John Thain
Joined Merrill Lynch as CEO after the major crisis. Merged the company with Bank of America.
But agreed to leave Merrill after Merrill had a unexpectedly large $15.4 billion fourther quarter loss.
Showing posts with label Sub-prime-trouble. Show all posts
Showing posts with label Sub-prime-trouble. Show all posts
Friday, January 23, 2009
Wednesday, December 10, 2008
Goldman Sachs Laid Off Thousands in 1st week of November 2008
Goldman Sachs notified roughly 3,200 employees this week that they have been laid off. It was part of previously announced and reported plans to slash 10 percent of the firm’s global work force.
Goldman has quietly and slowly cut jobs all year. The bank laid off hundreds of M&A support staff and junior bankers in June due to slowing markets, following a round of leveraged lending and mortgage securities cuts in April.
Early this year, Goldman cut 1,500 people, or 5 percent of its staff, following 2007 performance reviews.
A typical commnet by a GS employee
As someone who was let go from GS on Wednesday, I can tell you that the process was not very pleasant. They came in the morning, took us out, processed our paperwork and that was it. No goodbyes, no thanks for your contribution, no ability to go back to get our belongings. To make matters worse, no bonus will be given (assuming one is given to those still working there) even though we accrued the bonus for 11 of the 12 months. Makes me think that they wanted to keep the bonus pool high for existing employees, so they get rid of those who would be getting a bonus in 3 weeks - that is what truly sucks.
— Posted by Jessop
For more comments by GS employees
Visit
http://dealbook.blogs.nytimes.com/2008/11/06/goldman-sachs-laid-off-thousands-this-week-report-says/
Goldman has quietly and slowly cut jobs all year. The bank laid off hundreds of M&A support staff and junior bankers in June due to slowing markets, following a round of leveraged lending and mortgage securities cuts in April.
Early this year, Goldman cut 1,500 people, or 5 percent of its staff, following 2007 performance reviews.
A typical commnet by a GS employee
As someone who was let go from GS on Wednesday, I can tell you that the process was not very pleasant. They came in the morning, took us out, processed our paperwork and that was it. No goodbyes, no thanks for your contribution, no ability to go back to get our belongings. To make matters worse, no bonus will be given (assuming one is given to those still working there) even though we accrued the bonus for 11 of the 12 months. Makes me think that they wanted to keep the bonus pool high for existing employees, so they get rid of those who would be getting a bonus in 3 weeks - that is what truly sucks.
— Posted by Jessop
For more comments by GS employees
Visit
http://dealbook.blogs.nytimes.com/2008/11/06/goldman-sachs-laid-off-thousands-this-week-report-says/
Tuesday, August 26, 2008
Cost Reduction Measures – Investment Banks – 2008
Globally financial firms have reduced head count by 1,01,250 since beginning of credit crunch.
Citibank
Citigroup has cut about 14,000 jobs in the first half of 2008.
Citigroup is scaling down external training.
Purchases of computer hardware and software needs to be preapproved.
Blackberry buying requires preapproval.
All nonclient travel requires preapproval.
Off site meetings of employees cutback.
Colour copying limited to client presentations
Efficiency in spending is priority.
(According to contents of an internal memo published in the UK’s Daily Telegraph.)
Deutsche Bank
Business meas must not exceed 50 pounds per person ($92).
Dealmakers to get approval for taxi journeys in advance from their manager.
(According to Independent news paper)
UBS
UBS has made cost reduction program as a part of its new organization change initiative
(http://www.efinancialnews.com/homepage/index/content/2451589688)
Operating expenses
2nd Quater 08 vs 2nd Quarter 07:
Total operating expenses declined by 36%, falling to CHF 2,931 million from CHF 4,565 million.
A 56% decline in personnel expenses, to CHF 1,494 million, reflects lower accruals for performance-related compensation and an adjustment relating to changes to the forfeiture provisions of future equity ownership plan (EOP) awards. Salary costs also declined as personnel were reduced by 2,662 full-time equivalents.
