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Bankevents March/April
 

Bankevents March/April

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    Bankevents March/April Bankevents March/April Presentation Transcript

    • UK bankevents
      15 March- 1 april
      Naomi Clauwaert
    • 1. City insider trading ring
    • 7 bankers of South-London were arrested by the Financial Services Authority (FSA) & Serious Organised Crime Agency (SOCA).
    • The investigation is focused on a period of 3 years. Between 2007 and 2009, there were major capital raisings for three companies.
      It proceeds Barclays, Mitsui Banking Corporation, the estate group Segro and house-builder Taylor Wimpey.
    • It seems like the largest UK equity deals of recent years leaked to an insider trading ring. They used inside information to place trades for a raising capital and to make a profit.
    • 7 individuals at City Institutions have been arrested on suspicion of being involved in a insider dealing ring. Now they are released on bail. It seems that they made large profits
    • The persons who are involved so far are: - Clive Roberts
      - Martyn Dodgson,
      - Julian Rifat,
      - Graeme Schelley
      - Ben Anderson
      - IrajParvizi
      FSA is looking because there is a list of nine names of suspected traders.
    • 2.Rescue plan of The Royal bank of Scotland
    • The Royal Bank of Scotland exists of 84% by taxpayer
      8% is reserve when the bank gets in real trouble.
    • RBC is planning a restructuring of the balance sheet.
      But RBC needs time till April the 30th to prepare for this rescue plan.
    • The plan is to give the chance to the bondholders to replace up to £15bn of debts. Much of the debt deals with 60 to 70% of face value, RBS offers to buy it back at a discount. The profit will go straight through to the capital so RBS created a larger buffer against bad debts.
    • With this idea they hope to have an increase by £1bn to £1.5bn of their core capital base.
      Actually they will crystallize a loss , they will offer more than the market price and the bonds will carry a coupon.
      The bonds will be reverse into new debt securities, cash and equities. It seems like much bondholders will take the offer.
    • RBS examined the contingent capital , considering to replace the £8bn Government line but the finance director, Bruce Van Saun, said they have decided to exclude an instrument because the benefits are minimal.
    • 3. The Greektragedy
    • The Greek problem started when its government produced an incorrect budget to the European Commission. Afterwards the real deficits of the country put pressure on the Euro currency, not only because of Greece but also of other mostly Mediterranean countries.
    • The French and German government is deeply divided over the question how to resolve the Greek problem in the European Union.
      - The eurozone and the Euro currency is facing instability. Nicolas Sarkozy,saidthe eurozone must act firmly to restore the confidence of the investors en the president of the European Central Bank considers the intervention of the IMF as inappropriate.
    • - On the other hand, the German government thinks the Greek should ask the help of the IMF.
      The future of the euro currency is threatened because not only Greece, but also Spain, Portugal, Ireland and Italy are on the list of vulnerable countries. Some Germans even think Greece should ask for bankruptcy.
    • The European Commission must come to a clear political conclusion and order stricter rules to the member states.
    • Investors still ask important risk premia and the debt interest burden of Greece is to high.
      The Dutch government is asking for a partly intervention of the IMF, but Spanish and French politicians want to keep the IMF out, because they don’t want to let down a country that is member of the eurozone.
    • Because of the Greek problems, the Euro currency is moving downwards and their might be an important role of hedge funds abusing the credit default swaps of the Greek debts.
    • Greece has to tighten his income by taxes and the rescue packages probably cannot solve the solvency problems of the state.
      The € 30bn loans by eurozone states will not be sufficient and it is not certain they are legally correct. Some fear it’s a bottomless pit.
    • The IMF would provide a further € 15bn but the conditions are not clear yet. It’s managing director said the deflation (with falling prices) in Greece is necessary. Nevertheless, it should help Greece at least to the end of this year.
    • This is not a typical UK problem but I chose this subject because of its large importance to the whole European Community!
      The always strong Euro suffered on the international markets
    •   4.Dip in inflation
      Last February, the Consumer Price Index went down to 3% while it was 3.5% for the last 14 months.
      There are no access accounts that provide enough interest to make a good return of one’s money.
    • Consequently inflation erodes the value of our money but most people are satisfied with a short-term commitment.
    • Conclusion
      1. It is clear that the use of inside information is prohibited. Without punishment of such abuses the pathway would be wide open for further illegal activities. People should have maximal trust in their bankers.
    • 2. It’s smart of the Royal Bank of Scotland to built up a reserve for bad debts. Nowadays you never know what’s going to happen in the economic world.
    • 3. Solidarity between the member states of the eurozone is absolutely necessary to maintain the strength of the Euro currency. These states should be able to resolve their own problems. It’s a sign of weakness that they called for help from the IMF.
    • 4. The situation proves it is still extremely difficult to maintain the value of your money if you only want to use classic investment techniques. On the other hand, stock markets made good profits but many people hesitated to make use of them because of the 2008 crash.