Great Finance

Archive for the ‘Santander Bank’ Category

Small companies that hold business bank accounts with Royal Bank of Scotland (RBS) have been waiting to find out whether they will have their accounts moved elsewhere.

The government has now confirmed plans to break up the lender, which was recently rescued by tax-payers. The proposal was triggered after the 70% nationalised bank responded to demands from the European Commission (EC) to sacrifice up to 10% of its small business banking customers.

Lloyds has also been affected by the shake-up, after it was revealed that a further £30 billion of taxpayers’ money will be injected into the pair. In return, the banks have agreed to follow strict guidelines on staff pay, bonuses and lending.

The Treasury said: “To promote greater competition in UK banking, and meet EU state aid rules, the banks will be required to make divestments of significant parts of their businesses over the next four years.”

Sir Richard Branson has shown an interest in the bank assets up for sale, which could allow him to expand his banking business. However, Spanish banking giant Santander – owner of Abbey, Alliance & Leicester and Bradford & Bingley – has been rumoured as a possible bidder for RBS bank business banking counterpart.

RBS has announced that it will be selling its branches in England and Wales, its Scottish NatWest branches, parts of its investment banking operations and its Churchill and Direct Line insurance arm.

RBS is currently the UK’s largest lender to small to medium-sized businesses, with 1.2 million small business banking customers, and many suggest it offered the best business bank accounts in the industry.

The First two-year discount mortgage will priced at 0.95 per centime below HSBC’s standard variable charge (SVR) from early February, when its SVR module be lowered to an all time low of 3.94 per cent.

In acquisition, the bank is back in the market with tracker products for loans of 75 give-to-value (LTV) and has pledged to double its 2007 even of mortgage lending this year by making &poet;15bn available to customers.

The 2.99 per cent two-gathering special discount mortgage is available for a 60 per centime LTV and comes with a fee of £999.

There is also a primary two-year fixed mortgage rate of 3.99 per coin up to 60 per cent LTV and with a fee of £999.

The new lifespan tracker, with a fee of £599, has a charge of 4.09 per cent for 75 per cent LTV, and a charge of 4.39 per cent without the fee.

Martijn van der Heijden, psyche of mortgages at HSBC said: “As the Bank of England alkali rate comes down, we have the cognition to increase even further the affordability of our mortgages, some of which were already the cheapest to be open on the high street.

“Together with our dedication to double 2007 mortgage lending to &poet;15bn this year, we hope that this new arrange will demonstrate that those who poverty a mortgage can get one, and at sensible rates.”

Elsewhere, Abbey has declared it has cut the rates on its fixed and tracker products from today (14 Jan).

The Santander-owned lender said it was dilution rates by up to 0.3 percentage points on its two, tierce and five-year fixed rate mortgages, with rates turn at 3.99 per cent.

The new fixed rates allow a two-year fixed rate of 3.99 per coin with a £995 fee for 60 per coin LTV, and a three-year fixed rate of 4.39 per coin with a £995 fee for 60 per coin LTV.

Remortgage customers are offered a five-year concentrated rate of 4.99 per cent with a &author;995 fee for 75 per cent LTV, or with no fee in arm and by telephone for a limited offer period.

To aid first-time buyers and those active home, Abbey has removed the fee on its five-assemblage fixed rate 75 per cent LTV mortgage at 5.09 per coin.

In addition, Abbey is also reducing its two-assemblage trackers to 3.69 per cent with a &writer;1,995 fee for 60 per cent LTV, 3.89 per coin with a £995 fee for 60 per centime LTV and 4.04 per cent with a £1,499 fee at 75 per centime LTV.

US Congressional leaders and the Bush administration have reached a tentative deal on a bailout of imperiled financial markets that could cost taxpayers hundreds of billions of US dollars.

The House could vote on it later today and the Senate on Tuesday.

US House of Representatives Speaker Nancy Pelosi announced the accord just after midnight Saturday and said it still has to be put on paper.

Treasury Secretary Henry Paulson talked of finalising the deal but added: “I think we’re there.”

The plan would spend up to $US700 billion, most of it on buying deeply devalued mortgages from the housing market’s collapse and other bad loans held by tottering banks and other investors.

The aim is to prevent credit from drying up and causing a meltdown of the US economy, which is still on the cards.

Media reports indicated the $US700 billion request could end up being cut by as much as half, with the rest subject to congressional approval at a later date.

The proposed bailout, first rushed to Capitol Hill by Paulson as a three-page proposal, has now ballooned into a document of more than 100 pages, CNN reported.

A Democratic Senator said $US250 billion would be immediately available and another $US100 billion could be used when requested by the president for debt purchases.

The Congress could bar the expenditure of the remaining $US350 billion only by passing a resolution to block it from being spent.

