HBOS in Rights Cash Call for £4 Billion

The Halifax Bank of Scotland is going to investors for £4 billion in new money. The bank has announced a two for five issue of new shares at a 45% discount to yesterday's (28th April) closing price. HBOS, through its Halifax subsidiary, is Britain's biggest mortgage lender. The rights issue follows last week's £12 billion issue from Royal Bank of Scotland.

Despite increased market liquidity provided by the Bank of England and recent reductions in base rates, mortgage rates continue to rise.

The Euro Starts to Fall

According to The Daily Telegraph, the Euro has started to fall relative to other currencies. UK consumers will note with some alarm that in recent weeks the spot exchange rate has been in the area of 1.25 Euros per £. Well down on last summer, when rate was close to 1.50.

The consequences for the UK may mean higher import and holiday costs but in many respects this is good for the economy. The consequences within the Euro-Zone may well be catastrophic, particularly for weaker members that rely heavily on UK and perhaps US trade. The Telegraph highlights Spain, which enjoys a favourable balance of trade with the UK. As the Spanish are finding out, the Brits are no longer buying houses, least of all in the Costas. What scarce mortgage funds that are available will be diverted to UK house purchases. Along with Ireland, Spain has seen a huge boom in the property market. Nowhere else is the asymmetry within European economies going to be so severely tested.

The 10p Tax Problem

Did Gordon Brown blunder when he did away with the 10p bottom rate of income tax? Writing in the Financial Times, economist John Kay explains the maths behind the self-inflicted problem currently tearing apart the Labour party. Kay has worked out the income levels at which people lose and when they gain.

It seems to me, that the biggest mistake Brown made, was not to come clean on the fact that there would be a large number of losers. What seems ludicrous is that the losers are amongst UK society's poorest and most vulnerable people who appear to suffering a rate of inflation much higher than the population at large. Hubris.

Storm clouds gather for Tax of Mass Disaffection

How Gordon Brown must wish there was no such thing as televison. Yesterday's TV news shows ran footage from last year's budget when Brown was still Chancellor of the Exchequer. The clips show Brown commending the budget as a "Tax cutting" budget and making much of the cut in the basic rate of income tax from 22p to 20p in the pound. Interestingly, Brown failed to mention the total withdrawal of the lowest £1,500 band taxed at 10p in the pound. This was only mentioned in the small print of the budget document. The removal of this band has meant that up to 5.3 million people - all of them low paid - will now pay more tax than if the 10p band and the 22p basic rate had remained. This week, those low paid workers will see the full cost of this in their monthly pay packets.

Brown's dishonesty will cost him dear. The tax of mass disaffection is stirring up a rebellion amongst Labour MPs and Councillors. On 1st May, many of the country's voters go to the polls in local government elections. Don't expect the low paid to give Gordon Brown a vote of confidence.

RBS Rights Issue Tops £12 billion

According to the Financial Times, RBS' rights issue will top £12 billion, much bigger than the £5 billion reported last week. The announcement of the scale of the issue forced the FTSE to fall by 0.5% in today's early trading. This will be Europe's biggest ever rights issue!

RBS in £5 Billion Rights Issue

According to today's Daily Telegraph, The Royal Bank of Scotland (RBS) is to go to the City and ask for £5 billion in new capital. RBS is the first major British bank to admit it needs large amounts of cash to shore up its finances.

RBS owns NatWest, one of the biggest names on UK high streets. The fact that RBS is in trouble begs an interesting question. Only last month there was a run on HBOS - Halifax Bank of Scotland - when rumours spread through the market that the bank was in trouble. Its easy to draw the conclusion that HBOS and RBS could have been mixed up.

Brown Meets Bankers in Crunch Mortgage Summit

UK Prime Minister Gordon Brown meet the leaders of the UK banking industry in a Downing Street summit aimed at solving the crisis in Britain's mortgage market.

The banking industry is still reeling from the problems caused by the ongoing problems in the global money markets. Although the problems first emerged back in August 2007, a torrent of bad news runs the risk of causing a major collapse in the UK housing market. Recent data from leading mortgage bank Halifax indicated that prices had started to decline. In the US, prices have fallen 10% over the past year. A similar decline in the UK is seen as catastrophic given how much personal wealth is tied up in housing stock.

Only last week the Bank of England cut interest rates by a quarter of a point, to 5%. The cut has not been passed on to borrowers.

As well as the mainstream lender much of the market relies on independent mortgage brokers. These act on behald of borrowers. But with the market in crisis it seems lenders have the upper hand.