Barclays Bank News
- From: PaPaPeng <PaPaPeng@xxxxxxxxx>
- Date: Fri, 31 Aug 2007 06:08:48 GMT
Oops. China was going to invest in this bank. Its either get out
now or buy over the majority stake in this bank. Should be able to
buy it at fire sale prices.
======================================
Barclays admits borrowing hundreds of millions at Bank's emergency
rate
· 'Technical breakdown' in clearing system blamed
· Pound falls as news swirls around money markets
Ashley Seager, Larry Elliott and Julia Kollewe
Friday August 31, 2007
http://business.guardian.co.uk/story/0,,2159625,00.html
The Guardian
Barclays has been forced to borrow hundreds of millions of pounds from
the Bank of England's emergency lending facility for the second time
in a fortnight, it was revealed last night.
In a hurried and emotive statement after London's markets had closed,
Barclays attempted to calm fears that it faces a cash crisis. Rumours
had circulated all day that Barclays was forced to go to the Bank of
England after the central bank said it had lent £1.6bn at its penal
rate of 6.75%. It is thought that Barclays borrowed the entire amount.
Barclays said: "There are no liquidity issues in the UK markets.
Barclays itself is flush with liquidity. In these challenging times
the dramatisation of such situations is of no help to markets, their
members or their customers."
The high street bank, which also has a huge investment banking
division, said it needed cash only because of a "technical breakdown"
in the UK clearing system, through which all the major banks settle
their books at the end of the day. Its shares fell 2.5p to 597.5p,
raising questions over its £45bn bid to take over the Dutch bank ABN
Amro. In its statement, Barclays said: "The Bank of England sterling
standby facility is there to facilitate market operations in such
circumstances. Had there not been a technical breakdown, this
situation would not have occurred."
The standby facility is usually used a couple of times a month but the
size of the loan, and the fact that this is the second time within two
weeks that Barclays has gone to the Bank of England, have raised
eyebrows.
Barclays' appeal for calm follows days of speculation about the bank's
exposure to losses in asset-backed security markets.
Edward Cahill, the banker in charge of collateralised debt obligations
at Barclays Capital, resigned last week, and others in his department
are understood to have departed. The best known is John-Paul Parker,
who is credited as the inventor of "SIV-lite", the controversial
structured investment vehicles at the centre of the worries in
financial markets.
Barclays has failed to explain Mr Cahill's resignation but the bank's
claim that its potential losses from exposure to SIV will be as little
as £75m has been greeted with scepticism.
"£75m is a bad month at Barclays Capital. It's not a resigning
matter," one credit market operator said.
News that the Bank of England emergency lending facility had again
been tapped hit sterling. The pound slid to just over $2.01 and to 232
yen though it held its own against the euro at 67.7p.
Money markets remained tense last night as the credit that oils the
wheels of the global banking system remains all but dried up. Banks
around the world have become reluctant to lend to each other after
suffering big losses from the US sub-prime mortgage crisis.
Nick Parsons, head of strategy at nabCapital, said: "Every institution
is potentially guilty until proven innocent. With incomplete
disclosure and a lack of transparency, those holding cash are
unwilling to lend it for other than extremely short periods and then
only against the highest quality collateral."
The US Federal Reserve and European Central Bank have flooded money
markets with cash for short-term loans. The Fed two weeks ago opened
its "discount window" whereby it cut the interest rate at which it
lends to banks in the money market for periods of up to 30 days.
The Fed's chairman, Ben Bernanke, assured investors that the central
bank was monitoring the situation and would act to contain the crisis.
There was speculation last night that the Fed may cut its main lending
rate from 5.25% before its next meeting on September 18.
The stress is showing when banks want to borrow for three months or
longer. The 3-month Libor (London interbank offered rate) leapt from
6% to 6.6% in mid-August and has remained there. Traditionally,
3-month Libor is about 0.15% above the base rate, which is at 5.75%.
Now it is almost one percentage point over the base rate. One analyst,
who declined to be identified, said: "The interbank market is not
working well at all. It's in a persistent state of dysfunction."
Diana Choyleva, of Lombard Street Research, said: "Our estimates show
that bank losses could reach $300bn."
=====================================
China could buy stake in Barclays
By Robert Peston
July 23, 2007 http://news.bbc.co.uk/2/hi/business/6911138.stm
BBC business editor
Barclays is attempting to raise enough finance to take over ABN
Barclays is close to raising around £10bn from the Chinese and
Singaporean governments to help finance its takeover of the Dutch bank
giant, ABN.
If it succeeds and if Barclays acquires ABN, the Chinese state would
emerge with a shareholding of around 7% in the enlarged group.
The Asian cash will be used to help Barclays increase its takeover bid
for ABN to around £50bn.
A group led by Royal Bank of Scotland (RBS) is also vying for the
Dutch firm.
(more)
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