Barclays (LON:BARC) announced they were cutting over 400 jobs from its IT departments in London, Northampton and Cheshire.

The job cuts include 250 contractors and 158 permanent staff who had duplicate roles across the entire Barclays group, this adds to the doom and gloom that is surrounding the financial sector today.

It’s not certain at present if the job cuts at Barclays include compulsory redundancies according to the banks spokeswomen as they have only just started the process, she also added that Barclays will be offering several options for the staff members who are affected, including other roles within the bank.

The UKs largest trade union, Unite said that the cut’s to the Barclays workforce comes as a bitter blow.
Employees across the financial sector are under huge pressure as they continue to fear for their jobs, and the job cuts at Barclay’s signals there is still worse to come.

Source: Guardian

Li Ka-shing the Hong Kong billionaire is selling up to HK$4.06 billion ($524 million) worth of shares in Bank of China Ltd (HKG:3988), according to a share document the bank is the third largest in China.

Merrill Lynch & Co are managing the sale of the share holding, Li Ka-shing’s company Li’s Magnitico Holdings Ltd is offering 2 billion shares in the Bank of China at HK$1.98 to HK$2.03 each, according to information in the report.

The news comes after Bank of America (NYSE:BAC) offered $2.83 billion stake in China Construction Bank (HKG:0939) earlier on Wednesday.

In Hong Kong today shares in the Beijing-based bank closed at HK$2.14.

Source: Bloomberg

The Bank of England (BoE) is likely to cut the interest rate to their lowest level on record this week. It’s widely expected the BoE with cut the rate by at least 0.5 percent to 1.5 percent.

The Central bank’s Monetary Policy Committee on Thursday ends it’s two day meeting and will announce the cut, some analysts are predicting as much as 1 percent being cut from the interest rate.

It’s also expected that Britain will see another interest rate cut in February, taking the base interest rate below1 percent, this is a huge sign that interest rate will stay low for a long time as the Bank of England tries to soften the blow of the recession.

With house prices continuing to fall, and consumer confidence worsening day by day is unlikely interest rate cuts will lift the UK out of the recession, with the Government suggesting more tax cuts in March and the possibility of going down the route Japan took a decade ago by boosting money supply, but this is said to be a long way off before Britain resorts to those measures.

Source: Reuters

The Chancellor, Alistair Darling today confessed today in an interview with the Financial that the UK recession is much deeper than they had expected.

Darling, repeated himself several times describing the outlook as “difficult”, he also added that he may have to tear up his previous forecast on the economy. He also talked of how difficult 2009 are going to be and how the government will be faced with some tough calls.

In the Chancellors last forecast he had predicted that the economy would pick up in the second half of 2009, but it’s clear that Britain has not even reached its half way point, with consumer confidents at an all time low and the retail sector crumbling every day, the outlook is gloomy for 2009.

The authorization to print more money to allow the government to spend buying assets from the ailing financial sector is another option the Chancellor talked about, he did rule out handing over the overall responsibility to the Bank of England.

Source: Guardian

Northern Rock the lender that was fully Nationalized last year by the British Government may have to boost the number of mortgages it issues, as rival lenders withdraw their finance facilities, according to a report.

Northern Rock has been in the process of reducing its mortgage book until now to repay taxpayers money. But according to the report in the Daily Mail, the government may well reverse its policy and an attempt to jump-start the ailing economy.

The report also suggests that Northern Rock have been rejecting applications and refusing to renew mortgages for existing customers.

However it’s been noted in related reports that homeowners with existing Northern Rock mortgages feel that the Prime Minister should step in and stop the government owned bank charging penalty interest rates on over 200,000 borrowers who cannot afford to go elsewhere for their mortgage.

Source: introducertoday

If you have a good credit rating, proof of a reliable income and manageable debts this is the perfect time to buy a property according to HSH Associates.

So forget all the doom and gloom surrounding the housing market and get searching for your bargain property, 30-year Mortgage rates have not been this low in the US since 1961.

The US Government has started buying up mortgage backed securities to kick-start the housing market and in December 31, Freddie Mac reported that the average rate on a 30-year fixed rate mortgage fell to 5.1 percent on the week, this rate falling 1.3 percent from late October, and the lowest 30 year fixed mortgage rate since 197 when record began.

As we enter 2009 mortgage rates are expected to fall even lower, so depending on how risk adverse you are will depend if you borrow now or gamble and see if they drop any lower.

Source: msnbc

Credit Suisse (NYSE:CS) has invested 7.94 billion rupees ($164 million) into its Indian finance unit allowing it to lend to firms and fund purchases of shares in initial public offerings the bank said today

Switzerland second largest bank will compete with Motion Oswal Financial Services Ltd, Kotak Mahindra Bank Ltd and Indiabulls Financial Services Ltd to fund share purchases and companies when demand for capital is slowing and IPOs are few and far between.

Credit Suisse said in a statement “We will continue to invest selectively in the growth of wealth management, investment banking and asset management business” adding that the capital infusion shows clearly their commitment.

