Latest News

Iceland has turned to two women to rebuild its financial system after the banking empire built by its young, male business-schooled elite collapsed. Elín Sigfúsdóttir and Birna Einarsdóttir are set to become chief executives of New Landsbanki and New Glitnir respectively, the nationalised banks created by the Icelandic government in the wake of the crisis. One government minister said their appointments were an attempt to signal a new culture within the banking system. Landsbanki, Glitnir and Kaupthing, infamous for their aggressive international expansion, collapsed last week under the weight of their debt.

Santander of Spain, the biggest bank in the eurozone, is negotiating an all-share deal to buy the rest of Sovereign Bancorp off the US for a tenth of the price agreed when it took a minority stake three years ago, according to bankers familiar with the talks. The mooted rescue - at a possible exchange ratio of one Santander share for 3.4 shares in Sovereign and valuing the US bank at about $2.4bn (€1.7bn, £1.4bn) - is in line with Santander's view that it can take advantage of a "winner takes all" market in the current global financial crisis. José Antonio Alvarez, Santander's chief financial officer, said in a presentation to a banking conference in London last week that his bank could "add value by rescuing falling banks at attractive prices". He cited the £600m (€769m, $1bn) purchase of the deposits and branches of Bradford & Bingley, which was nationalised by the UK last month, as one example.

The US government summoned banking bosses to Washington yesterday to put the finishing touches to a plan to pump billions of dollars into the financial industry, sparking frenzied anticipation of a rescue that sent shares on Wall Street flying. Anxious to avoid lagging behind Europe in supporting troubled institutions, the US treasury said it was moving "quickly but methodically" towards an initiative that is likely to include guaranteeing inter-bank lending and taking equity stakes in leading banks. Encouraged by the prospect of bail-outs on both sides of the Atlantic, buyers returned to the US stockmarket.

Barclays' decision to reject the Government's offer of a capital injection surprised banking experts yesterday, with critics sceptical about the bank's claims to have steered a better course than its rivals through the credit crunch. In tough negotiations with the Financial Services Authority at the weekend, Barclays conceded that it would need to raise £6.5bn more than it believed it needed to gain access to the UK's guarantees on banks' debt. But the bank stood firm on the means by which it would raise the funds, opting to go to the market using a long timetable that could take until the end of next March.

Consumer groups and debt charities gave a cautious welcome to the news that the bailed-out banks will be required to stimulate the mortgage market and help homeowners facing repossession - but they warned more help is needed. The Treasury said one of the conditions in yesterday's £37bn bail-out would be more help for those struggling with mortgage payments, and help to keep them in their homes. It also demanded that the recapitalised banks, RBS, Lloyds TSB, and HBOS, continue to provide competitive mortgages to homeowners and loans to small businesses at volumes last seen a year ago. Debt charities asked whether some of the bail-out money might have been better spent helping homeowners fend off imminent repossession.

Thousands of jobs are under threat as Royal Bank of Scotland (RBS) slims down its global markets and investment banking division as part of the price of the Government's £20 billion capital injection. RBS has agreed to a significant downsizing of capital-intensive businesses within the division, which employs 25,000 people, most of them in Britain. It has also agreed to reduce proprietary risk, suggesting that proprietary traders could be under threat. Stephen Hester, the British Land boss who is taking over as chief executive from Sir Fred Goodwin, said that there were no sacred cows, but he added that RBS would remain an important international bank.

Estate agents are selling less than one property a week in the housing market downturn. Branches in London are selling barely one a fortnight, according to figures released yesterday. The survey by the Royal Institution of Chartered Surveyors showed that sales are at their lowest level since records began 30 years ago. Rics said estate agents sold an average of 11.5 properties in the three months to the end of September- 0.88 properties a week. They were selling more than double that in the same period last year and 5.25 properties a week at the market's heights.

Gordon Brown has announced that the Government is to take control effectively of three high street banks with more than 40 million customers and almost half the country's mortgage market. The Prime Minister unveiled an unprecedented bail-out for RBS, HBOS and Lloyds TSB. Under the emergency package, more than two-thirds of Britons will become customers of government-controlled banks that have more than £1 trillion in savings. The announcement of the £37 billion bail-out expected to become the blueprint for similar government schemes around the world was welcomed by the City and the stock market rose sharply. Bank executives are growing increasingly confident that the package represents a turning point in the financial crisis.

Battered American investment bank Morgan Stanley has clinched a life-saving £5.27billion bailout from a Japanese financial giant Mitsubishi after brokering a compromise agreement. Landing even a diluted deal will be a huge relief for Morgan Stanley executives and its investors after rumours the tie-up would be called off at the last minute. There were fears Mitsubishi was about to walk away after Morgan Stanley's plunging share price had made the terms of buying the 21 per cent stake unattractive. The stock tumbled 60 per cent last week.

Germany, France, Italy and a further 12 European countries last night unveiled a "comprehensive" plan for salvaging their banking systems from potential ruin, as panicked European leaders met to try to ward off more financial meltdown before the markets reopen today. An emergency summit in Paris of the 15 countries using the euro single currency was encouraged by Gordon Brown to adopt the rescue plan he launched last week as the template for an increasingly global approach to the financial crisis. Yesterday's summit in Paris followed a frenetic weekend of activity in Washington, in which the IMF, the World Bank, the G7 club of rich western nations and the broader G20 group, all called for urgent and coordinated action.