Several other provisions in the proposed bill include more oversight and a way for the Government to reclaim losses from companies on mortgage related assets that lose money.

In Europe Belgium’s Fortis looks like becoming the first large European continental bank to fall victim to the credit crunch, as the global chaos continues with Britain’s Bradford & Bingley mortgage lender and American regional bank, Wachovia also teetering on the brink.

The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a balance sheet of well over $A1.1 trillion and a market value at last Friday of just over $A25 billion.

The Belgian regulator is thought to be considering the creation of a “bad bank” for assets similar to the controversial scheme proposed in America as a means of ensuring a deal.

There were reports this morning that french bank, BNP, might mount a bid for Fortis.

Any uncertainty around the future of Fortis is likely to hit Royal Bank of Scotland, its partner with Santander of Spain in the consortium that bought ABN Amro last year for 102 billion euros just as the credit crunch was breaking.

They refused to withdraw the bid, and were allowed to continue by the UK, Belgium and Spanish central banks and regulators.

The Dutch banking assets that Fortis bought as part of the deal are yet to be transferred out of the special company used to execute the deal, which is legally a subsidiary of RBS, which raised over $A24 million and has sold more than $A10 billion in assets in the past four months.

Fortis, which has 2,500 branches across Europe, replaced its chief executive last week which worried markets.

The Belgian government, regulators, and the Dutch central bank are all involved in the talks and a deal is expected to be announced over the next day to prevent a crisis of confidence that could spark public panic and a run on deposits across parts of Europe;something that would be a replay in Britain where Fortis is Britain’s third-largest private car insurer and the fourth-largest travel insurer.

There’s talk the Luxemborg Government might take a stake in Fortis to support it.

In Britain Bradford & Bingley looks like being nationalised and then sold off.

The Bank of England, the Financial Services Authority (like APRA in Australia) and the government appear to have agreed to nationalise B&B and then sell it off, much in the way the US regulators closed and seized Washington Mutual last Friday morning and then sold the loans, deposits and branches to JPMorgan Chase.

Santander, the Spanish bank, is in negotiations to buy B&B, but it is insisting on conditions.

It would be the second British bank to be nationalized this year after Britain was forced to take Northern Rock into public ownership in February.

The FSA has been trying to find a single white-knight to take over B&B’s loans in their entirety, but Britain’s big banks refused to get involved.

B&B shares tumbled to a record low on Friday.

The UK government forced the merger between the country’s biggest mortgage lender, HBOS and Lloyds TSB.

Britain’s top five banks — HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS — and Santander already own about 30% of B&B between them after they stepped in to help save a rights issue that flopped in June. RBS, HBOS, Lloyds and Barclays (which bought the remnants of Lehman Bros. in the US) are in no position to extend a helping balance sheet, leaving HSBC and Santander which owns Abbey and Alliance and Leicester.

In the US, Wachovia may struggle to find a ‘friend’ until the bailout bill is law, or there’s some move by authorities to take it under control.

Some US commentators reckon possible suitors, one of whom is Citigroup (Which has gone from feather duster to potential white knight) might use the ploy JPMorgan ploy used with Washington Mutual: wait to see whether regulators will seize the bank, then buy the best assets and let the government sort out the rest of the mess.

Besides Citi, Well Fargo (which might be a target for Goldman Sachs) and Banco Santander are said to be in talks to buy Wachovia.

They were part of the same group that passed up a chance to buy Washington Mutual which JPMorgan bought $US1.9 billion.

Media reports say the possible buyers will wait to see what’s in the bill, but have been demanding Government aid. That’s something the Government refused in the case of Lehman Brothers and Merrill Lynch.

Wachovia shares fell 27% in New York on Friday.

The buyer may get help from regulators, who said the US benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp didn’t have to use its $US45 billion deposit insurance fund.

JPMorgan plans to write down WaMu’s loan portfolio by about $US31 billion ($A37.2 billion) – a figure that could change if the government goes through with its bail-out plan and JPMorgan takes advantage of it.

JPMorgan said there will be another $US1.5 billion in merger costs.

And further failures will further elevate the month of September to peak of the list of miserable months, surpassing October, when the great crash of 1929 and the plunge of 1987 happened.

The financial landscape has been ripped up by the bankruptcy of Lehman Brothers the investment bank; the government’s takeover of American International Group which was once the world’s largest insurer, based on market value; the shotgun marriage of Merrill Lynch to Bank of America; the conversion of Goldman Sachs and Morgan Stanley to regulated bank holding companies from investment banks, and the collapse of the nation’s biggest thrift, Washington Mutual, which ranks now as the biggest bank failure in U.S. history.

Goldman saw Warren Buffett snap up a $US5 billion shareholding to make his group the largest shareholder, and Mitsubishi of Japan grabbed a 20% stake in Morgan Stanley after they both abandonment the investment banking model to become old fashioned banks.

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