According to Bloomberg, initial share sales slumped 46 percent in India during 2008.

Source: Bloomberg

According to Citigroup (NYSE:C), UK house prices are to drop a further 15 percent in 2009, and UK companies will face a 45 percent drop in earnings as we head into a deep and lengthy recession.

With consumer spending in the UK tagged 80 percent to house prices over the last 25 years, compared to 50 percent in America, 10 percent in Germany and in Italy only 5 percent is geared to house prices. One thing is for sure it’s not looking good for the Britain.

According to Citigroup, trades such as automobiles could lose 82 percent this year and retailers could also decline 64 percent in 2009, healthcare, gas, water and electric being among the rare few sectors that are relatively safe havens.

The price-to-earnings ratio has fallen to its lowest level since the 1970s and the rate of return on equity will halve to 8.7 percent in 2009.

Source: Telegraph

Check your insurance policy says Lloyds TSB Insurance after the cold spell has caused many water pipes to burst.

According to Lloyds TSB repairing burst water pipes can be extremely expensive, with the average repair costing about £1,400 and in some extreme cases costing up to £40,000 to repair.

Due to the UK seeing relatively mild winters the insurer has said that many homeowners are unaware if they are insured against their pipes and that they should make sure their pipes are insulated properly.

Lloyds TSB have said that if you prepare yourself now it would give you piece of mind, check through your insurance and see if you are covered for the freezing cold conditions that Britain is facing this winter, before it effects your home.

Source: moneynews

Mortgage lenders are insisting on larger deposits on their home loans, with December seeing an increase from 54 percent to 60 percent of new mortgage deals requiring 25 percent deposit according to MoneyFacts.

With the Bank of England announcing last week that banks and Building Societies will decrease their lending further in the coming months of 2009, and lenders choosing their borrowers extremely carefully the prospect for the property market is remaining grim.

With the possibility of house prices falling even further and more and more customers falling into negative equity lenders are protecting themselves with the number of mortgage loans requiring just a 10 percent deposit hitting an all time low.

The number of mortgage products that needed just 10 percent deposit has fallen from 1,200 the figure in February 2008 down to 148 now.

Source: BBC

Nationwide Building Society has said that it will not cut the interest rate on its tracker mortgage products any further, even if the Bank of England cut the base rate, according to reports from the BBC.

This is due to the collar clause which stipulates that the UK’s largest building society do not have to drop the rate lower than 2.75 percent on their tracker mortgage range, this is to effect 250,000 of its customers.

Nationwide have said in order to protect its savers they will not cut the rate any further, however back in December Nationwide decided not to enforce this rule when the Bank of England cut the interest rate to just two percent.

It’s widely thought that the Bank of England Monetary Policy Committee will cut the rate further when they meet next week.

Source: fairinvestments

The UK Government has said they are contemplating further plans to encourage UK banks to increase lending to businesses and households.

Alistair Darling, Chancellor said that injecting more taxpayers money into banks was not the “first port of call”. The Chancellor also added that they will be holding further talks as to what steps they should take to kick start lending.

Reports have said that the Treasury is looking into an insurance scheme where banks would pay a fee to reduce possible losses on bad loans.

This could encourage the banks to resume lending more freely because they would have a clear picture of what losses they could face, with the government sharing the risk.

The key to the economic recovery would be for easily obtainable credit for homeowners and businesses, however, Alistair Darling has said that although the banks have began to lend again it’s not at the level the government wants to see.

Source: BBC

Royal Bank of Scotland (RBS) along with Nationwide, Alliance & Leicester, NatWest, Barclays (LON:BARC), Halifax, Lloyds TSB (LON:LLOY) and Abbey have all slashed the interest on the variable saving accounts, some by more than 1 percent according to moneyfacts.co.uk.

On some accounts rates have been slashed to just 0.1 percent at a time that many households are being dragged down by the recession.

Nationwide, Britain’s largest building society is one the financial institutions which have cut its interest rates to 0.1 percent.

With the Bank of England Monetary Committee set to cut the base interest rate to their lowest level in 315 years analysts warn that some accounts could nosedive to zero percent within days.

If this did happen it means that the banks saving interest rates would fall below the rate of inflation and customers would end up paying the banks to keep their money safe.

Source: DailyMail

First time buyers are faced with a brighter future in 2009, according to the Halifax First-time buyer affordability review.

With the house price to earnings ratio improving dramatically in the last 18 months, giving first time buyers the chance to take advantage of the low house prices.

In November 2008 the ratio was at the lowest level in five years at 4.56 from July 2007’s high of 5.84.
With the figures this low means that the numbers of properties in the UK that have become affordable have increased more than three times during 2008.

Although in particular the first time buyers in the Midlands and the South of England are benefiting the most. Scotland has also seen a huge increase of affordable homes for average earners in more than two thirds of local authorities.

House prices are likely to continue to fall in 2009 according to the Royal Institution of Chartered Surveyors, and the number of new buyer enquiries have risen to their highest level since October 2006, these figures showing that it’s a great time to get on the property ladder as the trend is set to continue throughout 2009.

