Northern Rock remains our main preoccupation today. Such an amazing story. Our political editor, George Parker, has rushed back from the LibDem conference and we have all sorts of great plans. The key points so far are:
- Northern Rock shares up 9 per cent
- Alliance & Leicester shares up 26 per cent
- The Bank of England said it would inject £4.4bn into the system at its benchmark rate of 5.75 per cent in a two-day “exceptional” tender. That brought overnight lending rates, which on Monday had surged to their highest levels in nearly six years, back down to 5.8 per cent.
- There is a very lively debate on FT.com about whether the authorities reacted too late. Have your own say.
- Buy-to-let mortgage lender Paragon expects the securitisation market to reopen before the end of this year after a temporary close amid a global credit crunch, but said the cost of funding is likely to rise.
- Delicious stuff in the Telegraph today about the analysts who shouted Buy Northern Rock all the way down. ”One final tip. Load up on NRK [Northern Rock] for your children, your Mum, your goldfish... it is not going bust, gives an excellent yield, is cheap and is a realistic takeover target – buy it now.” That was from Lehman Brothers.
- Edinburgh-based fund manager Baillie Gifford – the largest institutional shareholder in Northern Rock – is believed to have lost more than £250m as the stock plunged. So say the Telegraph and the Times. How sure are we, though, of the investors’ “in” prices?
There’s a load of other financial services stuff around as well, led by the spectacular row at Absolute Capital Management.
Florian Homm, one of ACM’s founders and famous for being shot by robbers in Caracas despite being a giant of a man, has stormed out after, he says in a gripping letter, the other directors failed to back his move to support the business by putting his own shares into the fund and distribute the management’s bonuses to the investment professionals. Heroic stuff, and not without cost: ACM shares have plunged 60 per cent (he still has about 20 per cent). Homm’s letter may shed some light on the departure last month of Sean Ewing, the chief executive brought in by Homm (as reported on by our People column the other day).
Lehman Brothers had just published its Q3 figures as I am writing this. Keep an eye on FT.com for reaction. Earnings are down but seem, at first glance, to be slightly better than our lowered expectations.
Elsewhere, Standard Chartered is buying American Express Bank for $1.1bn (NAV of $860m plus $300m) to boost its private banking and correspondent banking services.
Strong interims from Resolution. Strong figures, too, from Arbuthnot and BlueBay, the fund manager specialising in bonds. Also, Aberdeen Asset Management is expanding in the US but I haven’t been able to check the terms yet.
Finally, Debenhams has managed to disappoint yet again. It forecast a 5 per cent fall in its like-for-like sales this year but said profits would be in line with expectations. The shares are off 4 per cent. The stock has been an unmitigated disaster: floated at 195p by the team at Merrill Lynch that brought us Sports Direct, it is now at 101p.