Fitch Weighs Lower Rating for Wachovia
The New York Times Fitch Ratings may lower the credit ratings of Wachovia, the bank that ousted its chief executive after greater-than-expected mortgage losses. In a report Friday, Fitch said that Wachovia, based in Charlotte, N.C., increased its loan loss reserve by 2 billion as of March 31, which represented only about 1.2 percent of the bank s 170 billion mortgage portfolio. About 70 percent of Wachovia s mortgages are option adjustable-rate mortgages that let borrowers skip part of their payment and add the sum to their principal.
Euro inflation at 4 percent highest in 16 years
Topix.net Yearly inflation in euro nations hit a record 4 percent in June, the EU statistics agency Eurostat said Monday, adding pressure on the European Central Bank to raise borrowing costs even as the economy slows. ECB officials have signaled they may hike their key interest rate on Thursday from 4 percent to 4.25 percent to try to cool prices although that would raise costs for home buyers and companies seeking credit, further slowing the economy. It may also weaken the dollar by encouraging investors to seek higher returns by placing funds in higher-interest euro currency accounts.
Billionaire to join Barclays shareholder register
Wealth-Bulletin.com A Middle Eastern billionaire and two UK hedge funds are poised to line up alongside Japanese and Qatari investors in a shake-up of the Barclays shareholder register once the bank has completed its 163 4.5bn 710 5.6bn capital raising plan, according to a prospectus for the deal. However, analysts predict that Barclays may need up to a further 163 9bn even after the current capital raising to bring its equity tier one capital ratio in line with Royal Bank of Scotland if it suffers a similar level of credit market writedowns to its UK rival.
Barclays May Get 927 Million From Sumitomo Mitsui
Bloomberg Barclays Plc may get 100 billion yen 927 million from Japan s Sumitomo Mitsui Financial Group Inc. to restore depleted capital, Nikkei English News reported, without saying where it got the information. Tokyo-based Sumitomo Mitsui Banking Corp., the banking unit of Sumitomo Mitsui, will buy several percent of London-based Barclays in a private placement of new shares, Nikkei said. The banks also will increase cooperation in Asia, including the exchange of employees, the news service said.
Bank of England Gains New Oversight Powers
The New York Times The Bank of England announced a revamp of its leadership on Thursday as it was granted enhanced powers to manage financial crises in the biggest overhaul of Britain s financial regulatory system in a decade. The government appointed two close allies of the governor of the Bank of England, Mervyn King, as chief economist and deputy governor at the central bank, a move that analysts said strengthens Mr. King s position. The Bank of England and regulators have come under pressure for their handling of the financial crisis, and the central bank has been criticized as too remote.
UBS ex-banker pleads guilty in U.S. tax case
Wealth-bulletin.com A former UBS AG banker pleaded guilty in federal court to helping a billionaire client evade taxes by hiding 200 million in assets in offshore accounts, a move expected to aid U.S. prosecutors in their probe of the Swiss banking giant. Bradley Birkenfeld, 43 years old, answered softly when U.S. District Judge William Zloch asked him why he participated in the fraudulent tax scheme. I was employed by UBS. . . I was incentivized to do this business, he said, standing with his hands clasped behind him, at a podium before the judge.
Bank of England Gains New Oversight Powers
The New York Times The Bank of England announced a revamp of its leadership on Thursday as it was granted enhanced powers to manage financial crises in the biggest overhaul of Britain s financial regulatory system in a decade. The government appointed two close allies of the governor of the Bank of England, Mervyn King, as chief economist and deputy governor at the central bank, a move that analysts said strengthens Mr. King s position. The Bank of England and regulators have come under pressure for their handling of the financial crisis, and the central bank has been criticized as too remote.
Citigroup Offers 1,350 Japan Workers Early Retirement
Bloomberg Citigroup Inc. offered 1,350 employees at its consumer finance unit in Japan early retirement with two months pay as the company withdraws from the business, a proposal the workers union called unacceptable. CFJ KK, Citigroup s local consumer finance unit, made the offer in a memo distributed to all its employees on June 16 and provided to Bloomberg News by Akihito Kawamura, chairman of CFJ s labor union. Citigroup s Tokyo-based spokeswoman Atsuko Yoshitsugu declined to confirm the document, which was addressed from Masanori Hogi, CFJ s chief administrative officer.
Paulson Co. Says Writedowns May Reach 1.3 Trillion
Bloomberg John Paulson, founder of the hedge fund company Paulson Co., said global writedowns and losses from the credit crisis may reach 1.3 trillion, exceeding the International Monetary Fund s 945 billion estimate. We re only about a third of the way through the writedowns, Paulson, 52, told the GAIM International hedge fund conference in Monaco today. There are a lot of problems out there and it will continue to be felt through the year. We don t see any signs of stabilizing.
US banks need more funds
Reuters US banks may need to raise US 65 billion of additional capital to cope with mounting losses from a global credit crisis that will not peak until 2009, Goldman Sachs Co analysts said yesterday. The new capital would be on top of US 120 billion already raised by the industry, analysts led by Richard Ramsden said.
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