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  • mghzhombre mghzhombre Sep 18, 2007 9:41 PM Flag

    stunner FED has thrown caution to the wind, why?

    Panic withdrawals slow down at Northern Rock. Crowds have shrunk outside some Northern Rock branches after Chancellor Alistair Darling said customers' savings would be guaranteed.

    CONTAGION FEARS have spread England, Asia, Australia, run on banks have briefly sown up due to the credit squeeze. Thus the panic cut by the fed today. And still today the ceo of cfc is still saying, "more please". Just guessing something is yet to be reported. Public is last to know as can seen why, fear of banks runs.

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      Bank of China's subprime hit

      Friday Aug 24 2007 07:55
      Big number, big panic. Bank of China spooked investors this week when it confessed to holding nearly $10bn of securities backed by US subprime mortgages. That is the biggest exposure announced by any bank to date and no small change for China's number two lender. Bank of China did not raise a whole lot more than $10bn when it listed on the Hong Kong stock exchange last year and generated substantially less in operating profit in the first six months of this year.

      True, the subprime exposure looks less toxic when measured against the bank's capital. It represents just over 1 per cent of total assets and around one-fifth of shareholders' equity. It is also relatively top-drawer paper. Over 75 per cent of the securities are AAA-rated, while virtually all the remainder are AA. But with bankers still scrabbling to price US subprime securities, it would be naive to assume Bank of China's $145m provisions against the securities mark an end to the story � particularly since Industrial & Commercial Bank of China also revealed exposure of $1.2bn.

      More spookily, the fact that Chinese lenders are dabbling in such exotic instruments barely a year after transforming into partially privatised entities shows risks are spreading. Investors are accustomed to wobbles on the credit side: Chinese lenders are poor at pricing risk and the buoyant economy discourages caution. Notwithstanding radical restructuring and recapitalisation, more than one-tenth of Bank of China's loan book comprises doubtful quality loans, although just one-third of those are non-performing.

      • 3 Replies to mghzhombre
      • ostfor the next three days as he said. Highly recommend you keep youe eyes wide open and your ears tunes in to what is ocuring not just here put around the world. Just gave you some samples. Rate hike don't work over night 6+ month then that is if you still have a home or job.

      • EU Economic and Monetary Affairs Commissioner Joaquin Almunia said last week that the subprime crisis should not have a discernable effect on the European Union's growth in 2007.

        Released : Tuesday, September 18, 2007 1:19 PM
        Irish banks are poised to put the squeeze on customers to maintain their profits, writes David Clerkin.
        Anyone who had hoped the credit crunch would be a short-term and relatively painless phenomenon got the answer they did not want on Friday. News that the Bank of England had stepped in to prop up British mortgage lender Northern Rock sparked fresh panic and saw bank shares take yet another hit.
        Shares in the main Irish banks, which had already suffered so much pain - even before the liquidity squeeze took centre stage last month - tumbled even further.
        Special punishment was meted out to Anglo Irish Bank on Friday, as its shares fell 7 per cent. This was largely down to fears directed at banks that do not have large-scale deposit bases of their own and which are perceived as being more reliant on inter-bank funding to meet their cash requirements.
        Despite Friday's events, however, Anglo remained one of the better-performing Irish financials since the market peaked earlier this year, with its cumulative share price fall 29 per cent off its highs.
        By contrast, it is Bank of Ireland that has slid most of all among the four main Irish financials this year. Its 5 per cent drop on Friday brought the share price to a low not seen in three years and its aggregate decline to 38 per cent since its all-time high in February.
        The news has been little better at AIB and Irish Life and Permanent, whose prices are now down 29 per cent and 31 per cent from their peaks. The falls have dragged the Iseq down by 20 per cent since peaking in February. The Dublin index slipped below the 8,000 barrier last week for the first time in more than a year.
        While Northern Rock's problems represented more bad news for bank shareholders, they also spell major trouble for bank customers too.
        Hundreds of Northern Rock's Irish customers, who have collectively deposited E2.5 billion with the bank through its online and phone operation here, queued at its Dublin offices on Friday to get their hands on their money, despite assurances from the bank and the British financial regulator that their funds were safe.
        But Northern Rock's underlying difficulties, detailed in a stock-exchange statement issued by the bank on Friday, have further-reaching implications for customers of all banks, who face significantly higher borrowing rates as a result of the credit squeeze.
        Although the European Central Bank (ECB) failed to pull the trigger on higher interest rates earlier this month, the crunch has resulted in soaring borrowing costs in the interbank market and bankers expect this rise to be passed on to customers.
        Northern Rock said it was not expecting inter-bank borrowing costs to return to their historical norms in the short to medium-term. Chief executive Adam Applegarth spoke of "extreme conditions in global liquidity", and revised profit forecasts downwards by more than 20 per cent.
        The bank did not expect to see markets return to normal until next year at the earliest, and also suspended its attempts to raise cash through a fire sale of what it called "capital-inefficient assets", saying it would only sell these if and when the prices on offer for these assets improved......

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