Yahoo Finance Homepage Says It All
Posted by Noah Rosenblatt on November 26, 2007 at 12.12 PM
A: I cant recall the last time all breaking news and recent headlines were all on the same topic: the credit crisis. Let me just briefly go over the latest news.
1. HSBC Bails Out Two Troubled Funds
HSBC Holdings PLC, Europe's largest bank, said Monday it will bail out two troubled funds it manages by transferring about $45 billion of their assets onto its balance sheet. The funds are "structured investment vehicles" or bank-sponsored businesses that sell short-term debt but have been operated off the bank's balance sheet.As Calculated Risk states: "This is a poke in the eye to the SIV Superfund and will put pressure on Citi and others to make similar moves."The moves are another symptom of a global credit crisis which has forced up the cost of short-term lending.
2. Citigroup Examing Ways To Cut Costs; Layoffs Likely
Citigroup Inc., bracing for big credit-related losses in the fourth quarter, is looking to lower costs -- which could mean another round of job cuts at the nation's largest bank. In the third quarter, Citi's subprime mortgages and its exposure to financial instruments tied to those mortgages led to a loss of about $6.5 billion.According to TheStreet.com: "CNBC, citing people with knowledge of the matter, reported Monday morning that the bank could cut as many as 45,000 jobs, but hadn't yet set a firm number.""We are engaged in a planning process in anticipation of our new CEO, and our business heads are planning ways in which we can be more efficient and cost-effective to position our businesses in line with economic realities," said Citi spokeswoman Shannon Bell.
Shares of E-Trade Financial Corp. fell Monday after news that prospective buyers of the online brokerage are debating the value of its deteriorating mortgage portfolio. The Wall Street Journal reported over the weekend that TD Ameritrade Holding Corp. and Charles Schwab Corp. are worrying that some parts of E-Trade's business have not been marked down enough to reflect current troubles in the subprime mortgage market. E-Trade's mortgage portfolio was valued at $29.3 billion on Sept. 30, and the company owns $12.4 billion in mortgage-backed securities. But the company has posted $197 million in pretax write-downs for its securities portfolio and is holding aside $237.8 million in loan-loss provisions.4. Virgin Group Takes Lead in Bid for Norther Rock (UK Lender)
Northern Rock PLC will hold accelerated takeover discussions with a consortium led by Virgin Group, the battered mortgage lender said Monday. Northern Rock, which relied on short-term borrowing, ran into trouble in September when the subprime lending crisis in the United States made banks wary of extending credit. The Bank of England stepped in as a lender of last resort and triggered a run on Northern Rock deposits, and a collapse of its share price.Expect to see more consolidation in the financial sector as troubed banks and lenders resort to 'takeover talks' in order to survive!
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