rajesh purohit / blog

The bail out plan declared last week by UK Prime minister and Chancellor saw today nationalisation of three of major banks (okay only Barclays and HSBC is left now). Taxpayers will pay 37 billion £ for majority stack in the banks. RBS is to raise £20bn, £17bn will be put into HBOS and Lloyds TSB. Barclays intends to raise £6.5bn without government help. There are no free lunches now.. HBOS, Lloyd TSB and RBS will not pay cash bonuses this year and all future bonuses will be paid in stocks. This will prevent bankers to take short term goals and high risks.

Western developed countries were advocates of ‘free market’ and had forced some of asian economies to open their market for global firms. Now in their own backyard one of the ‘globalized’ firm has gone burst and they are now planning to ‘sue’ the country who now owned the global firm. The country in question is United Kingdom and it’s Prime Minister is furious that Icelandic bank operated in UK, which accepted deposits from UK nationals, invested in UK economy by providing loans to/buying stacks in major retailers, and when it goes burst couldn’t honour their debt. First of all why UK government councils didn’t keep their money in UK banks rather than ‘investing’ taxpayer’s money to foreign banks? What was the reason is it because of ‘greed’ or they didn’t have faith in UK banks? Councils kept millions of £ as investment in banks and kept raising council tax year after year. Now if councils couldn’t recover that money from Icelandic banks they will be forced to increase council tax aga...

It’s not fare to blame all on US banks for the credit mess created all over world. Isn’t it? European banks too should share some responsibilities for the credit crunch problems. To start with US banks are blaming European counterpart for hoarding cash and not giving fresh loans to them. But do they have cash to give others in first place? Remember ‘not to be a donor if you are bleeding’ Here is what Bloomberg data says - RBS, Barclays, Lloyds TSB Group Plc and the U.K.'s three other biggest banks need to repay as much as 54 billion pounds of debt by the end of March 2009 as par the reports on Bloomberg. The total, which includes bonds, loans and commercial paper, is triple the debt repaid in the same period a year earlier. RBS has about 11.5 billion pounds of obligations coming due in the next six months, while Barclays has 15.9 billion pounds maturing, according to data compiled by Bloomberg. Before going to press, RBS and Barclays are at doorsteps of Chancellor of the Exchequer ...

We have heard of n number of investment banks, retail banks and few insurance firms going down the drain because of ‘credit crunch’. Now it’s turn for few countries for a change. Reports are Iceland and Pakistan is near collapse if they do not act quickly.  To start with Pakistan is near defaulting its debt. Pakistan 's credit rating was cut by Standard & Poor's, which cited doubts about the country's ability to meet $3 billion in debt-servicing costs in the coming year. Rumours are that Pakistan 's President Asif Ali Zardari is seeking $100 billion to overcome the nation's economic crisis. And I wonder where from he will get that amount of money when US congress itself is unpleased of giving 700billion$ to their own banks and insurance firms. The nation is running short of money to repay state debt. Pakistan 's foreign exchange reserves fell to $8.14 billion as of Sept. 27 from $8.80 billion a week earlier, central bank data show. That is less than ha...

In line with my earlier post ( Are we done yet? ) last weekend saw 3 big announcements in Europe . Bradford and Bignley , UK ’s biggest mortgage provider to buy-to-let and self-certified buyers, had to be rescued by UK government or Tax payers which ever way you want to look at it. Across English Channel , things were not quite good though. Germany (along with some private players) had to bail out Hypo Real Estate Holding . HREH is Germany ’s second biggest real-estate lender. It took three countries ( Netherlands , Belgium and Luxembourg ) to bail out Fortis (11.2 billion Euro). The deal will see Belgium contribute 4.7bn euros (£3.7bn), the Netherlands 4bn Euros (£3.2bn) and Luxembourg 2.5bn Euros (£2bn).