General and administrative expense decreased by 17% to CHF 784 million, with reductions in a number of expense lines. The most notable reductions were in travel and entertainment, and IT and outsourcing, and are largely attributable to the ongoing cost reduction program.
(http://www.ubs.com/1/e/investors/08q2/0014/0016.html)
Merrill Lynch
1st quarter 2008
Compensation Expenses
Compensation and benefits expenses were $4.2 billion for the first quarter of 2008, down 14 percent from $4.9 billion in the first quarter of 2007, due to a decline in compensation expense accruals reflecting lower net revenues.
The firm intends to reduce its headcount from year-end levels by approximately 4,000 employees, or 10 percent, excluding FAs and investment associates. Headcount reductions will be targeted in GMI and support areas, and will not impact the firm's financial advisor or investment associate population. Cost savings from this reduction are expected to be approximately $800 million on an annualized basis, including approximately $600 million for the remainder of 2008. As a result, the firm expects to record a restructuring charge of approximately $350 million in the 2008 second quarter.
(http://www.ml.com/index.asp?id=7695_7696_8149_88278_95339_96026)
Citibank
Citigroup has cut about 14,000 jobs in the first half of 2008.
Citigroup is scaling down external training.
Purchases of computer hardware and software needs to be preapproved.
Blackberry buying requires preapproval.
All nonclient travel requires preapproval.
Off site meetings of employees cutback.
Colour copying limited to client presentations
Efficiency in spending is priority.
(According to contents of an internal memo published in the UK’s Daily Telegraph.)
Deutsche Bank
Business meas must not exceed 50 pounds per person ($92).
Dealmakers to get approval for taxi journeys in advance from their manager.
(According to Independent news paper)
UBS
UBS has made cost reduction program as a part of its new organization change initiative
(http://www.efinancialnews.com/homepage/index/content/2451589688)
Operating expenses
2nd Quater 08 vs 2nd Quarter 07:
Total operating expenses declined by 36%, falling to CHF 2,931 million from CHF 4,565 million.
A 56% decline in personnel expenses, to CHF 1,494 million, reflects lower accruals for performance-related compensation and an adjustment relating to changes to the forfeiture provisions of future equity ownership plan (EOP) awards. Salary costs also declined as personnel were reduced by 2,662 full-time equivalents.
General and administrative expense decreased by 17% to CHF 784 million, with reductions in a number of expense lines. The most notable reductions were in travel and entertainment, and IT and outsourcing, and are largely attributable to the ongoing cost reduction program.
(http://www.ubs.com/1/e/investors/08q2/0014/0016.html)
Merrill Lynch
1st quarter 2008
Compensation Expenses
Compensation and benefits expenses were $4.2 billion for the first quarter of 2008, down 14 percent from $4.9 billion in the first quarter of 2007, due to a decline in compensation expense accruals reflecting lower net revenues.
The firm intends to reduce its headcount from year-end levels by approximately 4,000 employees, or 10 percent, excluding FAs and investment associates. Headcount reductions will be targeted in GMI and support areas, and will not impact the firm's financial advisor or investment associate population. Cost savings from this reduction are expected to be approximately $800 million on an annualized basis, including approximately $600 million for the remainder of 2008. As a result, the firm expects to record a restructuring charge of approximately $350 million in the 2008 second quarter.
(http://www.ml.com/index.asp?id=7695_7696_8149_88278_95339_96026)
Criticism of Federal Reserve - Becoming Strident
Willem Buiter, Ex-Chief Economist at the European Bank for Reconstruction and Development criticized Fed in a paper "Central Banks and Financial Crises" presented at Jackson Hole economics symposium.
He charged the US Fed with messing up its response to the credit crisis and being close to and captured by interests on Wall street.
He argues that rate cuts the Fed has announced so far are due to Fed's desire to stop the slide in share prices, a desire that reflected too close proximity to Wall street.
He charged the US Fed with messing up its response to the credit crisis and being close to and captured by interests on Wall street.
He argues that rate cuts the Fed has announced so far are due to Fed's desire to stop the slide in share prices, a desire that reflected too close proximity to Wall street.
