Several of the world's biggest banks are setting up a multi-billion pound fund in an attempt to prevent potentially toxic mortgage securities poisoning the wider financial markets, reports The Guardian .
According to reports, Citigroup, Bank of America and JPMorgan are prepared to offer credit guarantees worth £37bn to the scheme, which would buy up assets that are backed by mortgages.
Further details of the initiative, called the Single-Master Liquidity Enhancement Conduit (SMLEC), are expected later today. The fund, which has been compared to a bail-out for the financial sector, is a response to the US sub-prime crisis and its impact on the global economy.
While "stability" and "prudence" might be two of Gordon Brown's favourite words, the Prime Minister (and former Chancellor) has upset the business world many times over the past 10 years with his frequent meddling with the tax system, reports The Telegraph.
The latest example arose from his desire to clamp down on the tax loopholes used by private equity bosses. But, by abolishing taper relief and setting a flat 18pc rate of capital gains tax, the government is also removing one of the key tax advantages for investors in the Alternative Investment Market (Aim).
The taper relief rules allowed investors in Aim companies to pay just 10pc tax on the profits from the sale of their shares so long as they had held them for more than two years. The measure was designed to encourage investment in start-ups and other small growth businesses.
But now, some commentators fear that the abolition of taper relief could deal a double blow to Aim, by encouraging existing investors to offload shares before the higher rate of tax comes in April and taking away one of the significant incentives for new investment in Aim stocks.
The United States is to call for draconian rules to control sovereign wealth funds, the vast, opaque, state-backed financial powerhouses that hold assets worth about $2.5 trillion (£1.2 trillion), reports The Times.
The proposal will be made this week in Washington at the meeting of finance ministers and central bankers from the Group of Seven (G7) nations, The Times has learnt. Observers question whether such regulations will be able to rein in the funds.
There is increasing concern in Britain over the influence of sovereign funds. About half the shares in the London Stock Exchange are held by Qatar and Dubai, with the former close to acquiring J Sainsbury, the supermarket chain. Temasek, of Singapore, and the Chinese Development Bank both have stakes in Barclays.
If you would like to comment on this story, contact:
Tel: 020 7034 2682
e-mail: [email protected]
'Annuities reinvented' paper
As US dollar strengthens
Introducing the Architas education series for clients.
What made financial headlines over the weekend?