Britain's banks will hold back an economic recovery due to their "significant debt burden", one of the world's leading credit rating agencies has warned.
Standard & Poor's on Monday lowered the collective rating of Britain's banks in anticipation of "high credit losses", reports The Telegraph.
By slashing the "banking industry country risk assessment" (BICRA) from group two to group three, the UK's financial system is now considered less secure than those of Italy and Belgium, and on a par with Chile, Portugal and Austria.
"We no longer consider the UK to rank among the most stable and low-risk banking systems globally in the light of the weak economic environment, the reputational damage to the industry, and the increased dependence on state support programs," S&P said.
It added that UK banks had no option but to reduce their debt, which "will lead to an elevated rate of loan losses for the next two years [and] will weigh on the growth prospects for the UK relative to many other large mature market economies". Full story...
BRITAIN IS STILL mired in its longest-ever recession despite news today that the economy shrank slightly less than previously thought in the third quarter of 2009.
According to The Guardian, The Office for National Statistics reported this morning that UK GDP fell by 0.2% between July and September, less than the 0.3% previously estimated. The change was partly due to a stronger-than-expected performance by the construction industry.
This dashed hopes that the recession might have ended in the quarter. Some analysts had predicted that today's revised data would show that GDP was flat quarter-on-quarter. Today's revision means that the UK economy has shrunk by 5.1% over the last year. Full story...
DAVID TEPPER, who runs the US hedge fund Appaloosa Management, is in line for a profit share of around $2.5bn (£1.5bn) this year after betting heavily on a recovery in the stocks of banks including Citigroup and Bank of America, says The Times.
Appaloosa has made about $7bn profit so far this year, according to the Wall Street Journal, with Mr Tepper set to gain about $2.5bn of this, one of the biggest personal annual pay rewards of recent years.
Mr Tepper, whose fund specialises in the bonds and shares of troubled companies, bought battered bank shares in February and March after the US Treasury announced its plan to prop up banks by buying preference shares. Most investors were running for the exits, fretting that the Government would eventually have to nationalise banks such as Citigroup. Full story...
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