This come after reports last week from Hometrack, the information group revealed that house prices have dropped by 8.7 percent in the UK in the last 12 months.

Source: Choices

Research shows that 50 percent of middle class homeowners are in fear of losing their properties in 2009 as they continue to struggle to pay their mortgage payments according to reports in the Daily Telegraph.

The Council of Mortgage Lenders predicts that the number of repossessions will hit 75,000 next year nearly double of this year.

According to a YouGov poll 44 percent of homeowners are worried that they will get repossessed in 2009. With a similar number of people worried that they won’t meet their mortgage payments between now and then ends of 2010.

The New Homeless study found that the fear of repossession runs across all classes with 42 percent of middle class professionals worried about next year’s mortgage payments compared to 46 percent of blue collar households.

Source: Telegraph

Between July and September of this year borrows increased the equity in their homes by £5.7 billion instead of withdrawing it by borrowing on the strength of the property value, this is the largest cash injection since 1970 when records began according to the Bank of England.

With the lack of funding and falling house prices it is now very difficult for a homeowner to borrow against the value of their home, which had become a convenient way for many to fund other spending including home refurbishments.

Homeowners are extremely scared at the moment to touch the equity in their homes, that’s indeed if with the falling house prices they have any equity left. With the rising unemployment people are trying to get their debts down rather than adding to them according to a mortgage broker at Cobalt Capital.

It’s now the case that homeowners are trying to cut their living costs down rather than increase their mortgage payments, with the number of live in landlords advertising for lodgers more than doubling in recent months.

Source: Telegraph

According to reports out on Monday, IndyMac Federal Bank (OTC:IDMCQ) is being sold to a hedge fund and a group of private-equity firms in a deal that the US Federal government are partly funding.

Hedge fund Paulson & Co along with private-equity firms Dune Capital Management and J.C. Flowers & Co will buy IndyMac that was seized by the Federal Deposit after it declared insolvent in July.

IndyMac, which branches throughout California and had $32 billion in assets was the second biggest bank failure this year behind the collapse of Washington Mutual in September.

According to the reports the deal could be announced on Monday, which could include Dune Capital buying IndyMac for about $14 billion, it’s also likely that the FDIC could cover certain losses as part of the deal by working out a loss sharing agreement.

Former Goldman Sachs Group Inc partners Daniel Neidich and Steven Mnuchin founded Dune Capital in 2004, and another former partner of Goldman Sachs, J. Christopher Flowers leads J.C. Flowers.

Source: Bussinessweek

Britain’s banks could be forced into a second round of government bail outs as they are set collectively to lose up to £70 billion on loans they made on commercial property, according to reports out on Monday.

Investment bank Close Brothers (LON:CBG) have predicted that commercial property may fall sharply between 50 percent and 60 percent by the end of 2009 compared to its peak in 2007.

With many property commercial property experts reporting drops already this year of around 30 percent, leaving 2009 falls to be around 20 percent to 30 percent.

As UK banks advance up to 95 percent of a property value to private investors it leaves them wide open to the collapse in commercial property value.

The report by Close Brothers highlighted that the UKs leading banks together have an estimated £250 billion exposure to commercial property loans, this is double the exposure they had before the recession in the early 1990s.

Source: UKPress

According to Oxford Economics forecasting company Britain were better off than Italy, France, Japan, Germany and the United States when wealth per capita was measured in dollars in 2007.

With the Recession taking its first bite of the British Economy in 2008, Britain fell in fourth place behind America, Germany and France but it’s predicted that during 2009 we will also be worse off than Italian households.

But with pound falling against the euro sharply there is worse still to come as families living in Britain are faced with the biggest economic contraction of any developed economy. The pound is now worth almost 1 euro, falling sharply in two months when you could get 1.3 Euros to your pound. The Sterling has also fallen hard against the dollar with the pound trading at less than $1.50, earlier this year you would get $2 for your £1.

Reports out last week from the Centre for Economics and Business Research, predict that the UK economy will shrink by 2.9 percent during 2009 making an altogether gloomy outlook for Britain’s economy.

Source: Telegraph

Royal Bank of Scotland (RBS) the troubled bailed out bank is likely to abandon the sale of its insurance operations thats worth £7 billion, which include the sale of the Churchill brand and Direct Line.

It’s rumored that Mervyn Davies, the chairman of Standard Chartered is set to work with new RBS Chief Executive Stephen Hester after weekend negotiations with headhunters.

Churchill and Direct line were put on the block in March whilst Royal Bank of Scotland was under Sir Fred Goodwin’s control, as an attempt to convince shareholders to back a massive rights issue. However since Stephen Hester took the rains the sale has halted amid the government rescue which leaves the British taxpayer owning almost 60 percent of Edinburgh based bank.

Royal Bank of Scotland general insurance business employs about 18,000 staff members and is the second-largest general insurer in the UK.

Source: Guardian