As yet A&L have not made an official announcement as to who the buyer is, but BBC News seems to think that it is Abbey owned Santander. The UK firm has said that it was in “advanced” discussions.

The BBC has said that if the takeover deal is true, then it could pose some competition issues. The correspondent said “The takeover – if successful – would be a great relief to the City watchdog, the Financial Services Authority – because it believes big banks are more robust in these uncertain times,”

Alliance & Leicester has said that they have been offered 317 pence per share; however they have said that they are not sure that a deal would be forthcoming. Although A&L has seen a slump in their shares like many other UK banks, they have not had to ask their shareholders for any extra cash.

Just last year A&L had seen their shares fall by 30%, as a result forced the bank to write down the value of mortgage-backed investments by nearly £400m. In the current climate, Alliance & Leicester has had to rescue the number of mortgages that they sell, along with pushing up interest rates.

It is expected that B&B who are specialists for buy-to-let mortgages will win the approval from shareholders, for its £400m rights issue; this is now the banks third attempt to do so. The shareholders meeting will take place on Thursday in Sheffield.

On the Friday, HBOS £4bn rights issue will close, it is expected that four fifths of the shareholders will take up those rights. According to the Telegraph, there will be a shortfall of 20pc or £800m; this will be picked up by HBOS’s underwriters – Morgan Stanley and Dresdner Kleinwort.

On Friday, HBOS shares dropped 8½p below the rights price, to just 266½p. The news of HBOS’s flagging share price seemed to have strengthened the Treasury and Financial Services Authority decision to reform the rights issue, in the hope of easing the process of raising capital.

Senior bankers will be meeting the Treasury today, who will discuss possible changes. It is also thought that the FSA will consider a takeover of Bradford & Bingley, once the capital raising is complete; they also need to find themselves a new chief executive.

Francis Ghiloni, marketing and business development director at Informed Mortgage Choice has said “the trend towards higher rates on fixes will continue as long as banks are facing difficult operating conditions in the money markets.” He also added Mortgage rates are continuing to rise despite concerted action by the Bank of England and it is unlikely there will be many fixed-rate deals left for below six per cent.”

The average deal for a standard two-year fixed rate mortgage is now 6.75 per cent, this is now the highest rate in ten years. We will warn you that this is set to get a lot worse, Mervyn King, Govorner of The Bank of England has said to expect interest rate increases each month until inflation goes back down. At them moment inflation is now at 3.3 percent, King needs to get this back down to 2 percent which is the preferred level. The people who will have to help getting this down are you with mortgages, we all have to tighten our belts, until we can work through this current crisis.

Source

Moneyfacts.co.uk, have launched some new figures and the results are very interesting. On average two-year fixed-rate mortgages are now set at 6.75 per cent, the average cost of a five-year fixed term mortgage has increased to 6.72 per cent. Many customers will now be moaning that they now have to pay much more on their monthly payments, but Darren Cook, Moneyfacts mortgage expert has said that “consumers are paying the price for the vast sums lenders now have to pay in order to secure funds.”

Cook has also warned that the situation is likely to get worse before it shows signs of improvement. He also said that while a fixed-rate mortgage seems more appealing than that of a variable rate given the UK’s current financial situation, these types of loans might just prove too expensive for some customers.

That said most customers will want to fix their mortgages, as there are no signs of the mortgage market recovering any time soon. My Brother took out a five-year fixed rate a little over a year ago; he did not think that he made the right choice back then. Now if you take a look at how the credit crisis is taking hold of the UK, he is now thankful that he did.

Source

Speaking at a Wall Street Journal conference, Kenneth Lewis said “We think we’ve got it right,” he also said “We still have room to make it a financially attractive transaction.” Many thought that with some advocates, lawyers and politicians criticizing the merger, Lewis would not go ahead with the deal, but he has said that he will not walk away from the deal. Bank of America are also standing firm on their dividend payout, they have said that the deal of a 64 cent-a-share dividend is safe.

However Bob Stickler, who is a spokesman for the bank has said that at a recent dinner with Lewis, he did not once use the word safe. Such a high dividend is seen as a surprise to a number of other banks, as they are slashing there dividends, like Citigroup Inc, Washington Mutual Inc and Wachovia Corp. According to Reuters, Bank of America shares on the New York Stock Exchange has fallen 2.6 percent to a five year low of $28.85. Countrywide has fallen 6 percent to $4.58.