Loans

London, England, United Kingdom (AHN) – British banks are apparently regaining their profitability, based on the performance of the four largest banks in the country.

The four – Barclays, Lloyds, HSBC and Standard Chartered – will announce combined profits of $36.3 billion (GBP 24.2 billion). The higher profits represent a 10 percent rise from last year reported by the four banks at $32.24 billion (GBP 21.5 billion).

HSBC enjoyed the largest profit at $20.25 billion (GBP 13.5 billion), followed by Barclays at $7.65 billion (GBP 5.1 billion), Standard Chartered at $6.75 billion (GBP 4.5 billion) and Lloyds at $1.5 billion (GBP 1 billion).

HSBC’s profit more than doubled compared to 2009′s, while Barclays was reduced by almost half.

Taxpayers have a 42 percent share in Lloyds and 84 percent stake in another bank, the Royal Bank of Scotland.

RBS, however, is expected to report a $919.50 million (GBO 613 million) loss. Despite the loss and being funded mainly by taxpayers who are tightening their belts, RBS Chief Executive Stephen Hester will reportedly receive a $3.66 million (GBP 2.44 million) bonus to be paid in shares cashable in three years.

Another British banker in the same situation is Michael Sherwood, head of Goldman Sach’s British operations, who reportedly will get $14.4 million (GBP 9 million) free shares or a 60 percent hike in value of stock award compared to what Sherwood got in 2009.

It is not only Sherwood who will enjoy a fatter paycheck at Goldman’s despite a 38 percent decline in the bank’s profits. Goldman Chief Executive Lloyd Blankfein will receive a 233 percent rise in basic pay this year to $2 million (GBP 3 million) from $600,000 (GBP 900,000).

Despite the turnaround enjoyed by the banks, Financial Services Authority Chairman Lord Turner said at the World Economic Forum that the public still require a reassurance that the financial crisis would not be repeated. Turner admitted the regulatory overhaul of British banks, which was designed to ensure the crisis would not happen again, is not yet complete.

Among the components of the overhaul is more transparency and control in bankers’ bonuses and compensation.

View full post on Labor Stories

D.C., Washington, United States (AHN) – Over 21,000 transactions were made by the U.S. Federal Reserve when it stabilized the financial markets. Details of the transactions made in 2008 and 2009 were posted on the agency’s website upon order by Congress.

The details include names of companies that borrowed money and the amount.

Among the borrowers were:

1. Citigroup $2.2 trillion,
2. Merrill Lynch $2.1 trillion,
3. Morgan Stanley $2 trillion and
4. Bank of America $1.1 trillion.

The Fed also loaned to major American companies such as General Electric, AIG, Caterpillar, Verizon, Harley-Davidson and Toyota.

The loans also extended to subsidiaries of U.S. banks in East Asia, Europe and Canada and to large foreign banks such as Barclays, Royal Bank of Scotland, Deutsche Bank and UBS.

The bulk of the loans were made in the fall of 2008 when the Fed lowered lending benchmarks and extended help to different institutions that never sought assistance from the U.S. central bank before the crisis.

The Fed said most of the loans have been paid back, and none are overdue.

Last month the Fed announced the availability of $600 billion stimulus money. The announcement sparked complaints that the agency was stoking inflation and asset-price bubbles.

View full post on Economy, Business And Finance Stories

The cost of debt rose in Spain and Portugal yesterday because of problems that surfaced in Ireland at the weekend. Analysts raised concerns on Monday about the ability of Ireland’s government to repay its debt. |||

The cost of debt rose in Spain and Portugal yesterday because of problems that surfaced in Ireland at the weekend. Analysts raised concerns on Monday about the ability of Ireland’s government to repay its debt.

That country is now negotiating with EU and International Monetary Fund officials about a bailout to “shore up the state’s finances, as well as enable it to inject capital into the country’s banks”, according to Bloomberg.

Troubles in Ireland spell trouble elsewhere. It’s called contagion.

And we have seen this movie before. Last time it was the chickens coming home to roost for profligate Greece that had that country begging to be bailed out.

Now Portugal is next in the firing line. The Portuguese finance minister has complained that his country is facing not only its own problems but the problems of Ireland and Greece. Portugal and Ireland are paying twice as much for debt as the UK.

But the UK is also exposed to Ireland’s problems. Bloomberg says Lloyds Banking Group has £27 billion (R302.6bn) of unresolved Irish loans. And the Royal Bank of Scotland owns the Ulster Bank.

More exposures may surface around the world as the week progresses.

If the situation in Ireland is not soon resolved, the contagion will spread as it did in the southeast Asian crisis of 1997/98.

South Africa and other emerging markets will feel the fallout.

Finance Minister Pravin Gordhan warned on Monday that the capital inflows that have been boosting the rand can suddenly turn around and flow out.

When risk aversion rises, investors head for the traditional safe havens of US bonds – ironic as it sounds.

Gordhan was trying to get through to those asking for action to curb the rand’s gains that different situations need different policy prescriptions.

A strong rand today may be gone tomorrow – and the weaken-the-rand brigade will once again be calling for a commission of inquiry to investigate a conspiracy to weaken South Africa’s currency.

Chair today, gone tomorrow

It is likely that the ANC in Parliament tomorrow will announce the new chairpersons of the portfolio committees left vacant by the advancement of previous chairpersons to the national cabinet or provincial legislatures. But it is unclear whether some of those remaining in their posts since the cabinet shuffle will continue to hold on to their chairs.

Yesterday the indomitable Vytjie Mentor, the chairwoman of the public enterprises portfolio committee, presided over two sessions dealing with what remains of the pebble bed modular reactor programme and the relatively new state-owned entity, Broadband Infraco.

