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This website will allow you to keep up to date with the financial world, with the Strictly BIF newsletters and allows you to have your say on our blog page.
In the latest edition of the Strictly BIF newsletter:
Story 1: Darling unveils UK BudgetStory 2: France and Germany reach deal over GreeceStory 3: RBS Debt Buy-Back seeks to boost Tier One Capital.Blog: How long can interest rates be held at 0.5%?
Darling unveils UK Budget, Folarin Araromi
On Wednesday, Alistair Darling, Chancellor of the Exchequer, unveiled the Labour party’s budget for the year. The Budget comes as Britain slowly emerges from recession and the May General Election nears. Although borrowing remains at a record £167bn, Darling insisted that Labour had “made the right calls” and assured debt was lower than predicted, and unemployment may have reached its peak. David Cameron, the Conservative leader, pointed out that Darling’s attempt to claim the credit for Britain’s emergence from the recession neglected to mention that the UK was one of the first economies to enter recession and the last one to exit.
Darling assured that Labour would continue to intervene to boost the recovery, helping small businesses to extract loans from banks and providing money to boost start-ups. The Budget also included a £2.5bn “growth package” to bolster renewable energy projects and other industries of the future. But he said that growth was fragile, arguing that sluggish growth in the Eurozone was holding back the UK recovery.
Meanwhile the Chancellor notified banks that they could soon face an international tax, while ordering them to make bank accounts available to the country’s poorest people and setting new lending targets for state-owned banks. While seeking full taxpayer recompensation for bank bail-outs, the chancellor stuck to his line that any systemic risk or transaction tax should be decided by the G20. The tax may not make the banking system safer, but it might help reduce the fiscal deficit.
Brussels officially announced today that France and Germany have reached an agreement over a financing plan to help Greece relieve its debt problems. As of March 25th, only the German and French governments have agreed, with other EU members still pondering the deal. It is estimated that the package will total 23 billion Euros. It has also emerged that the IMF will in fact take part in the deal.Ms. Merkel of Germany is shown reluctance to offer Greece anything in the realm of a bailout, as it is a violation of EU laws. She has also said that Greece is not insolvent and is still able to raise money on the international markets. It is hoped that this deal will prevent confidence in the Euro from plummeting more than it already has. Following Portugal’s downgrade, the Euro hit a 10 month-low against the dollar on Wednesday.
The Greek debt crisis has rocked the European Union and has exposed some fundamental squabbles between the member countries. In an attempt to curb its public deficit of 12.7% of GDP, the Greek government has put a freeze on public sector wages, pensions and increased its taxes. Greece is on the path of being the first Eurozone country to require IMF emergency aid. European members Hungary, Latvia and Romania are the predecessors of Greece on this path, yet they are not using the Euro as a currency. Greece is currently in a desperate attempt to re-finance its debt; they are currently poised to pay about 6%, which is double that of their German counterparts.
RBS Debt Buy-Back seeks to boost Tier One Capital., Bradley Wright
Late Thursday night RBS disclosed plans to buy back up to £7.4bn of debt and preference shares in a move that will boost core capital. RBS - 70% owned by the UK government, has been under pressure to shore its capital base, when the European Commission cracked down on state intervened companies. They had issued an April deadline for the bank to improve its capital ratio.
Bruce van Suan, the banks finance director admitted the buy- back had been structured more conservatively, but he stated many bondholders had expected the plan to be priced more sensibly.
The bank said it would be making £3.4bn worth of cash offers to holders of tier one preference shares. The total preference shares in issue at the moment totals £8.8bn. The firm has said it will launch a ‘waterfall’ approach – offering first refusal to holders of preference shares rather than hybrid holders.
The second part of the debt restructuring will be targeted at holders of £4.3bn in ‘upper tier two debt instruments’ that will be exchanged into new, more senior debt. RBS expects take up of £2.7bn in the bay back but stated it would not cap participation.
Hedge funds had in recent weeks piled large sums of money into RBS debt, expecting a lucrative restructuring. But “the pricing was quite cheeky” said one. In early trading Friday, RBS shares had risen .11% to 45.65p.
Morgan Stanley, Pearl Boateng
Name: Morgan StanleyShare price: $28.91, CHANGE THURS -0.46 -1.57%
Morgan Stanley, a financial holding company, provides various financial products and services to corporations, governments, financial institutions, and individuals worldwide. It operates in three segments: Institutional Securities, Global Wealth Management Group, and Asset Management.
The Institutional Securities segment provides financial advisory services on mergers and acquisitions, divestitures, joint ventures, corporate restructurings, recapitalizations, spin-offs, exchange offers, and leveraged buyouts and takeover defenses, as well as shareholder relations; capital raising; corporate lending; investments; and sales, trading, financing, and market-making activities, including equity trading, commodities, and interest rates, credit, and currencies, as well as financing services, including prime brokerage, consolidated clearance, settlement, custody, financing, and portfolio reporting services.
The Global Wealth Management Group segment offers brokerage and investment advisory services covering various investment alternatives comprising equities, options, futures, foreign currencies, precious metals, fixed income securities, mutual funds, structured products, alternative investments, unit investment trusts, managed futures, separately managed accounts, and mutual fund asset allocation programs; financial and wealth planning services; annuity and insurance products; credit and other lending products; cash management services; retirement services; and trust and fiduciary services.
The Asset Management segment offers products and services in equity, fixed income, and alternative investments, which include hedge funds, fund of funds, real estate, private equity, and infrastructure to institutional and retail clients through proprietary and third party distribution channels. This segment also involves in investment activities. The company was founded in 1935 and is headquartered in New York, NY.
Blog, How long can interest rates be held at 0.5%?
The MPC announced Thursday its decision to hold interest rates at 0.5%, marking the thirteenth consecutive month at the record low rate. The decision came as no surprise to many economists who believe that the UK’s economic recovery still remains somewhat fragile and that any interest rate rise may hinder this recovery. Growth figures have continued to exceed estimates but the Bank believes economic growth is still not a certainty, and hence feels that they have no choice but to hold rates constant. On the other hand, this has not come as welcomed news to dismayed savers, who argue that they were not the ones who caused economic collapse yet they are the ones now paying the price, struggling with reduced incomes and watching, in front of them, their savings shrink significantly in real terms. Therefore, many people have begun asking and wanting to know how long interest rates are going to be held at such low rates. What can be done for responsible savers who are losing out? Is the economy strong enough yet for increased rates?
The FSA carried out dawn raids across London and the South East as part of an investigation into an insider trading ring. Seven men including an employee at Moore Capital have been arrested.
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Nomura appointed Jasjit Bhattal, former head of Lehman’s Asian operations, as its first non-Japanese executive on its management committee. Mr Bhattal will be based in Hong Kong as chief operating officer and president of the bank.
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The Royal Bank of Scotland is to restructure £15.8bn of debt in an attempt to boost its core tier 1 capital. RBS shares closed 2.5% up at 45.6p.
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Dubai World is reported to be given $9.5bn in a debt restructuring plan by Dubai. Abu Dhabi has pledged to give another $5.7bn on top of a $10bn loan.
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South Korea's top insurer Samsung Life is expected to raise an estimated $4.7 billion in its upcoming initial public offering.
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Data released by Thompson Reuters showed M&A activity jumped to £350bn, an 18% rise in the first quarter. Blackstone Group ranked No.9, up from 78th place last year, in terms of value of deals.
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AIG, which has been selling assets to repay the U.S. government after a $182.3 billion taxpayer funded rescue, has closed around 90 transactions with disclosed value of $67.7 billion.