Saturday, August 2, 2008
IMF Global Financial Stability Report Update July 2008
Losses of the Financial system due to Subprime troube $1 trillion
In April, the IMF said that banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets lost most of their value - and it is still sticking to that estimate.
The current report says that that the banks have now acknowledged these risks and written off nearly $500bn worth of assets.
http://www.imf.org/external/pubs/ft/gfsr/2008/01/index.htm
http://www.imf.org/external/np/tr/2008/tr080728.htm
IMF Global Financial Stability Report Quarterly Update July 2008
At the moment however with delinquencies and foreclosures raising rapidly and house prices continuing to fall, a bottom for the housing market in the United States is not yet visible and the credit deterioration is spreading to even prime mortgage loans. Housing prices are also softening in a number of European economies, prompting concerns over future loan losses in the mortgage, construction, and commercial property sectors in those countries.
On the positive side, despite banks' write-downs now exceeding $400 billion in aggregate, banks have generally been successful in raising capital and balance sheets of the banks are adjusting. In fact, the equity raised covers upwards of three-fourths of the write-downs to date . Regarding the estimate of total mark-to-market losses that we published in our April GFSR, market prices of asset-backed securities and the ongoing delinquency experience give us little reason to change these estimates, so we have not revised the estimates on this occasion.
A question and clarification in the press conference by IMF July 2008
QUESTION: I just wanted one quick point of clarification. The loss that you were talking about that you haven't adjusted is the $1 trillion one.
MR. CARUANA: Yes, the figure that I was referring to in terms of losses was the calculation that we presented in our April GFSR of nearly $1 trillion in losses. We think that this figure is probably right and we have not changed it.
In April, the IMF said that banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets lost most of their value - and it is still sticking to that estimate.
The current report says that that the banks have now acknowledged these risks and written off nearly $500bn worth of assets.
http://www.imf.org/external/pubs/ft/gfsr/2008/01/index.htm
http://www.imf.org/external/np/tr/2008/tr080728.htm
IMF Global Financial Stability Report Quarterly Update July 2008
At the moment however with delinquencies and foreclosures raising rapidly and house prices continuing to fall, a bottom for the housing market in the United States is not yet visible and the credit deterioration is spreading to even prime mortgage loans. Housing prices are also softening in a number of European economies, prompting concerns over future loan losses in the mortgage, construction, and commercial property sectors in those countries.
On the positive side, despite banks' write-downs now exceeding $400 billion in aggregate, banks have generally been successful in raising capital and balance sheets of the banks are adjusting. In fact, the equity raised covers upwards of three-fourths of the write-downs to date . Regarding the estimate of total mark-to-market losses that we published in our April GFSR, market prices of asset-backed securities and the ongoing delinquency experience give us little reason to change these estimates, so we have not revised the estimates on this occasion.
A question and clarification in the press conference by IMF July 2008
QUESTION: I just wanted one quick point of clarification. The loss that you were talking about that you haven't adjusted is the $1 trillion one.
MR. CARUANA: Yes, the figure that I was referring to in terms of losses was the calculation that we presented in our April GFSR of nearly $1 trillion in losses. We think that this figure is probably right and we have not changed it.
Subprime Security and Credit Losses
Citigroup: $40.7bn
UBS: $38bn
Merrill Lynch: $31.7bn
HSBC: $15.6bn
Bank of America: $14.9bn
Morgan Stanley $12.6bn
Royal Bank of Scotland: $12bn
JP Morgan Chase: $9.7bn
Washington Mutual: $8.3bn
Deutsche Bank: $7.5bn
Wachovia: $7.3bn
Credit Agricole: $6.6bn
Credit Suisse: $6.3bn
Mizuho Financial $5.5bn
Bear Stearns: $3.2bn
Barclays: $3.2bn
UBS: $38bn
Merrill Lynch: $31.7bn
HSBC: $15.6bn
Bank of America: $14.9bn
Morgan Stanley $12.6bn
Royal Bank of Scotland: $12bn
JP Morgan Chase: $9.7bn
Washington Mutual: $8.3bn
Deutsche Bank: $7.5bn
Wachovia: $7.3bn
Credit Agricole: $6.6bn
Credit Suisse: $6.3bn
Mizuho Financial $5.5bn
Bear Stearns: $3.2bn
Barclays: $3.2bn
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.
