Eight banks join to rescue MBIA, Ambac,others: CNBC
|
|
|
| Posted
:
Fri, 01 Feb 2008 15:05:03 GMT |
| By
:
Reuters |
| Category
:
US (Business) |
| News Alerts by
Email ( click
here ) |
|
US Business News |
Home
|
|
|
|
NEW YORK (Reuters) - Eight large banks have joined forces to seek a rescue plan for MBIA Inc , Ambac Financial Group Inc and other troubled bond insurers battered by the global credit crunch, CNBC television said on Friday, citing a person familiar with the talks.In early trading, shares of MBIA rose $1.46, or 9.4 percent, to $16.96, while Ambac rose $1.34, or 11.4 percent, to $13.06. The cost of protecting MBIA and Ambac debt against default fell, indicating that investors see less risk.The $2.5 trillion bond insurance industry is struggling with mounting losses and capital shortfalls, jeopardizing the "triple-A" credit ratings that insurers such as MBIA and Ambac depend on to function normally.CNBC said the eight banks are Barclays Plc , BNP Paribas , Citigroup Inc , Allianz's Dresdner Bank, Royal Bank of Scotland Group Plc , Societe Generale , UBS AG and Wachovia Corp.The banks retained Greenhill & Co, a boutique investment bank, as an adviser, CNBC said, citing the unnamed source.The banking industry itself has suffered more than $100 billion of write-downs in the last year related to mortgages and other complex debt.Representatives of Citigroup and UBS declined to comment. Wachovia had no immediate comment. The other banks, Ambac, MBIA and Greenhill did not immediately respond to requests for comment.Bond insurers got caught after venturing beyond writing coverage for bonds typically used to finance hospitals, roads, schools and sewer systems.Instead, to increase profit, they chose to also underwrite structured products, including securities backed by risky subprime mortgages.That decision backfired last year as credit markets tightened, homeowner defaults soared, and the value of those securities sank.Unless the market or the insurers stabilize, investors may unload hundreds of billions of dollars of bonds, raising borrowing costs and ultimately burdening taxpayers.It could also result in hundreds of billions of dollars of additional write-downs at banks worldwide, analysts have said. Standard & Poor's on Wednesday estimated total banking industry losses tied to mortgage problems will exceed $265 billion.Regulators including New York Insurance Commissioner Eric Dinallo have been meeting with industry participants to discuss a rescue. Dinallo was not immediately available for comment.Credit rating agencies have taken away triple-A ratings from a handful of bond insurers.On Thursday, MBIA reported a record $2.3 billion quarterly loss and said it would look for new capital. But it said it expected to retain its triple-A rating. S&P nevertheless put that rating on review for downgrade, joining Moody's Investors Service.In Friday morning trading, the cost to protect MBIA debt against default fell to 14 percent upfront plus 500 basis points (5 percentage points) a year, from 17.5 percent upfront plus 500 basis points, according to CMA DataVision.Ambac debt protection costs fell to 14.5 percent upfront plus 500 basis points, from 18.7 percent upfront plus 500 basis points.(Reporting by Dena Aubin, Christian Plumb, Neil Shah, Jonathan Stempel and Dan Wilchins; Writing by Jonathan Stempel; Editing by Dave Zimmerman and John Wallace)
(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
Five more US bank failures bring total for 2009 to 120
New York - Bank failures in the United States have risen to 120 this year as five more regional institutions were added to the list, the US agency that guarantees the safety of bank deposits said. United Commercial Bank in San Francisco with assets o...
US stocks climb slightly despite double-digit jobless rate
New York - US stocks posted mild gains Friday to end the week as investors shrugged off government figures that put the unemployment rate above 10 per cent. The Labour Department said the jobless rate hit 10.2 per cent in the month of October, the hi...
US joblessness hits 10.2 per cent, highest in 26 years - Summary
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years as another 190,000 people lost their jobs, the Labour Department reported Friday. The figure comes after a 9.8-per-cent jobless rate in September and wa...
US joblessness jumps to 10.2 per cent, highest since 1983 - Update
Washington - The US unemployment rate surged to 10.2 per cent in October, the highest in 26 years, as another 190,000 people lost their jobs during the month, the US reported Friday. The figure reported by US Labour Department came after the 9.8 per ...
US jobless rate jumps to 10.2 per cent
Washington - The US unemployment rate surged to 10.2 per cent in October as another 190,000 people lost their jobs, according to US Labour Department figures released Friday. The jobless rate stood at 9.8 per cent in September. Unemployment had been ...
Bulls stop James, edge Cavs - Summary
Los Angeles - The King couldn't deliver in the clutch. Luol Deng and Joakim Noah combined to deny LeBron James a potential game-winning drive in the final seconds as and the visiting Chicago Bulls snapped the Cleveland Cavaliers' three-game winning...
Mortgage lender Fannie Mae posts nearly 19-billion-dollar loss
Washington - US mortgage lender Fannie Mae said Thursday that it would seek 15 billion dollars in federal aid, after posting its ninth consecutive quarterly loss. Fannie Mae reported a net loss of 18.9 billion dollars in the third quarter of 2009, co...
|
|
|
|
|
|
|
|
