Deutsche Bank has been privately scolded by the Financial Services Authority for advising clients to short rights issues at Britain's embattled banks to cash in on a collapse in their shares, The Telegraph reports.
The note to clients from its equity trading desk is understood to have infuriated the regulator and been one of the catalysts for its sudden clampdown last week on short-selling during rights issues, on which it provided more detail yesterday.
Deutsche drew up the client advice shortly after Royal Bank of Scotland and HBOS launched their respective £12bn and £4bn rights issues in April. In the document, it recommends "buying the rights and shorting the stock, hoping the stock trades through the rights price". Buying the rights "would provide a hedge to losses from the short".
THE ROYAL BANK of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks, also according to The Telegraph.
"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.
Such a slide on world bourses would amount to one of the worst bear markets over the last century.
GOLDMAN SACHS HAS once more escaped the deteriorating financial market conditions relatively intact, as it beat analyst expectations in the second quarter to post a $2bn (£1bn) profit, a day after rival Lehman Brothers confirmed its first quarterly loss as a public company, The Independent reports.
Most of its Wall Street rivals envy Goldman Sachs for its resilience, as it has become one of the few banks to largely shrug off the impact of the credit crunch.
It yesterday announced profits of $2.05bn for the three months to the end of May following strong performances in its equity and asset management businesses.IFAonline
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m