.
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.
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.
.
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.
Thursday, July 31, 2008
Citi Group - Management of Sub Prime Fallout 2007-08
Citi to Cut 17,000 Jobs in Broad Overhaul
April 11, 2007,
The company announced plans to lay off more than 17,000 workers, with the first pink slips coming this week. About 9,500 jobs will be moved to locations overseas or around the United States where the cost of doing business is lower, from more expensive locations like London, Hong Kong, and New York, where the company’s headquarters are based.
Roughly 8 percent of Citigroup’s 327,000 workers, from entry-level consumer bankers to senior executives in the investment bank, will be affected by the restructuring. All five of its major business divisions will face cuts.
About 1,600 jobs will be eliminated in New York City, where Citigroup currently has about 27,000 employees.
November 26, 2007,
Citi May Start New Round of Layoffs
CNBC reported Monday morning citing unnamed sources, that no exact number was set, though some jobs were already being cut. CNBC’s Charles Gasparino said the layoffs could be between 17,000 and 45,000.
Any cuts would be on top of the 17,000 Citi announced earlier this year, which amounted to about 5 percent of the bank’s workforce.
(http://dealbook.blogs.nytimes.com/2007/11/26/citi-may-start-new-round-of-layoffs/)
July 2008
Citygroup may have to write down the value of collateralized debt obligations by $8 billion in Q3 based on Merrill Lynch deal.
Merrill sold its holding for 22 cents on the dollar, while Citi currently values the securities at 53 cents.
Citigroup Deal Ends Its SIV Saga
November 19, 2008,
Citigroup said Wednesday that it would buy about $17.4 billion in assets from structured investment vehicles, or SIVs, that were affiliated with Citi.
Citi was a pioneer in the business of SIVs, which once made lots of money by issuing short-term notes to invest in longer-term securities with higher yields. They traditionally resided off the balance sheets of the banks that created and advised them.
(http://dealbook.blogs.nytimes.com/2008/11/19/citigroup-deal-ends-its-siv-saga/)
Citigroup to Liquidate Hedge Fund, Report Says
November 19, 2008,
Citigroup is liquidating its Corporate Special Opportunities hedge fund after it lost 53 percent of its value last month, The Financial Times reported.
The C.S.O. fund managed almost $4.2 billion at its peak and has a net asset value of about $58 million and debt of about $880 million, the report said, citing investors.
http://dealbook.blogs.nytimes.com/2008/11/19/citigroup-to-liquidate-hedge-fund-report-says/
April 11, 2007,
The company announced plans to lay off more than 17,000 workers, with the first pink slips coming this week. About 9,500 jobs will be moved to locations overseas or around the United States where the cost of doing business is lower, from more expensive locations like London, Hong Kong, and New York, where the company’s headquarters are based.
Roughly 8 percent of Citigroup’s 327,000 workers, from entry-level consumer bankers to senior executives in the investment bank, will be affected by the restructuring. All five of its major business divisions will face cuts.
About 1,600 jobs will be eliminated in New York City, where Citigroup currently has about 27,000 employees.
November 26, 2007,
Citi May Start New Round of Layoffs
CNBC reported Monday morning citing unnamed sources, that no exact number was set, though some jobs were already being cut. CNBC’s Charles Gasparino said the layoffs could be between 17,000 and 45,000.
Any cuts would be on top of the 17,000 Citi announced earlier this year, which amounted to about 5 percent of the bank’s workforce.
(http://dealbook.blogs.nytimes.com/2007/11/26/citi-may-start-new-round-of-layoffs/)
July 2008
Citygroup may have to write down the value of collateralized debt obligations by $8 billion in Q3 based on Merrill Lynch deal.
Merrill sold its holding for 22 cents on the dollar, while Citi currently values the securities at 53 cents.
