Abbey and Deutsche Bank linked in Porterbrook sale

Abbey and Deutsche Bank linked in Porterbrook sale

Abbey is reported to be selling its train leasing business to Deutsche Bank, for £2 billion.

Porterbrook Leasing Company was acquired by the bank in 2000 from Stagecoach, for approximately $1.2 billion in cash.

The firm specialises in the leasing of all types of railway rolling stock and associated rail equipment.

The business is now valued at around £2 billion and according to a report in The Sunday Times, Abbey’s parent company, Santander, could be making the disposal to improve its capital position.

In June, Royal Bank of Scotland announced that it had sold its Angel Trains rolling stock leasing business to a consortium headed by Australian infrastructure group, Babcock & Brown, for £3.6 billion.

Other members of the consortium included Deutsche Bank and AMP Capital Investors.

It is understood that HSBC is also considering the sale of HSBC Rail, another train-leasing firm, also valued at around £2 billion.

Angel Trains, HSBC Rail and Porterbrook are the three leading rolling stock leasing companies in the UK, having been formed out of the privatisation of British Rail between 1994 and 1997.

Israel cuts interest rates by 25 basis points

Israel cuts interest rates by 25 basis points

The Bank of Israel has announced a cut of 25 basis points in interest rates for November, which will stand at 3.5%.

The rate cut was largely expected, as concerns regarding inflation declined and new economic activity stalled.

Therefore the central bank decided that the balance of benefits and risks favoured a lower interest rate to try and promote economic activity, particularly as inflationary pressures appear to have begun to ease.

Tax revenues, demand and activity have all declined over the last few weeks, prompting the bank to try and bolster the situation through lower rates.

As with many other nations, the share indices in Israel have fallen substantially in recent weeks, down about 20%.

This decision follows an unscheduled cut of 50 basis points made on 7 October, with a view to returning inflation to the target range of 1-3% over the course of the next year.

The Bank of Israel forecasts a lessening of inflation in the medium term, and intends the lower interest rate to ease the cost of borrowing and promote economic growth.

BoE report puts global toxic asset writedowns at £1,800bn

BoE report puts global toxic asset writedowns at £1,800bn

The Bank of England has published new estimates of the amount of so called toxic debt that has been written down by global financial institutions, in relation to the credit crisis.

In its Financial Stability Report, the Bank puts the figure at £1,800 billion, adding that the size of its estimate of the collective writedowns facing banks, insurers and hedge funds, has more than doubled since April.

In the case of the UK High Street banks, Barclays, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide, the report estimates that losses from bad debt could reach a collective £130 billion over the next five years.

The estimate takes into account losses from toxic investments plus an allowance for bad debts on mortgages, credit cards and corporate loans, which are expected to rise.

According to the report, UK lenders have so far written down less than £20 billion in the credit crisis but latest calculations indicate that additional taxpayer support may be needed to shore up their balance sheets, over and above the £50 billion included in by the Government’s rescue package announced earlier this month.

Wachovia racks up massive $8.9 billion loss

Wachovia racks up massive $8.9 billion loss


The banking firm plans to shake up its mortgage unit, slash its dividend payout to shareholders, and cut thousands of jobs.

Chief executive Bob Steel, hired less than two weeks ago to bring the struggling bank back to its former glory, had hinted that he envisioned a smaller, leaner Wachovia.

Net loss for the quarter was $8.66 billion compared to a profit of $2.34 billion in the prior-year period. Net loss available to common stockholders was $8.86 billion, or $4.20 per share, compared to earnings of $2.34 billion, or $1.22 per share, a year ago. The company said that the current-year quarter included a noncash goodwill impairment charge of $6.1 billion in commercial-related subsegments, reflecting declining market valuations and asset values.

Excluding the goodwill impairment charge and net merger-related and restructuring expense of $128 million, second-quarter net loss available to common stockholders was $2.67 billion, or $1.27 per share. The company was expecting a loss, excluding goodwill impairment charges, in the range of $2.6 billion - $2.8 billion or $1.23-$1.33 per share.

Toronto Dominion To Purchase Hudson United

Toronto Dominion To Purchase Hudson United

Toronto-Dominion Bank has agreed to buy Hudson United Bancorp for $1.9 billion. The cash and stock offer is worth $42.78 per Hudson United share.

Hudson's acquisition by Canada's second largest lender, will increase its branch network in New England by about 50 percent, adding branches in New Jersey, Connecticut, Pennsylvania and more than 200 in the New York City area.

Hudson United is New Jersey's fourth biggest bank by assets. Last year the financial institution had approximately $9.1 billion in assets and a net income of $128 million.

Toronto-Dominion CEO, Edmund Clark, hopes U.S. expansion will offset slower earnings growth in Canada where bank mergers are prohibited.

Toronto Dominion will pay 51 percent of the offer in TD Banknorth shares, and 49 percent in cash. The cash portion will be financed through the sale of 29.6 million TD Banknorth shares to Toronto-Dominion at $31.79 a share.

