Subprime Stories

MAY 2008

15 May

Barclays takes a further £1bn writedown on assets.






12 May

HSBC reveals a further $3.2bn of losses linked to the US sub-prime market.






APRIL 2008

22 April

The UK's second largest bank, RBS, reveals £5.9bn in writedowns from the credit crunch, and asks its shareholders for an additional £12bn to rebuild its capital base.




18 April

Citigroup reveals another $12bn in sub-prime losses, bringing its total to $40bn, the most of any bank. It cuts 9000 jobs amid a quarterly loss of $5bn, down from $9.8bn in the previous quarter.

17April

US investment bank Merrill Lynch reveals an additional $4.5bn in credit writedowns and a loss of nearly $2bn in the first quarter of the year.




1 April

Swiss bank UBS reveals a further $19bn of asset writedowns. This came on top of the $18.4bn which it announced for 2007.




1 April

Germany's Deutsche Bank warns of credit losses of $3.9bn in the first three months of 2008.


Read the full story


MARCH 2008

31 March

US Treasury announces major package to reform regulation of US financial markets and prevent future financial crises. The plans are criticised by consumer groups but generally praised on Wall Street.




18 March

Wall Street investment banks Goldman Sachs and Lehman Brothers reveal that their first quarter profits have been halved by the credit crunch.

But stocks rise on the news that their results have not been as bad as expected.




17 March

Wall Street investment bank Bear Stearns is acquired by JPMorgan Chase for $240m, a fraction of its share price, in deal backed by $30bn in Fed loans.

The bank got into trouble over its huge exposure to sub-prime mortgage-backed securities.



14 March

Bear Stearns receives emergency funding, after its exposure to mortgage-backed investments undermined confidence in the bank.



14 March

Investment fund Carlyle Capital fails as the credit crisis spreads from sub-prime related products to other mortgage-backed investments.



11 March

Central banks make another coordinated attempt to ease conditions in the credit markets, by announcing $200bn of new emergency lending for banks.



7 March

The former bosses of Merrill Lynch and Citigroup are questioned by a Congressional panel over their bumper pay - despite huge, sub-prime related bosses at their banks.



6 March

A £1bn hedge fund run by Peloton Partners collapsed, after it struggled to meet interest payments due to the credit crisis.



5 March

France's biggest retail bank Credit Agricole announced a fourth quarter loss hit by a 3.3bn euro charge at its investment banking boss, Calyon.



3 March

HSBC announced a $17.2bn (£8.7bn) loss after the decline in the US housing market hit the value of its loans.





FEBRUARY 2008
14 February

Commerzbank, Germany's second-biggest bank, cuts $1.1bn off the value of investments linked to the sub-prime mortgage crisis and warns its losses could worsen.


Swiss investment bank UBS confirms it has made a loss of $4bn in 2007 after cutting the value of investments by $18.4bn.


13 February

Britain's Bradford & Bingley cuts the value of its sub-prime mortgage-related investments by £144.4m ($284.5m). A few weeks earlier it had said it did not expect to suffer any write-downs.



Japan's financial watchdog says Japanese banks suffered losses of $5.6bn by the end of 2007. These have more than doubled in the last three months of the year.


12 February


Swiss bank Credit Suisse says losses on sub-prime investments were $1.8bn, less than originally expected.


10 February

Leaders from the G7 group of industrialised nations say worldwide losses from the US mortgage crisis could reach $400bn.


8 February

Deutsche Bank announces $3.2bn of sub-prime write-downs in the third quarter of the financial year and predicts there is not much more to come.



7 February

US Federal Reserve boss Ben Bernanke expresses concern about bond insurers that guarantee against defaults on mortgage loans.


6 February

Wall Street sees its worst share losses in almost a year, amid fears that the worst US housing slump in 25 years is crippling the wider economy.


5 February

US financial firm GMAC, which owns sub-prime lender Residential Capital, says it has made a $2.3bn loss in 2007, compared with a $2.1bn profit the year before.


