Royal Bank of Scotland will this week post the biggest loss in British banking history when it reveals that the £5.9bn of write-downs taken against its "toxic" credit market assets have pushed it about £1.3bn into the red for the six months to June, compared with £5bn profit last year, The Telegraph reports.
Questions will be raised about Barclays' credit market impairments when RBS's closest rival reports half-year numbers on Thursday. Barclays is expected to take another £500m of provisions, net of any gains on its own debt, on top of the £1bn already disclosed this year and £1.6bn taken last year.
Citigroup analysts reckon the bank, which has just completed a £4.5bn capital raising, needs to write down the portfolio by another £9bn to be as conservative as RBS.
DEFAULTS ON AMERICAN corporate junk bonds could more than quadruple in the next year as the declining economy in the United States severely restricts companies' ability to repay their debts, the Standard & Poor's ratings agency has said, according to The Times.
The rate of default on America's risky junk, or high-yield, corporate bonds jumped from a 25-year low of 0.97% in December to 1.92% at the end of June.
However, S&P said that it expected the figure to rise to 4.9% by mid- 2009 and conceded that defaults could rise as high as 8.5%.
COMMODITY PRICES FELL by 10% last month, indicating that the five-year-long commodities price boom is coming to an end and easing pressures on the Bank of England to raise interest rates this week, The Independent reports.
The Jefferies-Reuters CRB Index, a composite, shed 10% of its value during July, the biggest monthly drop since 1980. In volatile trading on Friday platinum prices fell almost 7%, while gold and silver declined by about 1%. Rice and other "soft" commodities are also down.
However, it is oil that has seen the biggest switchback – down 13% or more since June's record levels.IFAonline
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