

Treasury sources indicated that an extra £108billion of public money will be used to guarantee loans and mortgages. Officials will be hammering out details over the weekend.

British banks are ‘technically insolvent’

January 20, 2009January 17, 2009 by Infinite

The Independent had previously removed the article.

“Britains biggest banks are “technically insolvent”, Royal Bank of Scotland said yesterday, as the global banking industry was rocked by another day of turmoil, including the announcement of $23bn (£16bn) of new losses from Merrill Lynch and Citigroup, the giant US institutions.

Analysts working for RBS, one of several British banks to have received emergency funding from the UK Government last year, told the City that “the domestic UK banks are technically insolvent on a fully marked-to-market basis”.

The warning does not mean British banks are about to go bust, because the assessment is purely theoretical, and RBS said the position was “not unusual at this stage in the economic cycle”.

However, it will add to pressure on the Government to provide more support for the country’s banks. Treasury officials are now set to spend this weekend in talks about a fresh round of measures, which could be unveiled as early as next week, to free up lending to households and major corporations hit by the credit crunch.

The value of Barclays fell by a quarter in stock market trading yesterday, amid a series of wild rumours about its finances, although the bank said it saw no need to comment on the drop.

Global Economic Crisis

January 13, 2009January 13, 2009 by Infinite

– Economy could lose 2M jobs in ’09 – report (CNN Money)

– China’s Exports Decline by Most in Decade on Global Recession (Bloomberg)

– Royal Bank of Scotland May Face LyondellBasell Losses (Bloomberg):
Jan. 12 (Bloomberg) — Royal Bank of Scotland Plc is the biggest lender to bankrupt chemical maker Lyondell Chemical Co. and may face losses on its $3.47 billion of loans to the U.S. chemicals company.

– Royal Bank of Scotland Selling Bank of China Stake (Bloomberg)

– Saab, Volvo Must Be ‘Carved Out’ To Win Aid-Swedish Official (CNN Money)

– Commercial property rents collapse in London hedge fund areas (Independent):
Rents for plush offices in Mayfair and St James’s plunged almost 30 per cent last year, hammered by the declining fortunes of many of their hedge funds tenants.

– Stephen King: You can’t buy confidence when the economy is in a state of collapse (Independent): Stephen King is managing director of economics at HSBC

– German bond sale’s fate signals trouble ahead (Financial Times):
A German sovereign bond auction failed (!!!) on Wednesday as investors shunned one of the most liquid and safe assets in the world in a warning for governments seeking to raise record amounts of debt to stimulate slowing economies.

– Bernard Madoff Will Remain Free on Bail, Judge Rules (Bloomberg)

– U.K. Slumps Most Since 1989 as Home Sales Drop, Surveys Show (Bloomberg)

– Zimbabwe introduces $50 billion note (CNN):
HARARE, Zimbabwe (CNN) — Zimbabwe’s central bank will introduce a $50 billion note — enough to buy just two loaves of bread — as a way of fighting cash shortages amid spiraling inflation.

– Taxpayer will own nearly half of super-bank (Independent):
Taxpayers are set to own almost half of the “super-bank” created from Lloyds TSB’s rescue takeover of HBOS, the two banks confirmed today

– Job losses accelerating to levels not seen since World War II (Memphis Commercial Appeal):
“There is no indication that the job situation would stabilize anytime soon,” said Sung Won Sohn, economist at the Martin Smith School of Business at California State University.
“This could turn out to be one of the worst economic setbacks since the Great Depression,” he said.

RBS May Join UBS, Li in Selling Bank of China Stock

January 8, 2009 by Infinite

In case the Bank of China wants to raise funds, will it start selling US Treasuries?

Pedestrians walk past a branch of Royal Bank of Scotland in London on Oct. 13, 2008. Photographer: Jason Alden/Bloomberg News

Jan. 8 (Bloomberg) — Royal Bank of Scotland Group Plc said it’s considering joining UBS AG and Hong Kong billionaire Li Ka- shing in selling Bank of China Ltd. shares as the end of a three-year lockup gives the U.K. lender a chance to raise funds.

RBS, the biggest bank to be controlled by the U.K. government after a 20 billion-pound ($30 billion) bailout, said it is “examining” its $2.8 billion Bank of China stake as part of a companywide review initiated last quarter. Bank of China, the country’s third-largest lender, fell 7.9 percent in Hong Kong after Li sold 2 billion shares in the Beijing-based company.