Financial Times Summary

Tue 28 Oct 2008

Bank of England
Britain's financial system faces the possibility of further instability, with the health of insurers and hedge funds among the current areas of concern, the Bank of England warned today. In its twice-yearly Financial Stability Report , the central bank talked not only of significant risks remaining to the banking system-in spite of the £50bn bail-out that in recent weeks has shown signs of bringing some stability -but also highlighted other potential worries.
Mitsubishi UFG Financial Group
Mitsubishi UFG Financial Group has unveiled plans to raise up to Y990bn (£6.8BN) in new capital to bolster its balance sheet as the global financial turmoil ensnared Japanese banks. The capital raising by Japan's largest banking group comes as tumbling stock prices and a deteriorating economic outlook threaten to undermine its financial health. MUFG said yesterday it would raise up to Y390bn in non-convertible preferred shares to undermined investors and up to Y600bn in common stock, in the largest fund-raising in Japan so far this year.
Morgan Stanley
A regulatory filing showed Morgan Stanley used $23bn to prop up its money market funds after convulsions in credit markets prompted withdrawals of $46bn. The decision, revealed in regulatory filing issued this month, emphasises the strain on the financial sector after the collapse of Lehman Brothers led to near-freeze in credit markets.
Standard Chartered
Shares in Standard Chartered dropped 8% on concerns the emerging markets bank might have to raise billions in extra capital. The London-headquartered bank, due to issue a trading statement today, is expected to repeat the position it laid out two weeks ago and say it has no plans to use the UK government's £37bn bank bail-out to raise capital. Shares in Standard Chartered fell 78p to 680p as emerging market concerns also affected HSBC, which fell by almost 5% to 663p.
FSA
The Financial Services Authority is to review the rules for carving up surpluses in life funds after its regulation was savaged by group of MPs. The FSA, in response to a report by the influential Treasury select committee, said it would review the framework governing with-profit funds, which aim to smooth volatility. This includes the rules for freeing up surpluses, often dubbed "orphan estates" which were described as "barmy" by the select committee earlier this year.
Prudential
Prudential, one of the UK's biggest insurers, has pulled out of the race for Equitable Life's £7bn with-profit fund, dealing a blow to efforts to offload what is left of the troubled mutual. Prudential was seen as one of the strongest candidates to acquire the remnants of Equitable, primarily because of its about £70bn with-profit fund. It also knows Equitable well, having completed the transfer of £1.7bn of with-profit annuities from the mutual at the beginning of the year.
Deutsche Bank
The owner of nearly a third of the UK's passenger rail rolling stock has been sold to a consortium led by Germany's Deutsche Bank in the latest of a series of deals likely to transform the sector's ownership. The sale of Porterbrook Leasing, owned since 2000 by Abbey National, the UK bank now part of Spain's Santander, comes just four months after Angel Trains, the leader in the UK market, was sold to a consortium organised by Babcock & Brown, the Sydney-listed fund manager for £3.6bn.
KBC
The decision yesterday by KBC, the Belgian bank, to turn to the state for a $4.4bn capital injection, leaves very few leading financial institutions in the Low Countries that have not sought government money. Some analysts yesterday expressed surprise that Aegon, the Dutch insurer, had not spent the weekend cloistered with finance ministry officials to hatch a similar deal. The group said this month that it wanted to bolster its capital base and has since maintained that it is weighing up whether to apply for government funds.
Fortis
Fortis, the Belgian-Dutch banking and insurance group, was first bailed out by the three Benelux governments on September 28th. Less than a week later, the Dutch government nationalised Fortis in the Netherlands, prompting the Belgian government to organise the sale of most of the rest of the bank

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