Posts Tagged ‘RBS’
JP Morgan Uses European Weakness To Bet Billions On Non-U.S. Homeowners
Bloomberg reports that JP Morgan has increased its holdings of non-U.S. agency mortgage securities by more than three times to $72 billion.
The additions to the bank’s balance sheet have been primarily driven by mortgage products from outside the U.S., and the U.K. and the Netherlands in particular. While the U.K. and Dutch housing markets have struggled of late, JP Morgan appears to be taking advantage of the motivation of institutions in these markets like RBS and ING to trim their own balance sheets.
At the same time, JP Morgan has been shrinking its exposure to U.S. agency mortgage products. The move is in contrast to the bank’s competitors, such as Bank of American and Citigroup, who have increased their domestic agency holdings recently, Bloomberg writes:
JPMorgan last year shrunk its investments in U.S. agency mortgage securities by $28.1 billion to $134.7 billion, according to data compiled by SNL Financial, a Charlottesville, Virginia-based financial-information and research provider.
The rest of the top-25 banks, including Bank of America Corp. and Citigroup Inc., increased their agency portfolios by $121.1 billion to $947.8 billion as their non-agency investments fell $31.6 billion to $98.6 billion, according to data assembled by SNL from regulatory reports.
Click here to read the full story at Bloomberg > >
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Markets Are Selling Off After The EU Slashes Its Eurozone Growth Forecast
Markets moved up notably during the European trading after the Ifo Institute’s German business confidence reading increased to a 7-month high, beating economists’ expectations.
However, the Ifo release was followed by the EU who announced it now projected a recession for the Eurozone. Specifically, they now see growth in the 17 country bloc shrinking by 0.3 percent in 2012 versus a previous expectation for 0.5 percent growth.
Britain’s FTSE 100 is up 0.0%.
Germany’s Dax 30 is down 0.5%.
France’s CAC 40 is down 0.2%.
Spain’s IBEX 35 is down 1.2%.
Italy’s FTSE MIB is down 1.1%.
A bunch of European banks announced quarterly earnings today, including the UK’s RBS and France’s Credit Agricole. Both banks announced losses that were worse than expected.
Germany’s Commerzbank is also selling off after unexpectedly announcing new plans to raise capital.
U.S. equity futures are pointing to a higher open for the Thursday trading session.
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RBS Reports A Huge $3.1 Billion Loss For 2011
LONDON (AP) — Royal Bank of Scotland, which is majority-owned by British taxpayers, saw its loss in 2011 swell by 78 percent as it booked large provisions for Greek debt and compensation for buyers of payment protection insurance.
The bank, in which the government holds an 82 percent stake, on Thursday reported a worse than expected net loss of 2 billion pounds ($3.1 billion) for 2011, compared with a loss of 1.13 billion pounds the previous year. Income was down 11 percent to 26.6 billion pounds largely on the back of a 25 percent fall in revenue at the global banking and markets division.
Chief Executive Stephen Hester nonetheless said the effort to turn the bank around was “well ahead of schedule,” and described the larger loss as a byproduct of management’s success in defusing “the largest balance sheet risk time bomb ever assembled in history.”
“The irony is, the faster and more successful we go in defusing that balance sheet time bomb, the greater the losses,” Hester said in a BBC radio interview.
“In three years since I took over, we have reduced the balance sheet of RBS by 700 billion pounds of assets, which to put in context is something like twice the size of the total debt of Greece,” he added.
RBS shares were down 1.6 percent at 26.9 pence on the London Stock Exchange.
Gary Greenberg, analyst at Shore Capital, said the biggest disappointment was the decline in revenues, though he backed RBS’ emphasis on rebuilding its balance sheet over profitability as “the correct strategy.”
Impairments included 850 million pounds for compensating people who bought payment protection insurance they didn’t need, and 1.1 billion pounds for Greek debt. That was offset by a 1.8 billion-pounds gain on the fair value of the bank’s own debt.
RBS set aside 785 million pounds for staff bonuses, down 43 percent from 2010.
Chairman Philip Hampton said “there are no shortcuts” to rebuilding a company saved by a 45.5 billion pounds bailout, the world’s most expensive bank rescue.
“We all understand that a company that is making losses at the bottom line tests the patience of those who depend on it,” Hampton said.
“However, the restructuring task we have undertaken at RBS is unique in its scale and complexity, and needs to be phased in line with our ability to fund and execute it,” he said.
In the fourth quarter, RBS reported a net loss of 1.8 billion pounds, compared with a profit of 1.2 billion pounds in the previous three months. Income was down 6 percent to 5.9 billion pounds.
RBS is the second big British bank to report annual results. Barclays earlier announced a 15 percent fall in net profit to 3 billion pounds, and part-nationalized Lloyds Banking Group publishes its results on Friday.
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THEORY: The EU Killed The Deutsche Boerse – NYSE Merger To Appease David Cameron
David Cameron’s decision to apparently reverse his earlier position and allow the European Union should play a role in bailing out the eurozone has caught him considerable criticism on home turf.
“For the prime minister a veto isn’t for life, it’s just for Christmas,” opposition leader said Wednesday, the Financial Times reports, while the Daily Mail la belled him a “pansy” for reversing his decision.
At best, Cameron was seen as standing aside when the new treaty was signed, rather than vetoing as he had done months back.
So what could have caused Cameron’s embarrassing u-turn?
Gawain Towler, a Eurosceptic blogger and UK Independence Party (UKIP) communications officers, suggests an intriguing theory:
Did the EU kill off the Deutsche Boerse – NYSE merger so that the UK’s prized London Stock Exchange would remain top dog in Europe?
It bears consideration, at very least.
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Former RBS chief executive loses knighthood
Fred Goodwin, the former chief executive of the Royal Bank of Scotland (RBS), has been stripped of his knighthood for his role in the bank’s collapse during the 2008 credit crunch.
The Queen formally approved the annulment of the honour yesterday, after it was decided Mr Goodwin’s award brought the honours system into disrepute.
The decision is unprecedented as honours have formerly only been withdrawn from people convicted of a crime.
Mr Goodwin was knighted in 2004 for services to banking but his actions during the banking crisis are believed to have contributed to the collapse of RBS.
The bank received £45bn of rescue-funding and is now more than 80% owned by the Government.
The Financial Services Authority and Treasury Select Committee believe the banks’ failure was a key factor in financial crisis and the subsequent recession in the UK.
Mr Goodwin oversaw the takeover of Dutch bank ABN Amro in a £49bn deal which took place at the onset of the credit crunch, exposing RBS’s weak balance sheet and precipitating its collapse.
When Mr Goodwin left the bank in November 2008 his £703,000-a-year pension deal, which included a £2.7m lump sum, led to public outrage.
In the event of a future banking crisis, Britain’s finance ministry will be able to take charge after new law reforming the regulation of the country’s financial system takes effect next year.
The legislation will disband the Financial Services Authority from 2013 and give the central bank the power to supervise banks and insurers.
In a speech following the publication of the draft law, Chancellor of the Exchequer George Osborne said: “When taxpayers’ money is at risk in a crisis this legislation gives the Chancellor (of the Exchequer) the power to direct the Bank of England to act.”