facebook rss twitter

UK financial market suffers further blows

by Hugh Bicheno on 2 June 2008, 18:43

Quick Link: HEXUS.net/qanjg

Add to My Vault: x

Please log in to view Printer Friendly Layout

Bad day for UK banks

Shares in Bradford & Bingley (B&B), Britain’s biggest buy-to-let mortgage lender, fell more than 30 percent this morning after it revealed profits down from £107 million to minus £8 million in the first four months of 2008. CEO Steven Crawshaw resigned in advance, citing serious heart problems.

The company blamed “difficult market conditions,” with people more than three months behind on their payments rising from 1.63 to 2.16 percent of its portfolio, and more likely to default as the economic slowdown takes hold, plus £15 million lost to organised frauds.

The “difficult market conditions” are the precipitous decline in mortgage approvals, reported by the Bank of England down from 63,000 in March to 58,000 in April, a record new low since records began in 1999.

B&B also confirmed that the private equity buyout firm Texas Pacific Group, one of the world’s biggest, is to invest £179 million in exchange for a 23 per cent stake in the group. This alongside an increased rights issue to existing City shareholders at 55p per share, down from the 82p of the original issue.

Further bad news came when the Office of Fair Trading (OFT) reported raids on the Royal Bank of Scotland and Barclays for possible price-fixing in loans made to law and accountancy firms. The OFT said the investigation was in its early stages and the focus was narrowly limited to two parties.

Last month, Bank of England Governor Mervyn King warned that the decade of strong growth and low inflation was over, predicting “a squeeze on real take-home pay, which will slow consumer spending and output growth, perhaps sharply.” In sum, a recession.

It is not, perhaps, remarkable that the star performers during the housing price boom of the last decade should be the first to bite the dust now that the bubble is deflating.



HEXUS Forums :: 0 Comments

Login with Forum Account

Don't have an account? Register today!
Log in to be the first to comment!