A highly telling and profound statement from Bernanke yesterday. While the notion of ‘public losses’ is not entirely clear, the second part that they will impose losses on shareholders, read Banks, is very clear. I read that a if a Bank is not viable it is not going to be saved, notwithstanding the crisis, and Bear Stearns albeit and investment Bank, is the best example so far. Which Bank will be the first? FT.com / World / US & Canada – Fed ready to extend bank aid “A bridge bank authority is an important mechanism for minimising public losses from … Continue reading “while imposing losses on shareholders and unsecured creditors, thereby ­limiting moral hazard” | Bernanke

I said I would stop commenting on the credit crisis, but just wanted to throw in a statement of the blindingly obvious …. confidence in Banks balance sheets is at a very low ebb, and its not clear when this will get better. FT.com / Equities / Volatile market – Shares hit as fears grow over financial turmoil Investors’ fears of prolonged financial turmoil deepened on Thursday as blue-chip downgrades sent European and US shares into a tailspin and oil prices jumped above $140 a barrel for the first time. Continue reading When will the write downs stop at the big banks?

Incredible losses displayed in an Ontario court yesterday. FT.com / In depth – Damage to securities revealed in court Some securities have lost almost a third of their value – even though many were considered to be so safe that they carried top-notch ratings from the credit ratings agencies. Meanwhile, some subprime mortgage-linked securities issued by groups such as UBS have lost almost 95 per cent of their value Continue reading Damage to securities revealed in court

In an ironic twist to the sub prime crisis, the big Banks are grouping together in an attempt to develop a solution for Ambac Financial.  The irony is that the Banks used Ambac to hedge their original risk in the bond market.  I believe the several of the Canadian Banks are also engaged with Ambac. Risk managers at Banks must be pulling their hair out, as new risk elements appear almost daily. FT.com / In depth – Banks link to solve bond insurers crisis The group looking at supporting Ambac includes Citigroup, Wachovia, Barclays, Royal Bank of Scotland, Société Générale, … Continue reading Banks link to solve bond insurers crisis

In the first report I have seen, Reuters notes that the credit market in Canada is tightening as we predicted a few months ago.  This is a result of the US Sub Prime crisis, and the participation by Canadian Banks. More firms face growing demand pressure | Canada | Reuters Sixty percent of firms said credit conditions had stayed the same in the fourth quarter compared to the previous quarter but 32 percent said borrowing had become even tougher. A shift toward tighter credit was first noted in the third quarter, a reflection of the global credit crunch that began … Continue reading Canadian firms report borrowing has become even tougher

An interesting fallout of the sub prime crisis is the sale of substantial stakes in Western Banks to Asian interests.  There have been a few to China, and here UBS is selling 9% to Singapore Government. BBC NEWS | Business | Sub-prime woes continue for UBS The bank wants shareholder support to sell a 9% stake to the Singapore government, and 1.5% to another buyer In related news, the Chinese economy is expected to cushion the what is now being described as the worlds slump. BBC NEWS | Business | China boom ‘cushions world slump’ Global economic growth will slow … Continue reading Sub Prime crisis drives increased globalisation into Asia, of worlds Banks