All GLG News Analyses Filed Under: Commercial & Retail Banking
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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January 13, 2009
Bank Loan Guarantee Schemes | www.ft.com
As the cold freeze thaws the state of the economy seems to be gripped by even more gloomy news. The British Chambers of Commerce reporting from a survey of 6,000 small and medium sized businesses that the economic future in the UK is frighteningIn response to rapidly growing unemployment and the demise of further High Street names, Land of Leather being the latest, the Government has proposed a Loan Guarantee Scheme for the banks totalling £20 billion in order to try and get credit moving againPrecise details have yet to be announced but is this initiative misplaced
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Regaining the trust: Investor's Pride
December 28, 2008
Singing the blues | www.economist.com
The high-end impact of roll back of economy had led to unforeseen jobcuts and loosing investor's trust. The bank has to see how to getback the status, build trust and improve deposits and investments. What tools are available to repair the damage and rescue to safety?
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HBOS Merger with Llyods TSB- The inevitable option
December 22, 2008
HBOS shareholders approve merger with Lloyds TSB | www.bankingtimes.co.uk
The severe multi-pronged impairments of the financials of a Bank often leave it but with the Hobson’s choice of its merger with a more stable Bank. The approval of shareholders of HBOS and Llyods TSB in favour of a merger of the two Banks is the obvious progression of the Rescue plan announced in September, with the the all-share deal approved by the Government. The sizeable bad debts & mortgage impairments reported by HBOS for the first eleven months of the year only vindicated the urgency for the remedial rescue plan. Though the Merger would have its woes in resultant branch closures or job losses the merged entity would make the biggest Retail bank in UK with anticipated annual savings of GBP 1.5 Billions.
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Irish Banks and the Government Guarantee
December 16, 2008
Bank guarantee will mean survival of the weakest | archives.tcm.ie
The Bank guarantee has focused institutional lenders and large deposit customers on the date the guarantee runs out which is 29th September 2010. The Irish Government will need to extend the guarantee beyond that date and/or ensure that the capital ratios of Irish banks are in line with the highest international standards. Particular emphasis will be on the Core Equity ratio which should be in the range of 7% to 9%. Irish Life & Permanent is sufficiently capitalised but has the highest dependence for liquidity on the Wholesale markets.
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HSBC carves out a support line for Small Businesses
December 15, 2008
HSBC backs SMEs with £1 billion fund | www.bankingtimes.co.uk
HSBC has well responded to the need of the economy & the will of the UK Government by dedicating a 1GBP Billion funding line to its SME clients. That the proposed funding line would be used to meet the working capital needs of its existing SME customers with strong financials that are facing cash flow problems, with a risk based pricing shows that the Bank doesn’t want to compromise its prudence in lending in the garb of an SME rescue plan. It is essential for the Banks & the Government to meet the legitimate funding requirements of SMEs facing genuine cash flow problems to facilitate a more broad based & inclusive recovery of the economy.
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Bank Guarantee Rescue Plan – Need to preserve the integrity of the Banking system
December 15, 2008
Bank guarantee will mean survival of the weakest | archives.tcm.ie
Bank guarantee should be used as a medicine to cure the ills of the weaker banks & not as a staple food. There is a simultaneous need to beef up the management & systems in these banks to prevent further deterioration. The banks also need to be recapitalized at appropriate stages & with appropriate doses, by the Government directly or by the larger Banks which could eventually be supported by the Government.
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Michael LynchConsultantMichael E. Lynch
The mills of the Gods grind slowly but they grind exceedingly fine
December 11, 2008
Dire Forecast for Global Economy and Trade | www.nytimes.com
Mark Landler reported in the December 10 issue of The New York Times that the world economy is on the edge of a rare recession. The World Bank made this forecast on December 9. World trade will fall in 2009 for the first time since 1982. World Bank officials warned that the downturn could place developing nations into crisis. Several economists can see no engine to drive a recovery. American consumers are not likely to renew old spending habits. Growth in China is declining. The collapse of oil prices has stunned consumers in oil-exporting countries. Justis Lin, chief economist of the World Bank said the financial crisis likely to be the worst since the 1930s. The drop in world trade will be greater than in 1975. Loss of capital will constrict investment in emerging-market economies. The drop in in capital flows is a danger to oil exporters that ran up debt. The bank recommended fiscal stimulus to cushion the blow.
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HSBC : Ignors A Quasi - Regulatory , Questionable Policy and Dictates a Direction!
November 27, 2008
HSBC fails to pass on full Bank of England cut | www.timesonline.co.uk
Implications: 1.A Major Financial Banking Insitution will not pass - along a percentage reduction in Interest Rates : A managerial decision wit merit! 2.It may appear as though Government Regulation in the UK is trying to supercede that of management decision-making and, hence, usurp the goals set by management.At best, "Out of Context". 3.A pace-setting decision - not to provide a pass through of a full 1.5% rate reduction. A re-alignment of priorities established by authorities' is not acceptable business policy and reactive signal is sent by a reputable business entity. 4.Lenders have, in effect , closed the window or many first - time borrowers: a calculated decision for that sector not meeting various deposit requirements. A viable decision. 5.A concept that MayBe popular for the consumer sector will not, in all case, be a value-added decision. Management has , now, provided a new Blue Print for the Industry! A positive Financial decision for market correction.
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November 25, 2008
Iceland agrees $6bn deal with IMF | business.timesonline.co.uk
Hjörtur Smárason is a social media consultant in Reykjavik. He describes the real-world implications of the Icelandic economic collapse for ordinary Icelanders, in this podcast interview with Steve Lubetkin of Professional Podcasts LLC, a GLG Councils member.
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Turmoil in the Financial/Economic Global Markets: One other Incident of Casuality!
November 25, 2008
Macquarie profits plunge 43% | www.ft.com
Implications: 1.A problematic issue goes Unresolved. A Core Issue of either Over/Under Capitalization or Poor Management - " A large Investment Bank's Profits plunge by 43%." $ 1.14 bn of write-downs ? 2.A Change in Corporate Governance is a likely alternative as Operations cannot support Revenue.Interference by whom? Management or Department Staff. 3.A Matter of Accountability: Underlying assets are regeared to fund Distributions. Another indication that Regulatory Intervention maybe required to restore order to the Financial/Economic Markets.Direct Financial aid is Not a Requirement for Success! 4.Liquidity does not appear to be a salient issue for this Institution, however , a clear explanation has not been offered. 5.Additional write-downs appear to be forecasted ( $400m) , which presents a non-viable situation for Banking Institution, Public and Management.Avoidance of the same should have been the scenerio oresented by the Insitution!
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