UK prime minister Gordon Brown last month unveiled a second bank rescue package including powers for the Bank of England to lend up to £50bn ($70.6bn) directly to businesses. He accused the Royal Bank of Scotland of taking “irresponsible risks” as the bank reported an annual loss of £28bn, the biggest corporate loss in UK history.
Overseas banks reduced outstanding loans to UK banks by 20% in the four months to November 2008, the Bank of England said last month. This sharp reduction came largely from banks based in the EU.
The Bank of England was last month given permission to print money and buy assets of up to £50bn directly from companies and banks. This measure should help to meet the bank’s inflation target, the monetary policy committee said.
Ratings agency Standard and Poor’s dropped Spain’s long-term sovereign debt rating by one notch to AA+ due to a deterioration of the country’s public finances. It is the first country since Japan in 2001 to lose its AAA credit rating.
Shares in Allied Irish Banks and Bank of Ireland halved amid fears that the Irish government may be forced to nationalise its two largest domestic lenders. The government announced it was nationalising Anglo Irish Bank, the country's third-largest bank, last month.
Japan’s samurai bond market is expected to reopen as credit markets show signs of stabilising, helped by government guarantees on bond issues. The first bonds likely to be issued were widely expected to be from Australian banks Westpac Banking and ANZ Banking Group.
Fitch Ratings downgraded the long-term rating of Global Investment House, a high-profile Kuwaiti bank with $10bn-worth of assets under management, from BBB to C. The downgrade came after the bank failed to meet an estimated $200m international loan repayment deadline.
Bank of America was expected to make several thousand employees in its capital markets businesses redundant, according to the Financial Times. The move comes after the bank asked the US government for a further $20bn injection to help digest the purchases of Merrill Lynch.
