| Credit crisis hits mortgage lender Paragon
Mortgage firm Paragon has admitted it is facing funding uncertainties after costs soared during the summer credit crunch. A statement from the company, the UK's third largest buy-to-let lender, alarmed investors as shares in the company tumbled by almost half. The Solihull-based firm said: "The deep turmoil in the credit markets is affecting the normal financing activities of the business." Paragon has no depositors and raises its funding by "securitising" - bundling up and selling on - its loans. Cash for new lending is also financed by a £2.3 billion "warehousing" facility from a banking syndicate. But since the summer credit crisis - sparked by slumping confidence in bonds based on high-risk US mortgages - the securitisation market has effectively closed.
The priorities are clear for Northern Rock
1. Depositors. Banks are different from other businesses, where customers shop at their own risk. The people who have placed their savings in Northern Rock need to know that their money is safe, not only to prevent another run on the bank but to ensure confidence in the banking system. It is in the general public’s interest that the depositors sleep easy at night. 2. Financial stability. The Government’s job is to address systemic risk. The chaotic collapse of a bank could easily prompt a run on others, paralysing the financial system and damaging the economy. Jobs and prosperity well beyond Tyneside are at stake. 3. Taxpayer funds. British citizens did not sign up to Northern Rock’s foolish business model, nor should they underwrite it. While Treasury money is not sacrosanct – i.e.
State grants charter to Greensboro business bank
Greensboro is a step closer to getting its first business-only bank. The North Carolina Banking Commission has granted a charter to Premier Commercial Bank, a startup lender for small and medium-sized businesses. The bank said it expects to open in early 2008. Premier was founded by Frank Gavigan, a longtime Triad banker who was most recently senior credit officer at 1st State Bank in Burlington. It's joining a space that's become increasingly crowded in North Carolina since Raleigh's Paragon Commercial Bank became the state's first business-only bank in 1999. The Triad has yet to get in on the action, however, with most of the startups planting their headquarters in Charlotte or the Triangle. So far, Premier has raised more than $11 million in its initial stock offering, which began Aug.
FTSE 100 closes at 6226.5
The FTSE 100 closed up 105.7 points at 6226.5, gaining nearly 2 per cent despite further falls from mortgage bank Northern Rock. The London market gained some late momentum from Wall Street, with the Dow Jones Industrial Average rising by more than 100 points in early trading. The gains on both sides of the Atlantic come after a dire day on Monday, with the FTSE dropping almost 3 per cent. It was a rough day for Northern Rock, down another 7 per cent, or 7.2p to 97p. However, the group rebounded from an earlier fall of as much as 40 per cent after news of an offer for the whole business from private equity firm JC Flowers. Elsewhere in the banking sector, Barclays - a recent heavy faller on fears over sub-prime mortgage losses - gained nearly 5 percent, or 25.25p, to 516.5p, Royal Bank of Scotland stood 8.5p higher at 412.5p, and Alliance & Leicester gained 12.5p to 594p.
Washington Mutual Director Buys Shares
A director of banking company Washington Mutual Inc. bought 10,700 shares of stock, according to a Securities and Exchange Commission filing Thursday. In a Form 4 filed with the SEC, Orin Smith reported buying the shares for $28.02 to $28.04 apiece on Tuesday. Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction. Washington Mutual is based in Seattle. .
Paychex CEO Joins NY Fed
The Federal Reserve Bank of New York named Paychex CEO Jonathan Judge to the board of directors of its Buffalo branch. The board of directors of the Buffalo Branch of the Federal Reserve Bank of New York consists of seven members, three of whom are appointed by the Board of Governors of the Federal Reserve System. The remaining four are appointed by the NY board of directors. Branch boards of directors are leaders representing various industries throughout upstate NY, including banking, manufacturing, health care, agriculture, labor and energy. Sh/ay Federal Reserve Bank of New York
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Louisiana firm to inject $5 million to $6 million into Douglass National Bank
The Louisiana banking company that is buying Douglass National Bank plans to inject $5 million to $6 million into Douglass, said a businessman who helped broker the deal. Marshall T. Reynolds, chairman of First Guaranty Bank, whose parent company last week announced its intention to purchase Kansas City's only black-owned bank, also said the purchase price would total about $2.5 million. In a regulatory filing, First Guaranty Bancshares said it would pay cash equal to the adjusted book value of Douglass immediately before the deal's closing. Although Douglass had a book value as of Dec. 31 of negative $87,000, Reynolds said that by the time the purchase is completed later this year, he expected First Guaranty to end up paying close to $2.5 million. Reynolds, 70, heads Champion Industries of Huntington, W.
Exchange in brief
ON WALL STREET Wall Street rises after global central banks calm nerves Wall Street rebounds after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness. ECONOMY Consumer retail spending up last month Consumers went shopping for clothes, furniture and electronics products last month, helping to give a modest boost to retail sales despite continued weakness in the demand for new cars. Oil futures retreat after rising Energy futures retreated from earlier highs as a revised forecast predicted a tropical storm will turn away from the Gulf of Mexico, and as refinery problems turned out not to be as bad as initially thought.
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