Barclays Debt Talks
admin | March 16, 2009Barclays have confirmed this morning that they are in talks with the Treasury over its potential participation in the government’s Asset Protection Scheme. Lloyds Banking Group and RBS are already signed up to the scheme. Barclays said that any decision on whether it would participate in the scheme would be based on “the economic merits to shareholders.”
Pound Sterling – UK markets
Barclays also confirmed that it is seeking to raise around £4bn by selling part of its £706bn iShares fund management arm in a further attempt to raise capital without turning to the government for any direct financial support.
There is now an average of 10 jobseekers for every vacancy advertised in the UK, the TUC has warned. The situation is worst in the South East of England where the trade union body said its research found 60 people chasing each job.
Official unemployment data compiled by the Office for National Statistics will be published on Wednesday and are expected to show UK unemployment at two million. Meanwhile, the British Chambers of Commerce estimated last week that UK unemployment would reach 3.2 million – or just over 10% of the workforce – by the second half of next year.
US Dollar – US Markets
Federal Reserve Chairman Ben Bernanke suggested in a televised interview on CBS’ 60 Minutes programme that the US recession would “probably” end in 2009, but that his country had averted the risk of plunging into a depression. Bernanke’s remarks came ahead of a two-day meeting by the Fed that begins tomorrow. It’s anticipated that they will launch some new programmes or expand existing ones to get Americans spending again. Any decisions are likely to be made public on Wednesday.
Under pressure insurance group AIG has revealed that it has spent billions of Dollars in taxpayer funds since its September bailout, with €105bn flowing to US states and banks including Goldman Sachs, Societe Generale and Deutsche Bank. Donald Powell, former chairman of the Federal Deposit Insurance Corp, sad the news “puts a sour taste in the American taxpayer’s mouth.”
US data revealed that retail sales fell by just 0.1% compared with the same month last year, better than the 0.5% drop analysts were expecting. American consumers have become more cautious amid difficult economic conditions, cutting back on more expensive items such as new cars, but continuing to flock to supermarkets and discount stores in search of bargains.
Euro – European Markets
Risk appetite continues to dominate European markets, which are posting increases above 2% today, with the EUR-GBP rate returning to its highest level since late February.
The Euro rose against the US Dollar as financial ministers from the G20 concluded their summit in London over the weekend, vowing to do “whatever is necessary” to fix the global economy. This statement is likely to include measures to supervise freewheeling hedge funds and restore bank lending by dealing with the shaky securities burdening their finances.
During the G20 meeting, Russia proposed the creation of a new reserve currency to be issued by international financial institutions. Leaders of the G20 leading economies will meet next month in London, with Russia calling for countries whose currencies currently have reserve status to adopt international rules on fiscal and macroeconomic discipline.
Later today, the European Monetary Union will release the Consumer Price Index and Employment Change figures for February.
Other Currencies – Highlights
The Swiss Franc has suffered its biggest ever single day drop against the Euro. The drop was triggered by news that the Swiss National Bank (SNB) will buy overseas currencies to try and stop its own currency rising further against the Euro.
Japanese stocks have risen almost 2% as the Japanese Central Bank considers buying loans and bonds to bolster its capital. The news has boosted Asian markets, with the Indian Rupee rising to its highest level for two weeks.
