Business Update: UK bank shake-up

Discussion in 'Growing and Managing a Business' started by irahat, Nov 3, 2009.

  1. irahat

    irahat
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    Lloyds Banking Group and Royal Bank of Scotland (RBS) are to get another 50 billion dollars of British taxpayers' money.

    In a deal aimed at appeasing European competition authorities, the UK's two largest mortgage lenders have agreed to sell hundreds of branches, accounting for about 10 percent of the retail market.

    Treasury Minister, Paul Myners said the measures represented the third and final stage of returning the two bailed-out institutions to health.

    Treasury Minister, Paul Myners, says:

    "As a result of what we've announced today, both Lloyds and Royal Bank of Scotland are amongst the strongest capitalised banks in the world. They are there to support the needs of British customers; but also, very importantly, we've got a great deal for the British taxpayer.

    Lloyds is planning to raise more than 34 billion dollars - including a record 22 billion dollar rights issue - dropping out of the Government's bad loan bailout scheme.

    The move - ending months of uncertainty - enables Lloyds to retain its financial independence.

    That leaves RBS, which is 70 percent-state owned, as the only bank joining the scheme, albeit on revised terms - the announcement coming hours after RBS said it was axing nearly 4,000 frontline jobs.

    Higher-than-expected accounting charges pushed UBS into a fourth straight quarterly loss.

    The Swiss banking giant made a net loss of 552 million dollars in the third quarter.

    UBS's results contrast sharply with stellar profits seen at European rivals, Credit Suisse and Deutsche Bank.

    The Zurich-based bank has been hit hard by the financial crisis, its exposure to the US sub-prime mortgage market making it one of the biggest casualties of the credit crunch.

    Europe's economy will rebound next year and accelerate in 2011, according to the latest European Commission forecast.

    Growth in the 16-country euro zone would be 0.7 percent next year, rising to 1.5 percent in 2011.

    This is a strong upward revision from the Commission's forecast in May, when it projected the euro zone to contract slightly in 2010, and paves the way for major deficit cuts across the 27-member bloc.


    European stocks fell to a new one-month low, with banks suffering after poor results from UBS and a shake up of the UK retail banking sector.

    The FTSEurofirst 300 was down more than 1.5 percent at midday.
     

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