Citigroup Deal Ends Its SIV Saga
November 19, 2008,
Citigroup said Wednesday that it would buy about $17.4 billion in assets from structured investment vehicles, or SIVs, that were affiliated with Citi.
Citi was a pioneer in the business of SIVs, which once made lots of money by issuing short-term notes to invest in longer-term securities with higher yields. They traditionally resided off the balance sheets of the banks that created and advised them.
(http://dealbook.blogs.nytimes.com/2008/11/19/citigroup-deal-ends-its-siv-saga/)
Citigroup to Liquidate Hedge Fund, Report Says
November 19, 2008,
Citigroup is liquidating its Corporate Special Opportunities hedge fund after it lost 53 percent of its value last month, The Financial Times reported.
The C.S.O. fund managed almost $4.2 billion at its peak and has a net asset value of about $58 million and debt of about $880 million, the report said, citing investors.
http://dealbook.blogs.nytimes.com/2008/11/19/citigroup-to-liquidate-hedge-fund-report-says/
Tuesday, June 10, 2008
Lehman Expects a Quarterly Loss of $2.8 billion
Lehman Brothers reported on 9th June 2008 that it expects a quarterly loss of $2.8 billion and would raise $6 billion in capital to shore up its balance sheet. It signals that turmoil in the credit market is far from over.
It took the unusual step of disclosing its second-quarter results a week early in an effort to assuage investors' concerns.
Lehman's estimated loss of $2.8 billion, or $5.14 per share, for its second quarter, which ended March 31, compares with profit of $1.3 billion, or $2.21 per share, a year ago. This will mark the first quarterly loss since Lehman went public in 1994 and far exceeded analysts' estimates of several hundred million dollars in losses.
The losses came as the firm wrote down the value of assets on its books and lost money from its trading activities. Lehman also took a hit as its hedges -- steps taken to protect the firm from certain losses -- failed to work. Such hedges had previously blunted the blows to Lehman's bottom line.
"I am very disappointed in this quarter's results," Lehman's chairman and chief executive Richard S. Fuld Jr. said in a statement. "Notwithstanding the solid underlying performance of our client franchise, we had our first-ever quarterly loss as a public company."
Lehman is in the company of Merrill Lynch and Citigroup, which have sought billions in fresh capital as they suffered outsize losses in mortgage-related and other securities.
The firm said it had moved aggressively during the second quarter to strengthen its financial position, for instance by reducing exposure to residential and commercial mortgages and real estate investments by up to 20 percent. It also cut its exposure to loans for mergers and acquisitions by more than a third. Lehman said it had reduced its gross leverage to 25, down from 31.7 at the end of last year, meaning the firm is now borrowing $25 for every $1 of its own money.
CFO Erin Callan said Lehman does not plan to reduce leverage further and intends to use the new capital to take advantage of market opportunities in the future. Lehman reported that it is raising $4 billion through common stock, at $28 a share, and $2 billion in preferred shares that will be convertible into common stock.
Lehman plans to release the full details of its quarterly results next Monday.
It took the unusual step of disclosing its second-quarter results a week early in an effort to assuage investors' concerns.
Lehman's estimated loss of $2.8 billion, or $5.14 per share, for its second quarter, which ended March 31, compares with profit of $1.3 billion, or $2.21 per share, a year ago. This will mark the first quarterly loss since Lehman went public in 1994 and far exceeded analysts' estimates of several hundred million dollars in losses.
The losses came as the firm wrote down the value of assets on its books and lost money from its trading activities. Lehman also took a hit as its hedges -- steps taken to protect the firm from certain losses -- failed to work. Such hedges had previously blunted the blows to Lehman's bottom line.
"I am very disappointed in this quarter's results," Lehman's chairman and chief executive Richard S. Fuld Jr. said in a statement. "Notwithstanding the solid underlying performance of our client franchise, we had our first-ever quarterly loss as a public company."
Lehman is in the company of Merrill Lynch and Citigroup, which have sought billions in fresh capital as they suffered outsize losses in mortgage-related and other securities.
