FT Update

Thu 6 Nov 2008

RBS
Royal Bank of Scotland will become the third UK bank to use the government's credit guarantee scheme as it plans to sell £3bn of bonds today in a two-part deal to include sterling and euro three-year debt. British banks have been quick to latch on to the £250bn credit guarantee scheme, which allows them to raise funding backed by the government with a maturity of up to three years and was put in place to ease the near-fatal strains that have afflicted bank funding markets since the collapse of Lehman Brothers.
Bradford & Bingley
Bradford & Bingley, the buy-to-let mortgage lender nationalised 5 weeks ago, has seen a rise in arrears in its mortgage book triggering fears the taxpayer could be exposed to potential losses. B & B was taken into state control after the collapse of Lehman Brothers shook confidence in the global banking system. B & B's branches and savings operations were transferred to Santander of Spain leaving the taxpayer with B & B's £42bn mortgage loan book, which is expected to run down over time.
Old Mutual
Old Mutual, the South African insurer, will today lose Jonathan Nicholls, its finance director. less than two months after its chief executive also left the company. Philip Broadley, formerly financial director at UK life assurer Prudential, will step into the role. The change comes during a difficult period for Old Mutual, whose former chief executive Jim Sutcliffe, resigned in September as the company was forced to inject another £157m into its US life business and take $135m of writedowns.
FTSE
London equities fell ahead of the Bank of England’s decision on UK interest rates, as global indices stayed under pressure as a mood of renewed caution eclipsed the enthusiasm of the recent recovery rally. The FTSE 100 started the session 2.9 per cent lower at 4,399.76, a loss of 140 points following profit-taking after its recent six-session rally. The mid-cap FTSE 250 lost 2.4 per cent to 6,595.39, a fall of 166 points.
Man Group
Turbulence in markets hit Man Group the hedge fund manager, which on Thursday revealed a 24 per cent fall in pre-tax profits for the half year to end September to $622m. The shares plunged in early trading, dropping 24.5 per cent or 96¼p to 296p.
Allied Irish Bank
Allied Irish Banks has issued a profits warning as it more than doubled the charge it makes for future bad loans to reflect the deteriorating domestic property market. The bad debt provision in the year to the end of December is now expected to be about £766m, equivalent to 0.75% of average loans or 75 basis points.
UBS
UBS is considering legal action against executives who were paid massive sums in the height of the credit boom, to force them to relinquish some of their bonuses. The bank, which was written off about $48bn in the credit crisis, said yesterday that it would discuss remuneration and ways of making staff more accountable for long-term performance at a special shareholders' meeting on November 27th.
Commerzbank
The European Commission is investigating Germany's $10.7bn capital injection into Commerzbank, in the first public dispute between Brussels and state authorities over an individual bank's participation in a national rescue scheme. Antitrust regulators are questioning whether Germany's second-largest bank is set to pay too low a price in exchange for the 8.2bn euro of capital the government has agreed to inject.
Lehman Brothers
The collapse of Lehman Brothers and the ensuing market turmoil took a heavier than expected toll on BNP Paribas, forcing third-quarter net income at France's biggest bank down 56% to $1.17bn. Baudoin Prot, chief executive, yesterday admitted that BNP Paribas had initially underestimated the cost of its exposure to the US bank, which collapsed in September.
Fortis
Fortis, the Belgian-Dutch financial group broken up after a government bail-out, will next month appoint a new board and replace Filip Dierckx, chief executive. The group, stretched by its part in last year's RBS-led acquisition of ABN Amro, turned to the Belgian, Dutch and Luxembourg governments in

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