The Commons Treasury Select Committee's long-awaited report into the Northern Rock debacle will be published on Saturday and is expected to conclude that the Financial Services Authority (FSA) should not be given new powers to intervene to help distressed banks, The Times reports.
Leaks of the report said last night that the FSA does not deserve additional powers, given that it was unable to identify the flaws in the Northern Rock business model and prevent a subsequent run on the Newcastle-based bank. The report is also expected to highlight the Bank of England’s decision not to prop up the banking system with a cash injection last summer as the credit crunch began to take hold.
Alistair Darling, the Chancellor, will not escape criticism over his handling of the affair, although the Treasury escapes relatively unscathed compared with the level of criticism levelled at the other two bodies that make up the tripartite authority.
SOCIÉTÉ GÉNÉRALE HAS made itself vulnerable to takeover bids from other large international financial institutions after it revealed one of its traders committed the biggest ever alleged bank fraud, losing €4.9bn (£3.7bn) in the first few weeks of this year, bankers said, according to The Telegraph reports.
Financiers said the management credibility of France's second biggest bank has been fundamentally damaged by the loss, which has forced SocGen to launch an emergency €5.5bn rights issue to cover the losses of the 31-year-old trader, Jérôme Kerviel, and a €2bn write down linked to US sub-prime losses.
Rival banks have been circling SocGen for years. While the market turmoil may make bidders wary, they may see the extraordinary revelation about the alleged fraud as an unique opportunity to strike. "This will be the time we look back to and say this is when SocGen lost its independence," one source said.
SOVEREIGN WEALTH FUNDS from several countries today defended themselves as responsible long-term investors who contribute to the stability of the global economy and do not have secret plans to use their money for political ends, The Guardian reports.
Responding to growing calls that they be regulated or forced to sign codes of conduct, representatives of funds from the Middle East and Norway told the World Economic Forum in Davos that that was "putting the cart before the horse".
"We are talking about pre-emptive regulation against something that might not happen. People are assuming that sovereign wealth funds are guilty until proven innocent said Mohamed Al-Jasser of the Saudi Arabian Monetary Agency. "Hedge funds have not been regulated in spite of all the problems they have caused."
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