The firm said it had moved aggressively during the second quarter to strengthen its financial position, for instance by reducing exposure to residential and commercial mortgages and real estate investments by up to 20 percent. It also cut its exposure to loans for mergers and acquisitions by more than a third. Lehman said it had reduced its gross leverage to 25, down from 31.7 at the end of last year, meaning the firm is now borrowing $25 for every $1 of its own money.
CFO Erin Callan said Lehman does not plan to reduce leverage further and intends to use the new capital to take advantage of market opportunities in the future. Lehman reported that it is raising $4 billion through common stock, at $28 a share, and $2 billion in preferred shares that will be convertible into common stock.
Lehman plans to release the full details of its quarterly results next Monday.
Thursday, April 10, 2008
Goldman Sachs - A PERSPECTIVE ON CURRENT MARKET CONDITIONS
Remarks by E. Gerald Corrigan
Managing Director
Goldman, Sachs & Co.
A PERSPECTIVE ON CURRENT MARKET CONDITIONS
March 18, 2008
New York,
Download the full document from
http://www2.goldmansachs.com/ideas/economic-outlook/perspectives-on-market-conditions.pdf
Some interesting points made in the remarks
By my count, the last four decades have witnessed four such events (systemic shocks) as follows:
The LDC debt crisis of the 1980’s
The 1987 stock market crash
The 1997-98 Asia, Russia, Long Term Capital episode
The current credit market crisis
There can be no doubt that ample financial market liquidity and relatively low
interest rates were an important driving force behind the pervasive “reach for
yield” phenomenon of recent years and that the reach for yield phenomenon, in
turn was an important factor in driving the surge in demand for and supply of
highly complex structured credit products.
To a considerable extent, the “hot spots” where contagion forces have emerged share at least two common denominators; first; the risk aversion contraction in market liquidity; and, second ; various forms of leverage made it very difficult and costly to unwind positions.
we tend to forget that centuries of experience tell us in unmistakable terms that
bubbles almost never deflate gradually – they burst.
we must recognize that (1) given the credit-driven nature of the
crisis; (2) the dollar; (3) emerging inflationary risks; and (4) near-term risks to
economic growth, there are limits as to the extent to which Fed actions, by
themselves, can out-muscle the complex forces that are driving the credit crisis.
Managing Director
Goldman, Sachs & Co.
A PERSPECTIVE ON CURRENT MARKET CONDITIONS
March 18, 2008
New York,
Download the full document from
http://www2.goldmansachs.com/ideas/economic-outlook/perspectives-on-market-conditions.pdf
Some interesting points made in the remarks
By my count, the last four decades have witnessed four such events (systemic shocks) as follows:
The LDC debt crisis of the 1980’s
The 1987 stock market crash
The 1997-98 Asia, Russia, Long Term Capital episode
The current credit market crisis
There can be no doubt that ample financial market liquidity and relatively low
interest rates were an important driving force behind the pervasive “reach for
yield” phenomenon of recent years and that the reach for yield phenomenon, in
turn was an important factor in driving the surge in demand for and supply of
highly complex structured credit products.
To a considerable extent, the “hot spots” where contagion forces have emerged share at least two common denominators; first; the risk aversion contraction in market liquidity; and, second ; various forms of leverage made it very difficult and costly to unwind positions.
we tend to forget that centuries of experience tell us in unmistakable terms that
bubbles almost never deflate gradually – they burst.
we must recognize that (1) given the credit-driven nature of the
crisis; (2) the dollar; (3) emerging inflationary risks; and (4) near-term risks to
economic growth, there are limits as to the extent to which Fed actions, by
themselves, can out-muscle the complex forces that are driving the credit crisis.
