Formation of Lloyds Banking Group puts 30,000 jobs at risk

Formation of Lloyds Banking Group puts 30,000 jobs at risk


Lloyds TSB’s announcement today that it intends to make annual savings of £1.5 billion through its merger with HBOS has sparked an angry reaction from trade unions, fearful of large-scale redundancies.

The latest estimate of cost efficiencies is £500,000 above an earlier £1 billion target and analysts are predicting that up to 30,000 jobs could go through the closure of branches, call centres and the integration of IT systems.

According to a report in The Times, Lloyds TSB will make £790 million in savings from cuts in the merged banks’ retail operations and a further £235 million by folding together their insurance and investment businesses.

Costs in wholesale and international banking will be shaved by £430 million.

Shareholders of both banks have yet to vote on the deal and the possibility of a counter bid emerged this weekend, from an unnamed international financial firm.

However, both HBOS and Lloyds TSB are confident that the merger will go ahead and have pencilled in a completion date early in the New Year.

Last week, details of the new board were revealed, with only one HBOS executive included.

The name of the new group has been announced today and spells the ultimate demise of the Halifax and Bank of Scotland corporate colours. The new company will be known as Lloyds Banking Group.

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