Mortgage and Business News

Bank of America Corp completes stock sale, raises $13.5 billion

Peter — Wed, 20 May 2009 08:29:12 +0000

The Bank of America Corp. (NYSE:BAC) has said that it has now completed a sale of stock, raising $13.5 billion in capital. This was all part of a fund raising scheme which was requested by the government. The banks sold 1.25 billion shares, which had an average price of $10.77.

Bank of America issued their last portion of shares on Tuesday, 825 million in total, which had an average price of $10 each. CNN Money explains that the deal had pushed Bank of America shares down to 3.4%, to $10.88, in after-hours trading.

The bank had been asked earlier in the month to raise its Tier 1 common equity level by $34 billion; this was a result of a recent government stress test on some of the United States largest banks.

Lehman and Barclays PLC payment

Peter — Tue, 19 May 2009 07:44:41 +0000

Lehman Brothers Holdings Inc (OTC:LEHMQ) have been seeking permission from the court to look to see if they have been adequately compensated by Barclays Plc (LON:BARC) for its brokerage unit. Reuters

say that this was accruing to the document s that had been filed on Monday.

Bankrupt Lehman Brothers Holdings Inc had sold its North American broker-dealer business to Barleys for $1.75 billion last September; this was just a few days after they had filed for bankruptcy protection.

Lehman has now seen an apparent material discrepancies with the liabilities that Barclays

was meant to assume. These discrepancies also includes a possible windfall to Barclays, which has come from the expense of the estate, it is thought that this could be in the billions.

RBS plans to hire advisers for Asset Management

Peter — Mon, 18 May 2009 13:27:51 +0000

Royal Bank of Scotland (LON:RBS) are said to be hiring advisers to help offload RBS Asset Management, this is the bank’s fund unit that invests on behalf of clients of its private banking subsidiary, Coutts.

The Sunday Telegraph

has reported that RBS executives have been in discussions with Morgan Stanley NYSE:MS), over a possibility of purchasing the division, which has assets of more than $50bn (€37.2bn). It is estimated to be worth £500m (€562.8m).

Both the FSA and RBS have not made any comment on these rumors, so we will just have to wait and say how these events will unfold.

Bank of America Corp sells 5.8 percent stake in CCB

Peter — Tue, 12 May 2009 07:25:18 +0000

Bank of America Corp (NYSE:BAC) has come under a great deal of pressure from U.S. regulators, they need to raise money so have sold a 5.8 percent stake in China Construction Bank Corp. this totaled $7.3 billion.

Bloomberg

reports that Hopu Investment Management Co. led the investors in to buying 13.5 billion shares from Bank of America from BoA. This sale has now brought the Bank of America closer to the $33.9 billion that regulators say that the bank needs to help increase following stress tests of U.S. banks.

Both UBS AG (NYSE:UBS) and Royal Bank of Scotland Group Plc (LON:RBS) have sold shares in Chinese lenders, which they purchased almost four years ago. Bank of America sold these shares for HK$4.20 apiece, which was 14 percent below yesterday’s closing price.

Lloyds, RBS, and Barclays dominate TD Waterhouse share dealing

Peter — Mon, 11 May 2009 11:04:10 +0000

The dealing activity at TD Waterhouse last week was dominated by buying and selling shares in UK banks such as Barclays (LON:BARC), Lloyds TSB (LON:LLOY) and RBS( LON:RBS), following the rally in the markets the previous week.

Dealing in shares was up by 16 per cent overall, compared to the figures on the previous week. A majority of traders focused on the shares of these UK banks, and according to Fair Investment, had experienced gains ahead of last week’s much anticipated trading updates.

Top of the sell trades was Barclays, shares rose to around 279, this is a great improvement to its low point in January, which went down as low as 51p. Shares in RBS accounted for 40 per cent of buys and 20 per cent of sells.

