December 2008
23 December 2008
JPMorgan plans to buy two units of UBS , as the Swiss bank continues to trim its investment banking arm. UBS has agreed to sell its Canadian commodities energy business and also its global agricultural business in a deal expected to close in the first quarter of 2009.
The beleaguered US insurance group AIG will sell the Hartford Steam Boiler Company to Munich Re , the German reinsurer, for US$742m.
China cut interest rates for the fifth time in three months as the government tried to pump money into the economy. The benchmark one-year lending rate was cut by 27 basis points to 5.31%, while the one-year deposit rate was lowered by the same amount to 2.25%.
A record number of merger and acquisition deals were cancelled in 2008 leading to a sharp fall in fees for investment bankers. The total volume of worldwide mergers and acquisitions reached US$3.28 trillion in the year to date, down 29% from the full year 2007. Companies abandoned 1,309 transactions valued at a total of US$911bn, according to Dealogic, the financial data provider. In 2007, there were 870 withdrawn deals valued at US$1.16 trillion. BHP Billiton’s US$147.bn bid for Rio Tinto was the largest-ever withdrawn deal, while the US$48.5bn acquisition of Canada’s BCE telecoms group by a consortium of private equity groups marked the biggest failed buy-out ever.
22 December 2008
TheIrish government unveiled a €5.5bn rescue package for the struggling banking sector that will see taxpayers own up to 75% in Anglo Irish Bank. The government will put €2bn into each of Bank of Ireland and Allied Irish Banks in return for an 8% coupon. The Irish government will also make a €1.5bn investment in Anglo Irish, which suffered the resignations of both its chairman and chief executive last week over loans for directors, but will charge a higher coupon of 10%.
Canada has unveiled a plan to ease pressure on automotive parts suppliers and dealers with C$4bn (€589m) in emergency loans to the local subsidiaries of General Motors and Chrysler.
17 December 2008
The US Federal Reserve has slashed interest rates from 1% to virtually zero, saying it would target a record low interest rate of between zero and 0.25%.
16 December2008
The fallout from Bernard Madoff’s alleged US$50bn fraud spread through the global financial system as more banks revealed exposures to his firm. The potential losses reported by large financial institutions that invested or lent to investors in Madoff’s failed venture reached US$10bn after HSBC confirmed the news, first reported in the Financial Times , that it could lose up to US$1bn. The nationalized Dutch arm of Belgian bank Fortis admitted losses could reach €1bn, while Royal Bank of Scotland joined BNP Paribas and Banco Santander among the victims of the scandal, saying it might lose up to £400m. Japan’s Nomura has US$300m at risk. BBVA may lose €300m.
15 December 2008
The Irish government is to provide a fund of £9bn to recapitalize all its listed banks. The money will be available to AIB, Anglo-Irish, Irish Nationwide, Irish Life & Permanent and Bank of Ireland, which owns the Bristol & West Bank.
12 December 2008
The effort to agree legislation to lend US$14bn to the US auto industry has collapsed in the Senate, leading the Bush administration to hold open the possibility that it would seek funds from its financial rescue plan instead.
The Japanese governmen t has doubled the size of its stimulus plan, increasing it by 23 trillion yen (£171bn).
11 December 2008
US House of Representatives approved a US$14bn emergency loan for Detroit carmakers by 237 votes to 170, but the bill faces opposition in the Senate.
The Bank of Korea cut its benchmark interest rate by 1 percentage point to 3%, the lowest since the bank began to set a policy rate in 1999.
10 December
The Bank of Canada has cut its benchmark interest rate by three-quarters of a percentage point to 1.5%, the lowest rate since 1958.
Volkswagen has become the first German carmaker to seek to tap the country’s €500bn government-backed banking rescue plan. Europe’s largest carmaker said its affiliates, Volkswagen Bank and Volkswagen Financial Services, had applied for state guarantees that would cover loans for refinancing.
09 December 2008
The top executives at Merrill Lynch and Morgan Stanley , led by their chief executives, John Thain and John Mack, said they will not receive bonuses this year amid growing pressure on Wall Street leaders to share the pain of the financial crisis. Morgan Stanley also became the first large US bank to announce that employees would be forced to pay back some of their bonuses if they caused significant losses, or reputational harm, to the company.
Sony announces it will close five or six factories and cut 8,000 jobs worldwide in an effort to remain profitable through a slump in consumer spending on electronics.
08 December 2008
India announced an extra $4bn economic stimulus package, which brings the amount in new government spending to help the export, real estate and infrastructure sectors to $60bn.
The European Central Bank announced a three-quarters of a percentage point cut in its main policy interest rate to 2.5% - its largest cut ever - just hours after Sweden’s central bank reduced the country’s official borrowing costs by a record 175 basis points.
French president Nicolas Sarkozy unveiled a €26bn package to stimulate the country’s faltering economy. Measures include support for construction and small businesses.
04 December 2008
The Bank of England has cut interest rates from 3% to 2% - the lowest level since 1951.
Latvia has nationalised Parex Bank. The government is set to increase its stake in the country’s second largest bank to 84% in order to reassure depositors, creditors and the International Monetary Fund.
The Reserve Bank of New Zealand cut its benchmark interest rate by a record 150 basis points to 5%.
01 December 2008
Canada's big five banks - Royal Bank of Canada, Toronto-Dominion, Scotiabank, Canadian Imperial Bank of Commerce and Bank of Montreal – have indicated they will announce write downs. Bank of Montreal, which reported last Tuesday, tripled fourth-quarter loan loss provisions to US$376m. Scotiabank has disclosed that it will take a pre-tax charge of US$714m. Toronto Dominion has announced US$281m in after-tax losses on corporate debt securities and related credit default swaps.
Sweden’s government has considered allocating about US$248m to Saab and Volvo in direct aid or loan guarantees, as GM and Ford anticipates selling these entities.
Royal Bank of Scotland promises to give at least six months’ respite to homeowners who fall behind with mortgage payments.
London Scottish Bank has gone into administration after the Financial Services Authority (FSA) stepped in to stop it accepting deposits. The FSA acted because the Manchester-based firm did not have the amount of cash it needed to continue operating.