There was a bit of a hoo-haa about the fact that the latter had not been granted a licence by the Independent Community Authority of SA (Icasa) that would allow it to serve the public directly – and not just act as a wholesaler.

Mentor argued that it was a bit of a contradiction that in the act establishing Broadband Infraco it was mandated to serve the public but the cabinet had, nevertheless, rubber-stamped the Icasa decision on the licence, which effectively prevented it from carrying out that mandate.

She pledged to hold the executive – particularly the former communications minister Siphiwe Nyanda – “accountable as individuals and as a collective”, which is probably quite a brave thing to say, given that Mentor owes her position as committee chairwoman to the party leadership, most of whom are in the national cabinet.

DA MP Pieter van Dalen quipped that a test of her political bravery would probably be dependent on “how much longer you want to sit in the chair (of the committee)”.

Mentor, without blinking, said: “I was not born on this chair, I will not die on it.”

The fiery MP also said that she had not received a report on directors of parastatals who did not regularly attend meetings. She suggested MPs should receive a report from the Department of Public Enterprises before the end of the year.

Bankers’ pay

FirstRand’s decision to defer part of the performance bonus due to its executives is to be welcomed because it indicates an effort to introduce some restraint into the highly controversial issue of bankers’ pay.

According to media reports, the decision to defer the payments for up to two years is designed to encourage the executives to focus on strategies that promote long-term growth.

And there you have it. Not quite the attention span of a goldfish but… where else in the world is two years considered long term?

The obvious answer is in every boardroom around the globe.

Every remuneration committee across the world apparently believes that two years is long term. And if you happen to be part of the remuneration committee of a financial institution then two years is probably equivalent to a few lifetimes.

So, well done to FirstRand for attempting to grapple with this thorny issue.

There might, of course, be a few squeals about how extremely competitive the industry is and how FirstRand risks losing some of its executives to competitors who are prepared to pay out bonuses even before performances are achieved.

No doubt some of these competitors will employ consultants to tell the board just that.

And so, perhaps, it is time for the SA Revenue Service to step in and support the brave move taken by FirstRand.

The revenue service could reconstruct the tax rates in such a way as to encourage the staggered and “delayed” payment of bonuses, while ensuring that the receipt of “early” bonuses is discouraged even by the recipients.

Such a move would not be without international precedent.

It would also be entirely justified on economic terms, given that the economy at large can no longer be held hostage to the machinations of people who believe that two years is equivalent to a few lifetimes.

Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Donwald Pressly and Ann Crotty.

View full post on All Stories

ROYAL Bank of Scotland yesterday agreed to sell a £3.8billion package of project finance loans to Japan’s Mitsubishi UFJ Financial Group as part of the drive to slash its -balance sheet.

View full post on All Stories

As the entire world succumbs to the historic unraveling of the financial markets, borrowers across the UK turn to bad credit loans to rescue them, explains Andy Hygate from www.loansbadcredit.org.uk. In their time of need these special lenders offer loans, mortgages, and credit to people who have damaged credit history, lower credit scores, or a lack of assets.

They are not new to the financial world, but remain relatively unfamiliar to most borrowers because during happy economic times most consumers do not require a bad credit loan. But as the credit situation worsens, bad credit lenders are now coming to the forefront to offer solid financial assistance as more conventional lenders retreat – leaving their customers to fend for themselves.

Banks are afraid to lend because they first have to solve their own credit problems. These days confidence in their ability to manage money has deteriorated so much that they are even refusing to lend to one another, and the governments of the world have to give them handouts.

The UK government has had to inject up to £37bn into the Royal Bank of Scotland, HBOS, and Lloyds, and central banks around the world are having to pour similar cash into their own banks to keep them from failing.

The UK Treasury recently unveiled a wide-ranging emergency rescue plan that will cut shareholder dividend payouts. That can hurt shareholders, including pensioners and those companies who manage retirement funds for their employees.

The government will also buy up a majority stake in RBS, but the bailout will cost UK taxpayers as much as £20 billion. Meanwhile Lloyds will get a package worth as high as £17 billion, and taxpayers may wind up also paying for a government bailout of Barclays to the tune of nearly £7 billion.

At the same time, UK Treasury officials are negotiating with the Ambassador of Iceland, to try and figure out a way to recoup millions of pounds that were invested by British local authorities in Icelandic banks that have since collapsed as that nation totters on the verge of outright bankruptcy.

Although the stock markets may rise – or fall – the fact remains that those living in the UK face a looming crisis that may go from a recession into a harsh depression. Already companies are starting to cut back on their overheads by trimming the workforce, and social service support systems for newly unemployed citizens are feeling an increased strain on their own limited resources. While ordinary consumers struggle to make ends meet, lenders continue to make it harder to borrow at affordable rates. Nationwide raised its mortgage rates considerably, despite the Bank of England base rates being cut by half a point.

Britain’s second largest mortgage lender also said that all new borrowers except for first-time buyers must come up with a down payment deposit of at least 15 percent, and first-time buyers must provide 10 per cent. Nationwide used to routinely lend up to 90 percent of the value of a property, and gave first timers loans for up to 95 percent. Those days are over, though, and the number of lenders willing to offer inexpensive loans is dwindling fast.

But providers of Loans for Bad Credit have not suffered the same kinds of severe losses that their traditional counterparts are experiencing. For that reason these bad credit lenders are able to continue offering a variety of different loan products to help UK homeowners mortgage or refinance their houses, buy Cars, pay tuition, or pay off high interest rate credit cards.