Teetering banks

Bit of a snowball effect bulding in Europe.

Never mind the Northern Rock disaster, we now have:

HBOS scraped off the floor by Lloyds.

Bradford and Bingley sold off to the Dons for a pittance leaving us (i.e taxpayers )with all the cr@p. Santander also owns Abbey National together with Alliance and Leicester, so perhaps Trafalgar Square will have to be renamed soon.

Fortis bailed out (well maybe) by three European Governments who are cacking themselves

German property company Hypo Real Estate gets emergency funding making most of the German banks looks very sick in the process.

Now Glitnir Bank ( Icelandic) bailed as well. Who cares you cry? Well anybody who has put money into Kaupthing Bank, who have been marketing really hard in the UK and offering 7.15% on deposits. Now you know why.

Meanwhile, back in the US Wachovia, which last week was supposed to be taking on Morgan Stanley to save it, is now seeking to jump in bed with Wells Fargo because it was stupid enough to fork out $24 Billion a while back for "Golden West Financial Corp." a shite California mortgage lender that has a terrible default rate.

Morgan Stanley, which last week saw a third of its prime brokerage asset vanish as clients legged it, is now looking to Mitsubishi Bank again, who have already taken up a 20% stake.

And it is not even lunchtime. 8O
And that the positive assement also, Blogg the simple fact is that debt has been sold and resold over the last 3 decades, of course with every sale it has ramped up it profit to some and a greater liabilty to others.

I dont see any simple solutions unfortunatly other than dam the stupidity of those who sailed the ship of extending and reselling debt while trousering a nice wedge.

What is the worst case if letting these banks fail due to the market forces that have been a rallying cry for so many in govenrment in the last decade 'these being the good years of course'.

While there is a need for confidence in the markets that this confidence has been brought by a finacial system based on the overinflation of property. yes the houseing market will recover but only when the economy is in growth, something that it realy hasnt been for at least the last 6 months...

Thus dam the banks and let then fall, they took the money without thought of the liabilty that they were underwriting.

Beans, gold, silver and a 12 gauge.... :wink:
Looks like Iceland is finally about to sink under the weight of debt. Borrowing by the three big Iceland banks now amounts to 500% of GDP.

Bauger is in a world of trouble now as many of their borrowings flow through the Stodir (in administration) and Giltner Bank (bust) chain are secured on their properties and businesses. Stand by for turmoil of the UK High Street: major shareholder and finance provider gone down the tubes so who is going to buy those in the current market at anything other than fire sale prices?


A company linked to Baugur, the Icelandic investment group, filed for administration on Monday as the fallout from the nationalisation of Glitnir, the Icelandic bank, threatened to reach the British high street.

Stodir – formerly known as FL Group – was the biggest shareholder in Glitnir and said on Monday it had filed for administration after last year making the largest loss in Icelandic corporate history.

The investment company, controlled by Jon Asgeir Johannesson, said in July that it had acquired a 39 per cent stake in Baugur, the group that owns a swathe of UK retailers from Karen Millen to Hamleys.

Mr Johannesson is executive chairman of Baugur. Neither Stodir nor Baugur was immediately available for comment. However, a source close to Baugur said the deal for Stodir to take 39 per cent of Baugur was yet to complete and the company had no stake.

”The application will be taken before the court today and an authorisation for the moratorium granted and administrator appointed,” said Stodir in a statement quoted on Reuters.

It was unclear what repercussions the administration of Stodir would have for Baugur and its large number of UK retail investments.

In April Baugur had sought to make a clean break from property and Icelandic banks by shifting its exposure to two new, separate companies and highlighting its focus on non-Icelandic retailers.

Baugur said at the time that it was selling to ”two new independent companies” its stakes in FL Group, which holds shares in banks and property, and separate media and technology assets for a total of £430m in cash and loan notes.

But although the two new companies, Styrkur and Stodir, were separate from Baugur they have a similar ownership structure to Baugur itself, which is majority owned by Mr Johannesson, executive chairman and co-founder, and his family.

FL Group said at the time that it would not be affected by the change in its biggest 37.2 per cent shareholder as it would continue to be ”controlled by the same people”. Gunnar Sigurdsson, chief executive of Baugur, confirmed that Mr Johannesson and his family had a majority stake in the new companies but said that a ”substantial part” of the £430m transfer was in cash.

Baugur has faced repeated questions about its indirect exposure, via Stodir, to Glitnir as well as its general funding position amid turbulence in the Icelandic economy centred on the financial sector.

Mr Sigurdsson said the deal ”had nothing to do with a lack of faith in those underlying assets”.

Just take a squint at what they own or have significant stakes in. Then remember it was all done on debt


As for the bloke behind all this, Jon Asgeir Johannesson, not exactly had a boring life:

"He resembles a 1970s heavy metal guitarist, with his flowing locks and fondness for black clothing. And his deep dislike of personal publicity has done little to keep his name out of the headlines.

He has fought a long court battle over allegations of fraud. He has talked about an overfondness for booze and there were wild allegations in a Miami courtroom in 2003 about exotic parties on a yacht."

"Icelandic business has never shaken off allegations, always firmly denied, that its startling incursions into the UK might have relied on some odd sources of funds. Iceland has a population of 300,000, but companies there have bought heavily into areas such as retailing and stockbroking, apparently out of all proportion to the size of the country.

Some have highlighted the convenient air travel between Reykjavik and Moscow. But no firm links have ever been established. "

Pestons Blog

Peston is calling it the worst day yet.... Seems to have now changed his tune to one of 'we are really in the sh!t now as opposed to we might be..

His is clearly off message with ZNL and may be a little hacked off that he has been used by them to 'manipulate' the markets with the little tit bits they leak to him now and again.

Will be interesting to see if he says we are all fecked on tonight's six news.

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