Royal Bank Of Scotland (RBS) News: Trading Update

Peter — Fri, 08 May 2009 07:28:40 +0000

Royal Bank of Scotland (LON:RBS) has made a small first-quarter loss, as the part-nationalised lenders bad debts quadrupled. RBS has now taken another 2.1 billion pound ($3.2 billion) writedown on risky assets. The first quarter loss was £44 million; compare that to a £479 million profit a year ago.

Reuters reports that RBS’s bad debts in the three months until the end of March 2009 have increased to £2.9 billion, compare that to £656 million a year ago. RBD say that this is a result of corporate and retail impairments increasing in all businesses and sectors.

Royal Bank Of Scotland (RBS) is just the latest of the big European banks to say that bad debts were ratcheting as the economy in all regions worsen, along with increased unemployment. Stephen Hester, chief executive of RBS has said that both 2009 and 2010 will be very tough for the bank.

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Fed's to unveil bank stress test results: recession proof

Peter — Thu, 07 May 2009 08:14:45 +0000

Today will see federal regulators unveil a picture of what the U.S. banking system is able to withstand, it will see how much stress it can take that the current recession may inflict on it. The picture will be formed once a handful of institutions add to their capital base.

Bloomberg explains that the Federal Reserve stress tests 19 of the biggest lenders shows that show Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. require $54 billion. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. at the same time have enough capital to help prop up flows of credit to businesses.

Yesterday saw bank stocks surge, this was in anticipation that firms will not need as much capital once they are protected. We saw the Standard & Poor’s 500 Financials Index rallied 8 percent.

GDP fell 6.1% for first quarter: there is an upside

Peter — Fri, 01 May 2009 06:47:20 +0000

The U.S. economy is still looking a bit shaky as the GDP has fell 6.1% for the first quarter; this is much the same as the fourth quarter of 2008. However, there is still an upside to this, which is explained in the video below.

The drop in Q1 was much worse that had been expected, economists presumed that the drop would only be 4.7% gross in domestic product, this is the broadest measure of the nation’s economic activity.

The 6.1% for first quarter was the second largest drop recorded in 26 years, the worst was the 2008 Q4, the GDP fell 6.3% then.

The video tries to look at the bigger picture and explains that there is still an upside, investors do not seem to be upset by the news. In the first half hour of trading on Wednesday, major U.S. stock indexes were all up more than 1%.

Watch the video below.

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Obama Mortgage Plan Expanded

Peter — Wed, 29 Apr 2009 13:46:22 +0000

The Barack Obama administration has released plans of its $75 billion expansion foreclosure prevention plan, which will be providing new subsidies to both mortgage lenders and its investors. Under this expanded plan, some homeowners could see a huge reduction in their payments, as well as the interest rates on their second mortgage falling by 1 percent.

This announcement has taken two months after the Obama administration launched the housing program, which they called Making Home Affordable. Officials have said that some borrowers have already received help from the new program.

The Foreclosure rate is still rising and it could still be months before the new program will have the effect that the administration hopes. The new housing plan pays lenders to help it borrowers to stay in their homes; this is done by reducing their mortgage to a more affordable level.

For an in-depth look at the Obama Mortgage Plan, visit the washingtonpost.com

Federal Reserve Appeals: Citigroup, Bank of America, and more

Peter — Wed, 29 Apr 2009 11:29:11 +0000

The Federal Reserve has received appeals from six of the 19 largest banks in the U.S. for more capital. Those banks include, Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC), these are according to stress tests taken by the government.

Bloomberg have mentioned that some of these lenders will need extra cash from the government, but most of the capital will be coming from converting preferred shares to common equity. The Federal Reserve is now in the process of hearing appeals from these six banks.

The decision to push conversion instead of federal assistance means that the government can allow these banks to shore themselves up without the worry of political taint, which has certainly soured both Wall Street and Congress on the bailouts.

There is however, a certain amount of risk involved, such as diluting existing shareholders which the government action does not seem strong enough for.