Housing Market Tracker - Subprime Strikes Korea, Switzerland, Israel, Australia, Germany...
Global Subprime Fallout
Deutsche Bank Expects $4B Quarterly Loss. “Deutsche Bank says it expects losses linked to the U.S. subprime fallout of $3.95 billion for Q1’08. Germany's largest bank said Tuesday the hit was due to financial products linked to the real estate market in the United States that had deteriorated in the past weeks. Already last week, Deutsche Bank had warned in its 2007 annual report of write-downs linked to "continuing difficult market conditions" that would hit its leveraged loans and loan commitments.”
Subprime 'Dupe', Water Body Claims. “Australia: A regional water authority admitted it unintentionally bought investments affected by the US subprime crisis and says it may join a class action against its broker. First Mildura Irrigation Trust chairman Jim Belbin [said] he accepted that money borrowed from the Victorian Government and subject to laws governing the use of public money had been invested inappropriately on the trust's behalf by Grange Securities, now Lehman Brothers Australia. The investments, originally worth about $2 million, are believed to have fallen in value by about $750,000… The trust still holds the investments, which could regain their value over time.”
Rock To Offload 60% Of Mortgages. “Ron Sandler, executive chairman of the now-nationalised Northern Rock bank, said he expected between £25B-£30 billion of mortgages to come up for renewal or shift on to a higher rate this year. The newly-appointed boss hopes that 60% of borrowers affected will move their mortgages elsewhere, helping the bank achieve its goal of cutting the mortgage book from £107B to £50B by 2011. Sandler pledged to pay back the £24B of outstanding debts to the Bank of England by the end of 2010… But [warned] of "significant losses" in 2008 and that it will be another three years before the bank breaks even.”
Israel Can't Escape Subprime Woe. “Bank of Israel: Economic growth this year, [could] be about 2%, compared with 5.5% in 2007… In terms of growth per capita, that's stagnation… The central bank's interest rates may be brought down even further, warned deputy governor Zvi Eckstein... That explains the aggressive steps the BOI has been taking lately, to the general shock: intervening in the foreign currency market… Buying about $25 million every business day for two years, and the half-percent interest rate cut to the lowest level in Israeli history, 3.25%... The central bank is unworried about an inflationary outbreak because an economic slowdown… would counter the inflationary pressures resulting from the interest rate cuts or forex meddling.”
UBS Facing More Subprime Losses. “UBS AG, the European bank with the highest losses from the US subprime crisis, fell in Swiss trading after reports that it may need to raise capital to offset writedowns on mortgage-related assets... The stock is down 47% this year… Merrill Lynch: ''We estimate that UBS's capital base can withstand $US16 billion of further writedowns on legacy assets and we expect $US11B of that capacity to be absorbed in Q1. A second capital raising at UBS is a real possibility.'' The bank's first-quarter writedowns may amount to $11B, leading to a loss of 8.2B francs… Merrill also forecast a loss for all of 2008 and writedowns of about $21B.”
U.S. Subprime Crisis Sent Investors Running From Korea. “Korea has seen the biggest exodus of foreign capital among Asian emerging markets since the U.S. subprime mortgage crisis. Korea institute of Finance researcher Lee Yoon-seok: Foreign investors net sold stocks worth US$32.3 billion in the Korean stock market between August, when the U.S. subprime crisis started, and February. The net sale volume was the largest among major Asian emerging markets like Taiwan, India, Thailand, the Philippines and Indonesia. According to the report, foreign investors net sold stocks worth 3.4B in Taiwan, $2.5B in Thailand and $800 million in the Philippines during the same period.”
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This article has 3 comments:
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Steven R. Smith
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22 Comments
My Website
Apr 02 10:56 AMThe good news is that by 2011, things might have worked themselves out.
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Derwentwater
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7 Comments
Apr 02 04:43 PM-
Paul Nicklas
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1 Comment
Apr 03 03:28 AMAll loans become potential problems wherever value exceeds debt.
The problem is real estate prices disconnected from buyer income. Upside-down homeowners in Japan are more likely to pay, upside down people in the US are more likely to walk. Part of the RE values problem is RE buyer values.