Fears that Alliance & Leicester may have to seek emergency funds from the Bank of England circulated in the City last night as ratings agency Standard & Poor's said the bank could suffer from the lending freeze that triggered Northern Rock's downfall, The Guardian reports.
S&P said Alliance & Leicester could be in trouble if wholesale markets failed to open up in the near future, and it downgraded the outlook for the bank from stable to negative.
Analysts said the bank was struggling to cope amid turbulence on international money markets that has in effect put a freeze on banks lending to each other.
Suspicions were raised in the last few days when it became apparent a share buyback programme that involves the bank buying £300m of its own shares this year was stopped 12 days ago without notice to shareholders.
COMPANIES IN BRITAIN and Europe have failed to place a single high-yield bond since the credit crunch kicked off in August, and may now have to wait until next year before the credit market reopens for business, according to The Telegraph.
Société Générale said the monthly volume of junk bond issues peaked at €6.5bn (£4.69bn) in June, falling to zero in August, September, October, and November as investor flight from the market forced up yield spreads to stringent levels.
Far from returning to normal, the credit markets appear to tightening even further into the Christmas season.
THREE NATWEST BANKERS who fought extradition from Britain to answer a multimillion-dollar fraud charge face 37 months in jail after dramatically pleading guilty last night, The Times reports.
Gary Mulgrew, David Bermingham and Giles Darby had fiercely maintained their innocence since September 2002 against charges of defrauding the NatWest-owned bank where they had worked out of $7.3 million through a suspect deal. They are believed to have agreed to pay this sum as restitution to the Royal Bank of Scotland.
The trio had each been charged with seven counts of wire fraud – illegally gaining money through international banking systems – that left them facing a maximum prison sentence of 35 years each.
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