Financial Times Update

Wed 5 Nov 2008

JP Morgan
JP Morgan is to scrap its standalone proprietary trading desk, highlighting how the dearth of investment opportunities is prompting banks to retreat from in-house hedge funds that had thrived before the turmoil. People close to the situation said the decision to fold the 80-strong global proprietary trading unit into JPMorgan’s other trading operations could result in job losses. The bank is believed to be looking at other areas where operations overlap and could announce further reorganisations and job cuts in months to come.
RBS
The new chief executive of Royal Bank of Scotland blamed his predecessors for fostering a “bull market culture” that helped force the banking group into accepting a £20bn ($32bn) government bail-out. Stephen Hester, who formally takes over as RBS’s chief executive later this month, told the Financial Times on Tuesday that the bank had overextended itself at the wrong time, leaving it particularly vulnerable after the collapse of Lehman Brothers shook confidence in the global financial system.
London Stock Exchange
The London Stock Exchange is to carry out its threat to levy a special charge on orders that are routed through its new competitors. From Monday, it will charge a fee of 1 basis point on any trade that arrives from an external trading venue - such as Nasdaq OMX Europe, owned by the US-based arch-rival to the LSE.
Swiss Re
Financial market turmoil, lower investment income and hurricane damage claims led Swiss Re to report a SFr304m net loss for the third quarter compared with expectations of profits.
UBS
UBS, one of the biggest casualties of the credit crisis, prepared investors yesterday for a heavy loss int he fourth quarter as it warned of weak markets and one-off accountant factors linked to the value of its own debt. The world's biggest wealth manager did not issue a specific product warning. But John Cyran, chief financial officer, said exceptional factors, alongside difficult markets, could prompt a hefty loss, in spite of the group having cut costs, reduced risks and shifted toxic credits off the balance sheets.
Carlyle Group
US private equity firm Carlyle Group warned a group of its investors that they were unlikely to see returns on their money soon.
FSA
Banks could soon find their retail operations coming under tighter scrutiny from the City Watchdog under proposals that would severely curtail the industry's freedom to regulate itself. The Financial Services Authority yesterday proposed that it would extend its remit to oversee areas of banking conduct including: current accounts, personal loans and overdrafts, savings, card services and cash machines. Currently those areas are covered by sections of the Banking Code, which is enforced by an industry-led body, the Banking Code Standards Board , into which the regulators had some input.
Abbey
One of Britain's largest mortgage providers yesterday pre-empted an expected cut in interest rates by announcing a rise in mortgage rates, defying ministers who want banks to lower the costs of borrowing. Abbey, which provides one in four mortgages in the UK, will today increase its two and three-year tracker deals by up to 0.5% points ahead of a rates decision by the Bank of England's monetary policy committee tomorrow.

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