WEEKEND BANKING MOVES FAIL TO REASSURE MARKETS - Asian markets are not reacting well to all of the news from the world of banking over the weekend - this includes new savings guarantees in Germany and a €50m rescue of its bank Hypo Real Estate. These developments come in the wake of the approval late last Friday of the $700 billion bailout of banks in the US and after leaders of Europe's four biggest economies decided against a similar co-ordinated bank bailout here.
James Hughes, an analyst at CMC Markets in London, says a lot of negativity still surrounds the global banking sector with investors still afraid that the all plans will just not work. This is continuing to make the markets jittery and hence the steep share losses this morning. On the German move to guarantee savers' deposits, the analyst says that the moves were not totally unexpected. He says that Germans were pretty assured that if their savings did come under pressure, then the Government would step in to make sure the funds were OK. He says this is why investors are not seeing too much upside from the move. On the Hypo Real Estate move, he says it is just another financial institution coming under pressure and piling on new misery on already depressed investors. He says there is not much light at the end of the tunnel and predicts that world markets will experience a lot more downside effects yet.
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MORNING BRIEFS - Germany's officials spent the weekend scrambling to come up with ways to avoid a run on its banks, and it has been a busy last few hours elsewhere for banks and other countries. Overnight Austria and Denmark followed Ireland's lead and introduced a new blanket guarantee for savers. In Germany officials agreed a new rescue deal for lender Hypo Real Estate; Belgium and Luxembourg found a buyer for the troubled financial group Fortis in BNP Paribas; and UniCredit, Italy's second biggest bank, announced plans to raise new capital.
*** Citigroup has won a New York court order blocking its rival Wells Fargo from moving ahead with its acquisition of US bank Wachovia.
*** Icelandic officials are at work on a financial stability plan to address a crisis that has sent the country's currency spiralling lower and is seen as threatening its financial sector.
*** The credit crunch is also being felt in Asia - South Korea's finance minister said Korean banks were having trouble securing funds in foreign currencies and said the government would offer loans from its reserves.
*** On the currency markets this morning the euro is trading at a two and a half year low against the yen. It is also trading at $1.3591 and 77.3 pence sterling.
