NightBlogger

There is no question that Citigroup badly needs the money, but so do all its peers. The more interesting aspect of the case is that Citigroup, as the flagship American bank internationally, has been targetted by the British, who wish to eliminate it as a rival.

The essential facts are these:

* All of the big international banks are hopelessly bankrupt, holding hundreds of trillions of dollars of worthless assets and quadrillions of dollars of uncollectible derivatives bets. The illusion of solvency in these banks is nothing but an accounting trick. Citigroup is no more bankrupt than J.P. Morgan Chase, Bank of America, HSBC or the Royal Bank of Scotland. Thus the singling out of one bank, as has happened to Citigroup, is political targetting.

* Citigroup is the flagship American bank internationally, active in more nations than any other bank in the world. It has operations in 106 nations, compared to 85 for HSBC, the flagship British Empire bank. Citigroup’s chief rival in the United States, JP Morgan Chase, has been a British bank from its inception (J.P. Morgan & Co. started as the U.S. arm of a London bank, J.S. Morgan). Anything which weakens Citigroup, improves the British position. More

Mail Online
The Royal Bank of Scotland has blown £300,000 on a secret champagne junket for executives - less than a month after being given a £20billion handout by the taxpayer. Bankers and their partners enjoyed the lavish party to mark their ’success’ after a year in which the collapse of the banking industry led to global financial meltdown. The supposedly stricken bank laid on the celebration amid extraordinary secrecy to try to prevent details reaching the public, even cancelling the original venue, a top hotel in Hampshire, and transferring the party 350 miles north to Edinburgh.

But despite holding the black-tie ball in private, executives gave the game away as they danced in the street and continued the fun back at their five-star hotel. In the public bar of the Caledonian Hilton other guests were singing and swigging double brandies into the small hours of yesterday. Meanwhile, more than 300 HBOS bankers enjoyed a boozy £330,000 junket - complete with five-star hotel rooms and a four course meal. The 302 Halifax/ Bank of Scotland mortgage staff, along with 68 guests, guzzled down champagne while watching TV comedian Patrick Kielty - who charges £20,000 a show - tell jokes about the credit crunch, the News of the World reported.

Joking about the bankers excesses while Britain suffers a credit crisis, Kielty apparently told them: ‘Your secret is safe with me!’ An HBOS whistleblower told the Sunday tabloid: ‘There was absolutely no expense spared. We had the best of everything - great food, expensive wine, you name it. ‘It’s outrageous really, considering all the recent troubles at HBOS. We all had a good time though. We even got a day off work- and got paid for it.’ Last month both HBOS and RBS, which owns NatWest, crawled cap-in-hand to the Government for help. More

Shares in the Royal Bank of Scotland Group PLC (RBS), whose credit rating was downgraded by Standard & Poor’s credit agency on Monday, plummeted by 39% to close at 90 pence ($1.58) on the London Stock Exchange. HBOS closed down 41.5% at 94 pence ($1.65), Lloyds TSB dropped 13% to 225 pence ($3.96) and Barclays fell 9% to 285 pence ($5.01). The dramatic falls followed a meeting on Monday between the government’s leading financial figures and the heads of Britain’s biggest banks, during which they discussed a possible rescue plan for the beleaguered banking sector, according to two banking officials with knowledge of the meeting who asked not to be identified because the meeting was confidential. More

The Telegraph
Royal Bank of Scotland, the owner of Natwest and Britain’s second-biggest bank, has slumped to its first loss in 40 years after taking an almost £6bn credit writedown….RBS’s first-half writedowns come on top of last year’s losses of £2.6bn on US subprime mortgages, leveraged loans and bond insurance. Barclays, Britain’s third-biggest bank, yesterday reported first-half writedowns of £2.8bn. “We see little upside from the acquisition (of ABN Amro), while the downside risks are disproportionate,” said Simon Pilkington, an analyst at JPMorgan Cazenove. RBS has already asked shareholders to cough up a record £12.3bn to shore up a balance sheet, depleted by writedowns and the ABN Amro purchase.

THE Royal Bank of Scotland is poised to unveil the biggest loss in UK banking history after taking a hit of almost £6 billion from the credit crisis. Britain’s second-largest bank is this week expected to reveal a pre-tax loss of at least £1 billion for the first six months of the year, with analysts warning it could slide to as much as £1.7 billion in the red. The loss would be roughly five times higher than the deficit racked up by Barclays in 1992 at the height of the last recession. RBS chairman Sir Tom McKillop is already under pressure from investors after the bank’s recent £12 billion rights issue. His chief executive, Sir Fred Goodwin, who marks 10 years at the bank this weekend, also faces shareholder scrutiny. The bank is scouring the world to find three new non-executive directors to shore up its board in response to shareholder concerns. The RBS figures will cap another terrible week for Britain’s biggest banks as the credit crisis continues to take its toll. More

Bob Morris @ Jun 30th 2008 05:55 - Category: Credit crisis
I was emailing a friend recently about the stock market. He thinks the markets are “totally divorced from the reality of the time” and in many ways he’s right. They exist in a bizarre other universe, seemingly not affecting the rest of us much. Except when they do, as witness the subprime debacle that has now morphed into a worldwide credit crisis.

* Former Sec. of Labor Robert Reich: “The economy is failing” and Congress needs to pass a massive stimulus package now, deficit spending be damned.
* Former Sec. of the Treasury Lawrence Summers: “In the months ahead there is the real possibility that significant financial institutions will encounter not just liquidity but solvency problems“
* Mish says forced sales of bank assets are coming soon as banks desperately try to raise money. WaMu is toast and Citigroup will be broken into pieces.
* Barclays Capital is warning clients that a major financial storm is coming and blames the Fed for not moving against inflation.
* The Royal Bank of Scotland advises all the chickens will be coming home to roost after the current excesses and that the contagion will be worldwide.

More

DailyReckoning.com
Not one but three different banks are warning investors of major crisis ahead. Note to the banks: where have you been for the last year? A thousand martini lunch? The slow-motion credit crisis is nearly twelve months old. The question today is whether the competing interest rate policies of the European Central Bank and the U.S. Federal Reserve will lead to more selling in global stock markets and higher commodity prices. Inflation is winning the war.

“A very nasty period is soon to be upon us - be prepared,” says Royal Bank of Scotland’s chief credit strategist Bob Junjuah. In Wednesday’s U.K. Telegraph Junjuah says, “The Fed is in panic mode… The massive credibility chasms down which the Fed and maybe even the European Central Bank will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets.” Aussie stocks are caught in the thematic cross fire. Higher commodity prices are good for commodity producers. But global inflation sows the seeds of global recession, which is not bullish for resources.

Morgan Stanley’s European research team says an European Central Bank rate hike next month (the one Jean Claude Trichet has threatened to deliver) could lead to a “catastrophic event.” Morgan’s report concluded that, “We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe.” More