Some selected quotes from the FT on today’s markets, sum it up: Panic grips credit markets | ft.com Yields on short-term US Treasuries hit their lowest level since the London Blitz gold had its biggest one-day gain ever in dollar terms All thought of profit was abandoned as traders piled in to the safety of short-term Treasuries the yield on three-month bills falling as low as 0.02 per cent – rates that characterised the “lost decade” in Japan. The last time US Treasuries were this low was January 1941. the so-called Ted spread, which tracks the difference between three-month Libor … Continue reading A stunning day in financial markets | 17th September, 2008

Mukesh over at the excellent Moneyaisle blog makes a crucial point that the financial’s of Lehmans, Merrill, and AIG are all provided publicly and to analysts, yet no-one foresaw the crisis and the speed with which these Banks failed.  Lehman, Merrill Lynch, AIG: A Crisis of Confidence | Moneyaisle Blog Until very recently, Lehman (NYSE:LEH) was insisting that they were doing fine and had sufficient reserves. Clearly, they were way off base. There were countless analysts reviewing their financial reports in excruciating detail and, unfortunately, all that collective wisdom and experience was largely unable to dispute it. Similar situations occurred … Continue reading Would you lend money to this man (Bank) ?

RBS, the third largest bank in the world is expected to report a loss of nearly $4 bn today. ITN – City braced for RBS results The Royal Bank of Scotland is reportedly set to release the worst figures in UK banking history.… RBS, which owns NatWest, recently raised £12 billion from a rights issue and is aiming to raise £950 million through the sale of its stake in Tesco Personal Finance to the supermarket giant to shore up its battered balance sheet. Continue reading City braced for RBS results | $4 bn loss

FDIC predicts more Bank failures in the US. FT.com / In depth – US banks likely to fail as bad loans soar Meanwhile, the FDIC said the number of “problem” banks rose in the first quarter from 76 to 90, with combined assets of $26.3bn. Three US banks have failed this year, compared with three for the whole of last year and none in 2005 and 2006. Ms Bair said she expected more bank failures but emphasised that the number of problem institutions remained well below the record levels of the savings and loan crisis of the 1980s and 1990s … Continue reading US banks likely to fail as bad loans soar | ft.com

In the first of what I expect we will see more of, HSBC directors are attacking the bonuses of senior executive. The general thinking with regard to bonuses, especially those in investment banking, is that they are so large, you would have to be crazy not to take excessive risks. FT.com / Companies / Financial services – Showdown looms over HSBC bonuses Directors at HSBC are heading for a potentially bitter showdown with shareholders over a remuneration package that could reward the bank’s most senior executives with more than £100m over the next three years. The scheme, made up of … Continue reading HSBC directors attack executive bonuses

There is a trend in US and UK towards reater transparency on overdraft fees. One of the dirty secrets in banking, is the ability to charge enormous fees in addition to overdraft interest. This practise worked because people preferred to pay the fee, rather than the embarrassment of bounced cheques. The notion that [some] people warrant help from their bank, has been lost in favour of a one size fits all fee approach, and now that is in question. Payments News: How to Comment on the Fed’s Proposed Credit Card Rule Changes – May 02, 2008 In addition, the proposed … Continue reading Overdraft fees are one of Banks’ dirty secrets

Aside from the press release that I just shot down in flames, I have to say the 92 page document behind the release is quite a different story and clearly worth the read, something I will do tomorrow. Its just very annoying when PR departments try to take one thing, and make it something else. The report is very detailed, and contains clear comparisons between the Canadian Banks, winners and losers. This will support another post later. Canadian Banks 2008: Perspectives on the Canadian banking industry This publication provides an analysis of the 2007 financial results for the Canadian banking … Continue reading Canadian Banks 2008: Perspectives on the Canadian banking industry | PWC

I hate these kinds of press releases, and PWC should really think carefully about it. Its a classic example of wanting to say something (pro mergers) and taking any fact that comes along and using it to support what they wanted to say anyway. CNW Group | PRICEWATERHOUSECOOPERS | Canadian banks manage 2.2% growth in 2007 – real test is on its way … net income was CDN$19.5 billion – a small increase in year-over-year growth of just 2.2%, compared to a record-breaking 50% increase in the previous year. …. …. “The growing size gap between Canadian and global banks … Continue reading PWC miss the point completely trying to tie profitability to size

I think I can officially cease posts on the credit crisis …. its finally official that the impact is far reaching into all aspects of the worlds economies.  Back to normal programming for me.  FT.com / Columnists / John Authers – The Short View: US recession Now we have clarity. Last week’s awful employment data from the US ended all arguments about whether the US is heading for a recession: it is already in one. Now we need only argue about its severity and its duration Continue reading Its official …. finally