A round-up of other banking crisis news in brief
Argentine markets fall sharply
Argentine markets fell sharply yesterday ahead of an expected announcement that the government planned to nationalise the country's 10 private pension funds, which have been severely hit by the global financial turmoil.
The Merval stock index plunged 12 per cent to its lowest since 1998 and bonds fell 14 to26 per cent. Guido Bizzozero, analyst at brokerage Allaria Ledesma, said: "They're destroying what little is left of capital markets in Argentina."
Argentina crashed to the world's biggest sovereign default in 2001 and has been shut out of international capital markets ever since. Fears had surfaced in recent months that it would struggle to meet its total financing needs next year of $21 billion, including $11bn-$14bn in upcoming debt maturities, and could be heading for a new default.
The government denied such a risk. - ( Financial Timesservice)
Hungary raises interest rates
Hungary's central bank has raised interest rates 300 basis points in an emergency bid to shore up its currency as officials signalled it was in talks with the IMF for help to ride out the crisis.
Just two days after a no- change vote at its regular meeting, the bank stepped in as the forint slumped close to an all-time low against the euro, raising its benchmark interest rate to 11.5 per cent.
The forint bounced 2 per cent on the move, but quickly slid back as investors continued to sell on concerns over the health of Hungary's banking system and its ability to finance a large external debt amid the global credit crunch. Analysts said the economy would pay heavily for the rate rise. - (Reuters)
Oil prices down 7% to 16-month low
Oil dropped more than 7 per cent yesterday, touching a new 16-month low as rising US fuel inventories added to signs a global economic slowdown has dragged down demand.
US crude settled down $5.43 at $66.75 a barrel, after earlier touching $66.20, its lowest since June 14th, 2007. London Brent crude settled $5.20 lower at $64.52 a barrel.
Oil has plunged more than 50 per cent from its record high above $147 in July as the financial crisis cuts energy demand in the United States and other industrial countries.
Gloom about the global economic outlook could limit the impact of any Opec cuts at an emergency meeting tomorrow. - (Reuters)
Danske bank downgraded to 'negative'
Danish bank Danske, owner of National Irish Bank, has had its outlook downgraded to "negative" from "stable" by credit ratings agency, Standard & Poor's, blaming in part the "sharp deterioration" in the quality of the bank's assets in its Irish operations. Danske wrote off about €80 million worth of NIB's loans in the third quarter, compared to loan losses of €25 million in the first half of the year. The third-quarter write-off amounted to an annualised bad debt charge of 3.16 per cent. The main Irish banks are forecasting loan losses to reach as high as 0.8-0.9 per cent of loans at the peak of the bad debt cycle.
"The outlook revision . . . also reflects the sharp deterioration in the asset quality of the bank's operations in Ireland," said S&P "although these form a relatively small part of its total portfolio."