The offer represents a 14 percent premium over yesterday's closing price for the U.S. bank.

The purchase will be TD Banknorth's largest takeover, after a $694 million acquisition of American Financial Holdings Inc. in August 2002.

What is the Dow Jones Industrial Average?

What is the Dow Jones Industrial Average?


What makes up the Dow?

The daily three-digit drops on the Dow Jones Industrial Average this week scream from headlines. But what are the components driving these drops? Here are the 30 stocks in the average, with company, ticker symbol, 52-week trading range (before close Friday) and Friday close:

3M Co. (MMM); $53.38-$96.49; +76 cents, $54.26

Alcoa Inc. (AA); $11.98-$44.77; +$8.06, $96.80

American Express Co. (AXP); $23.33-$63.63; -85 cents, $23.15

AT&T Inc. (T); $22.52-$42.79; -58 cents, $22.42

Bank of America Corp. (BAC); $18.44-$52.96; +$1.24, $20.87

Boeing Co. (BA); $44.41-$99.58; +$1.33, $14.25

Caterpillar Inc. (CAT); $44.26-$85.96; -$1.67, $43.13

Chevron Corp. (CVX); $64.00-$104.63; -$6.17, $57.83

Citigroup Inc. (C); $12.85-$48.95; +$1.18, $14.11

Coca-Cola Co. (KO); $43.30-$65.59; -$1.80, $41.50

E.I. DuPont de Nemours (DD); $33.76-$52.49; -36 cents, $33.40

Exxon Mobil Corp. (XOM); $67.47-$96.12; -$5.64, $62.36

General Electric Co. (GE); $19.00-$42.09; +$2.49, $21.50

General Motors Corp. (GM); $4.65-$43.20; +13 cents, $4.89

Hewlett-Packard Co. (HPQ); $37.14-$53.48; -$1.50, $37.00

Home Depot Inc. (HD); $19.71-$34.25; -18 cents, $19.75

Intel Corp. (INTC); $15.49-$27.99; -41 cents, $15.19

IBM Corp. (IBM); $88.23-$130.93; -$1.25, $87.75

Johnson & Johnson (JNJ); $57.58-$72.76; -$1.73, $55.85

JPMorgan Chase &Co. (JPM); $29.24-$50.63; +$4.96, $41.64

Kraft Foods Inc. CI A (KFT); $27.67-$35.29; -45 cents, $27.25

McDonald's Corp. (MCD); $49.36-$67.00; +$1.27, $53.35

Merck & Co. Inc. (MRK:NYSE); $25.53-$61.62; +2 cents, $26.23

Microsoft Corp. (MSFT); $22.07-$37.50; -80 cents, $21.50

Pfizer Inc. (PFE); $15.49-$25.64; -53 cents, $15.14

Procter & Gamble Co. (PG); $60.05-$75.18; -$1.32, $59.56

United Technologies Corp. (UTX); $46.33-$81.20; +$1.30, $47.63

Verizon Communications (VZ); $25.87-$46.24; +84 cents, $26.77

Wal-Mart Stores Inc. (WMT); $42.50-$63.85; -44 cents, $50.95

Walt Disney Co. (DIS); $23.75-$35.63; -76 cents, $23.04

Northern Rock directors and auditors escape legal action

Northern Rock directors and auditors escape legal action


The bank, which was nationalised in February, said earlier this year it was looking into whether there were legal grounds to sue Mr Applegarth and others for negligence.

The Newcastle-based lender said today it has also decided "no action is warranted" against the auditors.

The chancellor, Alistair Darling, revealed last week Northern Rock had repaid more than half of the Government's £27bn loan. The bank said today the net balance outstanding is £11.5bn.

Northern Rock's chief executive, Ron Sandler, said the repayment was due to the bank's aggressive mortgage redemptions, where it helps customers to access new products with alternative lenders.

Mr Sandler added that the redemption programme would continue. But he added: "The company anticipates it will be more challenging in the future to maintain 2008 redemption levels given the significant slowdown in the housing market and reduced availability of alternative mortgage financing."

At the same time as shrinking its mortgages, Northern Rock is trying to snap up deposits. The bank had to withdraw some of its savings products two weeks ago when savers rushed to put their money into the Government-owned institution at a time of severe turmoil elsewhere in the market.

Northern Rock agreed a "regulatory framework" in return for the Government's support. One condition is that it is not allowed to compete unfairly with rivals and must keep its share of the UK savings market at less than 1.5pc.

Northern Rock said it would "continue to monitor the situation and will take action as necessary to ensure that it remains compliant with the framework. No breach of the framework has occurred since its introduction at the end of March."

Northern Rock said it continued to attract new retail deposits in the third quarter. Total retail funding rose to £17.2bn at the end of September, a £3bn increase from the end of June. Retail deposits represent £15.5bn of that sum.