JANUARY 2008

31 January

Bond insurer MBIA announces a $2.3bn loss, its biggest yet for a three-month period. It was hit by declines in the value of US mortgage-backed debt, which it guarantees against.


30 January

The US Federal Reserve cuts interest rates to 3% from 3.5%. It is the second cut in nine days. US economic growth slows.


29 January

The US Federal Bureau of Investigation launches an investigation into 14 companies involved in the sub-prime mortgage crisis.


Pub chain owner Mitchells & Butlers loses £274m when a property deal falls through due to the credit crisis.


28 January

Belgian bank Fortis warns its losses connected to bad US mortgage debt could be as high as $1.47bn.


25 January

Barclays Capital predicts banks will need to raise as much as $143bn to weather the credit crisis.


23 January

The Bank of China dismisses rumours it was about to unveil massive losses caused by its exposure to the US sub-prime mortgage market.


22 January

The US Federal Reserve cuts interest rates by half a percentage point to 3.5%, it's biggest cut in 25 years.


21 January

Global stock markets, including London's FTSE 100 index, suffer their biggest falls since 11 September 2001.

21 January

German Bank WestLB warns investors that it expects to write down $1.45bn of investments and make a net loss of a similar amount.


18 January

Scottish Equitable introduces delays for investors wanting to withdraw money from its commercial property funds, citing recession and sub-prime worries.


17 January

Merrill Lynch unveils a $14.1bn write-down of investments linked to sub-prime mortgages and posts a net loss of $7.8bn in 2007.


Investment bank Lehman Brothers cuts 1,300 jobs as it scales back its US mortgage lending business.



16 January

US bank JP Morgan Chase says it has cut the value of its mortgage-related investments by $1.3bn. Profits for the last three months of 2007 fall by a third.


15 January
Citigroup, the largest bank in the US, reports a $9.8bn loss for the fourth quarter and writes down $18bn in sub-prime losses. It also announces further investments in the group by Kuwait and Saudi Arabia.



UBS has said that the crisis had cost it about $13.5bn in total
11 January

Swiss investment bank UBS warns that is still does not know the scale of its total losses from the sub-prime crisis and says it might make a loss in 2007 when it reports its full results.


Federal Reserve boss Ben Bernanke says that the outlook for the US economy is deteriorating among continuing worries about the sub-prime crisis.


The largest mortgage lender in the US, Countrywide, which pioneered sub-prime mortgages, is bought by Bank of America for $4bn after its shares plunge 48%.


9 January

Bear Stearns boss James Cayne steps down after the firm reveals $1.9bn in sub-prime losses, the largest in its history.



World Bank says that world economic growth will slow in 2008 due to credit crunch, but strong performance in China and India will cushion impact.


7 January

President George W Bush admits that the credit crunch could slow the US economy in 2008, but says it is still fundamentally strong.


US economists urge government action to ease looming US economic slowdown as a result of credit crunch.


4 January

US unemployment rises sharply as job report sparks fall in stock market


DECEMBER 2007
19 December

Morgan Stanley writes off $9.4bn in sub-prime losses and sells a 9.9% stake in the company to the Chinese state investment company CIC for $5bn to rebuild its capital.


18 December

The US Federal Reserve Bank tightens rules on sub-prime lending, requiring mortgage companies to check more carefully on customers' income and give full disclosure of the cost of the loan.


ECB lends European commercial banks $500bn over the Christmas period to help ease the credit crisis.


Bank of England makes £10bn available to UK banks to ease credit crunch.


17 December

US central bank, the Federal Reserve, makes $20bn available to commercial banks at auction to help ease the credit crunch.


Former Fed chairman Alan Greenspan urges the US government to give direct aid to homeowners hit by the sub-prime crisis.


14 December

Citigroup takes $49bn worth of sub-prime debts back on its balance sheets, effectively closing seven structured investment vehicles (SIVs) which had relied on money market funding.


