More On Global Subprime Banking Fallout [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Global Subprime

Lehman Nears Two Asset Sales In Europe. “A sale of Lehman Brothers' European equity trading and corporate finance units was inching closer last night, although prospects for a deal to save the bank's fixed-income business in the region were looking poor. PwC, the administrator to Lehman in Europe, had been locked in talks over the weekend with Barclays, the UK lender, and Nomura, the Japanese bank… Barclays was primarily interested in the equities arm, while Nomura was focused on the advisory franchise. PwC was seeking a single deal covering both assets.” (Financial Times, Sept. 22)

Potentially More Toxic Than Sub-Prime: The £6.6bn Of 'Alt-A' That Spooked HBOS Investors. “HBOS has £6.6bn of "Alt-A" securities, [which] the market fears could be more toxic than sub-prime debt... They sit between prime and sub-prime, but default experience is showing they are almost sub… HBOS holds only £90m of sub-prime debt, but the £6.6bn of Alt-A dwarfs even the bank's £2bn portfolio of prime... It has marked down the value of the bonds by 20%, but rivals such as Royal Bank of Scotland (RBS) have written down their Alt-A holdings to half their face value. Lehman Brothers… cut the value of its Alt-As by 71% – a deeper writedown than it made on its sub-prime securities.” (Independent UK, Sept. 21)

Centro To Sell $157.5m Assets. “Shopping centre manager Centro Properties Group says it [will] sell four shopping centres for $157.5 million. Centro CEO Glenn Rufrano: “The sale prices were "acceptable''… Under the agreements, Centro Australia Wholesale Fund and Centro Retail Trust will sell their separate 50% interests in Centro Southport on the Gold Coast in Queensland for $68M, representing a 9.9% discount to book value.  CER will also sell its Meadowlands and Barrington shopping centres in New Zealand for $US49.9M… a 1% discount to book value… [And the]Adelaide Central Carpark and Charles Street Plaza, for $47.69M, a 3.85% discount to book value.” (Sydney Morning Herald, Sept. 19)

Central Banks Pump Out Cash. “The U.S. Federal Reserve sharply expanded its efforts to provide dollars to continental European central banks and unveiled new programs to give central banks in the U.K., Canada and Japan access to dollars. The Fed boosted its currency-swap lines -- through which it gives foreign central banks access to U.S. dollars -- by $180 billion, to allow central banks to meet fierce dollar demand from commercial banks outside the U.S.” (WSJ, Sept. 19)

Egypt Bourse Plunges Over 4 Pct With World Markets. “Egypt's benchmark index plunged 4.73% on Tuesday to its lowest since March 2007 as foreign hedge funds continued to sell big caps, spurring retail panic, brokers said. The CASE 30 index closed at 7,184.35 points to extend its losses to about 10% in two days. The Hermes index fell 4.07% to 645.32 points while the broader CIBC index lost 4.63% to 384.35 points.” (Reuters, Sept. 16)

Most Big Companies See Japan In Recession: Survey. “Tokyo Shimbun poll: Some 85% of major Japanese companies believe the nation is already in recession and most say the economy would only recover late next year... About 71% of 209 leading companies polled said the world's second largest economy was in a gradual recession and 14% said it was in a definite recession. The latest poll, conducted from late August to mid-September, was a sharp contrast to the previous survey in April, when 61% saw the economy as flat and 19% said it was going down.” (AFP, Sept. 19)

Hundreds More Throng AIG Singapore Office. “For the second day hundreds of anxious policyholders lined up in the hot sun outside Singapore offices of global insurance giant American International Group (AIG) Thursday, despite a US government bailout of the firm. Hundreds more -- some vowing to terminate their policies -- were already inside the offices of AIG and its wholly-owned subsidiary, American International Assurance Company Limited. They had returned after lining up on Wednesday without getting served.” (AFP, Sept. 18)

Nordic Banks Can Weather Turmoil, System Stable. “Nordic banking stocks have tumbled alongside those of their peers across the globe… A number of small Danish banks have been forced to seek partners and one has been taken over by the central bank, but the region's major firms have so far survived the crunch. Sweden's Financial Supervisory Authority said… the banks had strong finances and capital buffers to deal with the current uncertainty in markets.” (Guardian UK, Sept. 18)

Asia At Risk From Fallout From US Financial Crisis. “Asian Development Bank: Asia's financial institutions remain at risk from U.S. financial turmoil even if the region's losses from the sub-prime crisis have been lower than elsewhere… Keith Lui, executive director for market supervision of Hong Kong's Securities and Futures Commission: The crisis will have minimal impact in Asia given the region's limited exposure to sub-prime credit products. The region has also been strengthened by post-1997 Asian financial crisis reforms. David Fernandez, head of JP Morgan's Emerging Asia Research: Pain from the U.S. financial crisis is being felt most acutely in Asia, where stock markets are now among worst performing among emerging economies.” (IHT, Sept. 18)

Central Banks May Seek More `Bang' as Markets Freeze. “Julian Jessop, chief international economist at Capital Economics Ltd. in London, says central banks may be wary of providing greater liquidity for fear it will stop financial institutions from unwinding their debt and consolidating. The ECB said Sept. 4 it will make it harder for banks to exploit its lending rules.” (Bloomberg, Sept. 18)

Honda's Aoki Says Subprime Woes May Hurt Car Sales.  “Honda Motor Co., Japan's second- largest carmaker, said the financial turmoil caused by subprime loans in the U.S. may hurt global car sales. Honda Chairman Satoshi Aoki: “Demand in China and India, the world's two fastest-growing major economies, may also be slowing… The U.S. auto market, hurt by higher fuel costs and a housing slump, is headed to the lowest annual total since the early 1990s. The failure of Lehman Brothers, once the fourth-largest U.S. investment bank, may also sap demand, as consumers avoid buying expensive goods.” (Bloomberg, Sept. 18)

Temasek Could Profit On Merrill Takeover: Economists. “Bank of America (BAC) announced Monday it was paying $50 billion in stock for Merrill Lynch, whose biggest shareholder is Singapore's state-linked Temasek. If Singapore's Temasek Holdings decides to sell its stake, it could gain $1.5B, according to Ilian Mihov, an economics professor in Singapore. Since December, Temasek has invested billions of dollars in Merrill... Temasek's initial investment, covering $4.9B, came with a requirement that if Merrill raised more capital within 12 months at a price lower than the $48/share Temasek initially paid, it would be compensated for the difference.” (AFP. Sept. 17)

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Comments

[lepso:]

It is so frustrating how these colassal events are moving through the recent days and even the people that are talking about it do not understand. The media does have a great responsibility to make these events more clear, make them more understanding. Are the practices of working with derivatives so risky? How are "off book accounting" practices so toxic when the market forces do not comply with the anticipated.

2008 Sep 22 10:36 AM

[freddie:]

Thanks. Interesting synopsis of effects around the globe and a reminder that Alt-As are out there still to be resolved.

2008 Sep 22 11:46 AM