Global Subprime: Australia's Turn [Housing Tracker]

Global Subprime 

National Australia Bank Takes A$830 Million Provision. “National Australia Bank Ltd., the country's biggest, set aside A$830 million ($795 million) for credit market losses, triggering the steepest decline in its stock in seven years. National Australia made provisions equivalent to 90% of the value of its A$1.2 billion of collateralized debt obligations. The Melbourne-based bank set aside a A$181M provision in March.”  (Bloomberg, July 25^th) 

Credit Suisse Returns To Profit After Subprime Losses With A Q2 Net Income Of $1.2 Billion. “Credit Suisse Group (CS) posting a Q2 net income Thursday of SFR1.22 billion (US$1.16B). Credit Suisse's second-quarter result was 33% lower than the net income of SFR3.2B in the Q2’07. CS, which has weathered the U.S. subprime mortgage crisis better than rival UBS AG, had gone into the red for Q1, posting a net loss of SFR2.1B. The bank said it had combined net writedowns of SFR22 million (US$21.3M) in the leveraged finance and structured products businesses, which it said was so low as to be "immaterial." In Q1, Credit Suisse had net writedowns of SFR5.3B for big buyout loans and mortgage securities.”  (International Herald Tribune, July 24^th) 

Investors Sue CIBC For Downplaying Exposure To US Subprime Mortgages. “Investors launched a multibillion dollar class action lawsuit Wednesday against the Canadian Imperial Bank of Commerce, alleging it downplayed its exposure to the US subprime mortgage meltdown… CIBC is purported to have said its total exposure to the failing US subprime residential mortgages market was "not a major issue" when, in fact, the bank had exposure to billions of dollars of losses. Further, CIBC failed to disclose that one of its principal hedge counterparties ACA Financial was "woefully undercapitalized" and was far from able to provide any meaningful hedge protection to the bank's subprime mortgage investments, said the claimants.” (AFP, July 24^th) 

Bank Of China Says Its US Subprime Exposure Risks 'Controllable'. "Bank of China, one of the country's four main commercial banks, said its risks from US subprime mortgage exposure are manageable. "The risks are completely controllable," said president Li Lihui when asked by reporters if Bank of China held any bonds issued by US mortgage finance companies Fannie Mae or Freddie Mac… Bank of China said earlier it had trimmed its investments in subprime-related assets to $4.4 billion as of the end of March, from $4.99B as of the end of 2007.” (Quamnet, July 23^rd)

Mortgage Approvals Hit New Record Low. “British Bankers' Association: Mortgage approvals for house purchases dived by more than two thirds in June from a year ago to hit a fresh record low of 21,118. The annual fall was the biggest since the series began in September 1997 and indicates the downturn in the housing market is accelerating. The figures come just a day after government figures showed the number of homes changing hands almost halved in June, highlighting the difficulties facing estate agents, homebuilders and retailers. House prices have fallen by almost 10% from their peak last August.”  (Reuters UK, July 23^rd)

IKB In New Sub-Prime Write Downs. “IKB Deutsche Industriebank, hit by the sub-prime crisis, has said it expects to cut the value of its investments by another €500 million ($794M; £397M). It has also lined up €1.5 billion from main shareholder KfW, the German state development bank that led IKB's rescue. IKB has been given €8B in payouts since losing billions on investments in assets backed by risky US home loans. KfW is seeking a buyer for IKB, and will provide the €1.5B to keep the bank running until later this year… But before any injection of cash is made, the European Union has to rule on whether the move is state aid. Its decision is expected by October at the latest.”  (BBC News, July 22^nd)

 

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