13 December

World central banks agree coordinated action to inject at least $100bn into short-term inter-bank credit markets to restore confidence.


11 December

US central bank, the Federal Reserve, cuts interest rates for a third time to 4.25% to ease the credit crunch.


10 December

Swiss bank UBS reports a further $10bn write-down caused by bad debts in the US housing market.


Lloyds TSB reveals that bad debt linked to the US sub-prime mortgage crisis will cost it £200m.


6 December

President George W Bush outlines plans to protect more than a million homeowners hit by the US housing slump.


Royal Bank of Scotland warns it will write off about £1.25bn because of exposure to the US sub-prime market.


The Bank of England cuts UK interest rates for the first time since 2005, amid signs that the economy is slowing.


The European Central Bank keeps interest rates in the eurozone at their current level of 4%.


4 December

US mortgage giant Fannie Mae is to issue $7bn of shares to cover losses linked to the housing market.


Canada cuts interest rates for the first time since April 2004 amid credit fears.


The future of the UK mortgage industry remains bright, despite the current funding crisis, say lenders.


UK mortgage lenders should prepare for the global credit crunch to get much worse, the City watchdog says.


3 December

Credit agency Moody's widens its debt review, having already earmarked $116bn of debt for downgrading.



November 2007
30 November

US construction spending falls sharply, led by a large fall in the building of private homes.


Morgan Stanley co-president Zoe Cruz is to retire, seen as the latest casualty of the US sub-prime crisis.





27 November

US mortgage guarantor Freddie Mac is selling $6bn of shares to cover further bad debt losses.



Citigroup agrees to sell shares worth $7.5bn to an investment fund owned by Abu Dhabi.





22 November

UK lender Kensington Mortgages withdraws its entire range of sub-prime mortgages because of market conditions.


The Nationwide, the UK's largest building society, benefits from being seen as a haven from troubled banks.


20 November

US mortgage guarantor Freddie Mac sets aside $1.2bn to cover bad loans and reports a $2bn loss.




UK buy-to-let mortgage lender Paragon sees its shares fall nearly 40% after revealing funding difficulties.




19 November

Northern Rock says bids to buy bank are "below current market value."


Swiss Re expects to lose $1bn on insurance a client took out against any fall in the value of its mortgage debt.


16 November

Goldman Sachs forecasts sub-prime losses for entire financial sector at $400bn (£200bn).


Northern Rock's boss resigns




15 November

Barclays says it had written down £1.3bn ($2.6bn) in sub-prime losses.



US House of Representatives passes Predatory Lending and Mortgage Protection Act by lopsided majority.



14 November

HSBC raised its sub-prime bad debt provision by $1.4bn (£670m) to $3.4bn.




Mizuho, Japan's second largest banking group, saw a 17% drop in first-half net profits and cut its full-year operating profit forecast by 13%, largely as a result of sub-prime-related losses at its securities arm.

13 November

Bank of America writes off $3bn in sub-prime losses.


12 November

The three biggest US banking groups - Citigroup, Bank of America and JPMorganChase - agree a $75bn superfund to restore confidence to credit markets.


9 November

US's fourth largest lender Wachovia revealed a $1.1bn loss due to decline in value of its mortgage debt plus $600m to cover loan losses (total $1.7bn, £829m).


8 November

Morgan Stanley unveiled a $3.7bn loss from its US sub-prime mortgage exposure.


BNP Paribas (after temporarily freezing hedge funds with $2.1bn in assets under management in August) revealed it had written down 301m euro ($439m, £214m) because of credit problems, including $197m related to US sub-prime and home builder lending.




5 November

Banking giant Citigroup announces fresh losses of between $8bn and $11bn because of exposure to the US sub-prime market. Chief executive and chairman Charles Prince resigns.


1 November

Credit Suisse revealed a $1bn write-down on bad debts.




