Abbey National was forced to inject £180 million into Scottish Mutual, its life insurance subsidi...
Abbey National was forced to inject £180 million into Scottish Mutual, its life insurance subsidiary, to counter the adverse impact of a plunge in stock markets earlier this month, the Times newspaper reports this morning.
The funds were required to overcome severe restrictions on its ability to write new business. The bank apparently took action at the same time as Scottish Mutual prepares to write to thousands of policyholders giving warning that they face exit charges if they seek to withdraw funds from some savings products.
The extent of the impact of the market downturn on Scottish Mutual is revealed in filings made with the Financial Services Authority, the City regulator.
According to figures obtained by the Times, Scottish Mutual's free asset ratio - the cushion that it has above its reserves - fell from 12.8 per cent to just 1.8 per cent between the end of 1999 and the end of 2000.
There is significant news in the FT of a major replacement at Credit Suisse First Boston. Switzerland's second largest bank has replaced Allen Wheat, chief executive of its investment arm, CSFB, with immediate effect by John Mack, the former president of Morgan Stanley Dean Witter.
Wheat had been CSFB chief executive since 1998. Mack became available after he resigned from Morgan Stanley in January and subsequently met with Lukas Muehlemann, chief executive of Credit Suisse, reports the FT.
But all of this comes at a turbulent time for CSFB, as three employees have been suspended following investigations by US authorites into the investment bank's dealings in the initial public offerings' market. On top of this, CSFB has problems in India and Japan where it faces allegations of market manipulation and a senior employee was convicted of violating Japanese securities rules and obstructing a government investigation.
France's insurance regulator has also criticised the Financial Services Authority, reports the FT, over the collapse of Independent Insurance, as the British group has a subsidiary in France.
Jacques Delmas-Marsalet, president of the Commission de Contrôle des Assurances (CCA), complained in Les Echos newspaper there had been a failure of co-operation with the FSA, and information seemed to flow in one direction - from France to the UK.
As well as criticism of the regulator, news in the Times says HSBC is suing the former chief executive of Independent Insurance, Michael Bright, to recover loans worth £4.3m taken out against his 6.2 per cent stake in the collapsed company.
A story that most newspapers are carrying this morning is nine mobile phone companies in Britain and Germany were raided by European Commission investigators yesterday over suspicions that consumers are being overcharged for using mobile phones abroad.
Brussels strongly suspects there is an illegal price-fixing cartel between wireless companies to overcharge customers when they use their phones abroad, in the process known as roaming, says the Guardian.
If found guilty of price fixing, the operators could be fined up to 10% of their annual turnover - which could run to billions of pounds.
Spent 56 years at Schroders
Warns on profits
Hargreave Hale seeking legal advice