Monday, March 31, 2008
Goldman Sach's Trading Strategy- Subprime Loan Based Securities
List of articles
http://articles.moneycentral.msn.com/Investing/Extra/HowGoldmanProfitedFromSubprimeMeltdown.aspx
http://www.theage.com.au/news/business/subprime-crisis-separates-the-quick-from-dead-slow/2007/10/08/1191695823566.html
http://www.whiskeyandgunpowder.com/Archives/2008/20080125.html
http://www.ephblog.com/2007/12/14/making-money-for-the-man/
http://www.gata.org/node/5799
http://www.portfolio.com/views/blogs/market-movers/2008/01/17/why-goldman-sachs-was-short-cdos
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3054952.ece
http://www.agorafinancial.com/afrude/2007/10/24/sub-prime-so-over-part-ii/
http://articles.moneycentral.msn.com/Investing/Extra/HowGoldmanProfitedFromSubprimeMeltdown.aspx
http://www.theage.com.au/news/business/subprime-crisis-separates-the-quick-from-dead-slow/2007/10/08/1191695823566.html
http://www.whiskeyandgunpowder.com/Archives/2008/20080125.html
http://www.ephblog.com/2007/12/14/making-money-for-the-man/
http://www.gata.org/node/5799
http://www.portfolio.com/views/blogs/market-movers/2008/01/17/why-goldman-sachs-was-short-cdos
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3054952.ece
http://www.agorafinancial.com/afrude/2007/10/24/sub-prime-so-over-part-ii/
Wednesday, December 5, 2007
Sub Prime Troubles - E Trade Asset Sale
E*Trade Financial’s in a recent fire sale, sold a basket of asset-backed securities with a book value of $3 billion to Citadel Investment Group for just $800 million.
The case has been made, often persuasively, that E*Trade was getting rid of particularly toxic assets while under duress.
But here is a point worth considering: Only about $450 million of E*Trade’s $3 billion portfolio was made up of the riskiest kinds of securities — C.D.O.’s and second-lien mortgages — that have made headlines recently.
What was the other $2.6 billion or so? In E*Trade’s own words, it was “other asset-backed securities, mainly securities backed by prime residential first-lien mortgages.”
In other words, E*Trade’s enormous haircut went far beyond subprime.
A large part of E*Trade’s basket of assets was securities backed by high-quality mortgages — loans to homeowners with strong credit ratings and reasonably large equity cushions. That could raise troubling questions on Wall Street about the true value of “prime” mortgage assets, especially when they need to be liquidated in a hurry.
The picture becomes clearer when you look at this breakdown, which E*Trade shared with investors in October. It shows that more than $1.35 billion of E*Trade’s asset-backed portfolio consisted of prime, first-lien residential mortgages rated “AA” or better — hardly toxic sludge by any stretch of the imagination.
So analyse this way: Even if E*Trade got nothing — not a cent — for anything but these top-quality mortgage securities, it still sold $1.35 billion in prime mortgage assets for $800 million, or less than 60 cents on the dollar.
Why?
http://dealbook.blogs.nytimes.com/2007/12/04/in-etrade-deal-pain-went-far-beyond-subprime/
The case has been made, often persuasively, that E*Trade was getting rid of particularly toxic assets while under duress.
But here is a point worth considering: Only about $450 million of E*Trade’s $3 billion portfolio was made up of the riskiest kinds of securities — C.D.O.’s and second-lien mortgages — that have made headlines recently.
What was the other $2.6 billion or so? In E*Trade’s own words, it was “other asset-backed securities, mainly securities backed by prime residential first-lien mortgages.”
In other words, E*Trade’s enormous haircut went far beyond subprime.
A large part of E*Trade’s basket of assets was securities backed by high-quality mortgages — loans to homeowners with strong credit ratings and reasonably large equity cushions. That could raise troubling questions on Wall Street about the true value of “prime” mortgage assets, especially when they need to be liquidated in a hurry.
The picture becomes clearer when you look at this breakdown, which E*Trade shared with investors in October. It shows that more than $1.35 billion of E*Trade’s asset-backed portfolio consisted of prime, first-lien residential mortgages rated “AA” or better — hardly toxic sludge by any stretch of the imagination.
So analyse this way: Even if E*Trade got nothing — not a cent — for anything but these top-quality mortgage securities, it still sold $1.35 billion in prime mortgage assets for $800 million, or less than 60 cents on the dollar.
Why?
http://dealbook.blogs.nytimes.com/2007/12/04/in-etrade-deal-pain-went-far-beyond-subprime/
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