October 2007
31 October

Federal Reserve delivers second rate cut to boost markets


Deutsche Bank revealed a 2.16bn euros ($3bn, £1.6bn) write-down on bad debts.

30 October

Merrill Lynch takes a $7.9bn hit following exposure to bad debt. Its chief executive, Stan O'Neal, resigns.







16 October

Northern Rock executives defend role at Treasury Select Committee




15 October

Citigroup writes down additional $5.9bn on exposure to the US sub-prime market.

Japanese bank Nomura announced the closure of its US mortgage-backed securities business and takes a $621m (£299m) hit.

14 October

US banks holding secret talks at US Treasury float idea of a new super-fund to revive the frozen credit markets.





5 October

Investment bank Merrill Lynch reveals $5.6bn sub-prime loss


1 October

Swiss bank UBS revealed losses of $3.4bn in its fixed income and rates division, and in its mortgage-backed securities business, while Citigroup admits $.31bn in losses.



September 2007
26 September

Commercial banks shun Bank of England rescue fund



22 September

UK Chancellor Alistair Darling suggests government will consider boosting deposit savings guarantee to £100,000.



20 September

Deutsche Bank boss Josef Ackermann warns of losses from sub-prime exposure.




Goldman Sachs makes a profit by betting that mortgage-backed securities will fall despite $1.5bn exposure.






18 September

The US Federal Reserve cuts interest rates to 4.75% from 5.25% to try to energise financial markets.



Savers return to Northern Rock after the government guarantees all savings.


15 September

Thousands of depositors queue outside Northern Rock branches to try and get their money out.


14 September

Shares in Northern Rock plummet after news of its Bank of England rescue is announced.


13 September

The BBC revealed that Northern Rock had asked for and been granted emergency financial support from the Bank of England, in the latter's role as lender of last resort.


11 September

ECB president Jean-Claude Trichet blames rating agencies for sub-prime crisis but says EU economy sound.


US Treasury Secretary Hank Paulson says mortgage lenders are to blame for sub-prime crisis.


6 September

ECB injects fresh cash into markets as credit fears intensify. Total intervention has now reached 250bn euros ($300bn, £150bn).


4 September

Bank of China reveals $9bn in sub-prime losses but Chinese government says its foreign exchange reserves will not be affected.


Overnight bank lending dries up as banks fear defaults from each other


3 September

German regional lender IKB recorded a $1bn loss as a result of exposure to the US sub-prime market.



August 2007
31 August

President Bush, flanked by Treasury Secretary Hank Paulson and Fed chief Ben Bernanke, pledges to ease sub-prime lending crisis.


30 August


German Chancellor Angela Merkel criticised credit ratings agencies for not spotting problems on the market.


28 August

The German regional bank Sachsen Landesbank is rapidly sold to Germany's biggest regional bank, Landesbank Baden-Wuerttemberg. It came close to collapsing under its exposure to sub-prime debt. It received a 17bn euro lifeline.


23 August

Leading sub-prime lender Countrywide gets $2bn cash injection from Bank of America.


Shares slump after Countrywide warns that mortgage slump is getting worse.


Leading US and European banks borrow $2bn from Federal Reserve


21 August

Sharp rise in US home repossessions as sub-prime borrowers default.


Capital One cuts jobs as sub-prime crisis bites.


20 August
Countrywide cuts jobs as sub-prime crisis hits.


US mortgage lender sells assets



UK sub-prime lenders tighten up lending terms.



17 August

The US Federal Reserve cut the interest rate at which it lends to banks (the discount rate) by half a percentage point to help banks deal with credit problems.


BNP Paribas says sub-prime losses in hedge funds will not impact on quarterly profits.


16 August

Countrywide draws on its entire $11.5bn credit line as liquidity crisis looms. Australian mortgage lender Rams also admits liquidity problems.


15 August

Shares plunge in largest mortgage lender Countrywide on fears it will go bankrupt


13 August

Wall Street giant Goldman Sachs said it would pump $3bn into a hedge fund hit by the credit crunch to help shore up its value.



