Gov intervention spreads
(21 October 2008 – Global) Government rescue have continued, spreading through Europe and across to Asia, from Switzerland to South Korea.
Switzerland became the latest European country to bail out one of its primary financial institutions, UBS.
The Swiss Government has injected Fr6 billion (A$7.8 billion) into UBS, taking what could become a 9.3 percent stake in the bank.
UBS will also transfer US$60billion (A$90 billion) of assets, including US sub-prime mortgages and student loans, to a new vehicle controlled by the Swiss National Bank, in order to cap future losses and reduce the risks on its balance sheet.
Still in Europe, the Dutch Government has been a part of its second major capital injection, after taking a major stake in Fortis.
ING reached an agreement with the Dutch government to strengthen its capital position, by issuing 10 billion Euros of core Tier-1 securities to the Dutch State.
The move follows the plans the Dutch government previously announced to make capital available to financial enterprises that are fundamentally sound and viable.
Moving into Asia, the South Korean Government has issued a US$130 billion (A$188 billion) package of foreign borrowing guarantees and domestic liquidity support.
Finance Minister Kang Man-soo, Bank of Korea governor Lee Seong-tae and Financial Services Authority chief Jun Kwang-woo said that the Government would act, if needed, to recapitalise banks and extend deposit guarantees.
Moody's estimated that South Korea’s top four banks’ leverage, measured by loans-to-deposits, had reached 150 percent, compared with the East Asian average of less than 100 per cent and considerably larger Japanese main banks at 75 per cent. The high Korean leverage is exacerbated by unusually high levels of short-term debt.
The Swiss Government has injected Fr6 billion (A$7.8 billion) into UBS, taking what could become a 9.3 percent stake in the bank.
UBS will also transfer US$60billion (A$90 billion) of assets, including US sub-prime mortgages and student loans, to a new vehicle controlled by the Swiss National Bank, in order to cap future losses and reduce the risks on its balance sheet.
Still in Europe, the Dutch Government has been a part of its second major capital injection, after taking a major stake in Fortis.
ING reached an agreement with the Dutch government to strengthen its capital position, by issuing 10 billion Euros of core Tier-1 securities to the Dutch State.
The move follows the plans the Dutch government previously announced to make capital available to financial enterprises that are fundamentally sound and viable.
Moving into Asia, the South Korean Government has issued a US$130 billion (A$188 billion) package of foreign borrowing guarantees and domestic liquidity support.
Finance Minister Kang Man-soo, Bank of Korea governor Lee Seong-tae and Financial Services Authority chief Jun Kwang-woo said that the Government would act, if needed, to recapitalise banks and extend deposit guarantees.
Moody's estimated that South Korea’s top four banks’ leverage, measured by loans-to-deposits, had reached 150 percent, compared with the East Asian average of less than 100 per cent and considerably larger Japanese main banks at 75 per cent. The high Korean leverage is exacerbated by unusually high levels of short-term debt.
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