The European Central Bank pumps 47.7bn euros into the money markets, its third cash injection in as many working days. Central banks in the US and Japan also topped up earlier injections.

10 August

Global stock markets stayed under intense pressure over sub-prime fears. London's FTSE 100 index had its worst day in more than four years, closing 3.7% lower.


The ECB provided an extra 61bn euros of funds for banks. The US Fed said it would provide as much overnight money as would be needed to combat the credit crunch.

9 August

Short-term credit markets freeze up after French bank BNP Paribas suspends three investment funds worth 2bn euros, citing problems in the US sub-prime mortgage sector. BNP said it could not value the assets in the fund, because the market had disappeared. The European Central Bank pumps 95bn euros into the eurozone banking system to ease the sub-prime credit crunch. The US Federal Reserve and the Bank of Japan take similar steps


6 August

American Home Mortgage, one of the largest US independent home loan providers, filed for bankruptcy after laying off the majority of its staff. The company said it was a victim of the slump in the US housing market that had caught out many sub-prime borrowers and lenders.


3 August

Shares fall heavily on fears of sub-prime losses and global credit crunch.


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July 2007
31 July

Bear Stearns stopped clients from withdrawing cash from a third fund, saying it has been overwhelmed by redemption requests. The lender also filed for bankruptcy protection for the two funds it had to bail out earlier.

27 July

Worries about the sub-prime crisis hammered global stock markets and the main US Dow Jones stock index slipped.


26 July

Bear Stearns seized assets from one of its problem-hit hedge funds as it tried to stem losses. Shares fell 4.2% in five sessions, its worst weekly decline in almost five years.


24 July

Rising defaults on sub-prime loans hit profits at Countrywide, largest mortgage lender.


20 July

Federal Reserve chairman Ben Bernanke warned that the crisis in the US sub-prime lending market could cost up to $100bn.


19 July


Fed comments shake global shares


18 July

Bear Stearns told investors that they will get little, if any, money back from the two hedge funds that the lender was forced to rescue.

13 July

US industrial firm General Electric decided to sell the WMC Mortgage sub-prime lending business that it had bought in 2004. "The mortgage industry has greatly changed since the purchase of WMC," said its chief executive, Laurent Bossard.

10 July

Independent market analyst Datamonitor said UK sub-prime mortgages were set to grow faster than mainstream mortgages, with the market worth some £31.5bn by 2011.

4 July

The UK's Financial Services Authority (FSA) said it would take action against five brokers selling sub-prime mortgages, claiming they offered loans to people who should not be given them.


June 2007
29 June

Bear Stearns fires its head of asset management and hires Jeffrey Lane find out what went wrong at its hedge funds.



22 June

Bear Stearns revealed it had spent $3.2bn (£1.5bn) bailing out two of its funds exposed to the sub-prime market. The bailout of the fund was the largest by a bank in almost a decade.



14 June

Senior US legislator Barney Frank says Fed could lose its authority to regulate mortgage business.



May 2007
30 May

UK sub-prime lender Kensington agrees takeover





3 May

GM finance unit loses heavily on sub-prime mortgages


UBS closes its US sub-prime lending arm, Dillon Read Capital Management.



April 2007
17 April

US government-backed lenders try to tackle sub-prime crisis


2 April

US home sales fall sharply


New Century Financial filed for Chapter 11 bankruptcy protection after it was forced by its backers to repurchase billions of dollars worth of bad loans. The company said it would have to cut 3,200 jobs, more than half of its workforce, as a result of the move.



March 2007
16 March

US-based sub-prime firm Accredited Home Lenders Holding said it would sell $2.7bn of its sub-prime loan book - at a heavy discount - in order to generate some cash for its business.



13 March

Wall Street hit by sub-prime fears


12 March

Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.


8 March

Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.



February 2007
22 February

HSBC fires head of its US mortgage lending business as losses reach $10.5bn.