28 Apr 2009

100 percent mortgages - AGAIN!!

Do some Bank Managers never learn their lesson? One of the banks that was in the middle of the sub-prime crisis has reportedly started to offer 100 per cent mortgages again. The offer by HBOS - which is now part of Lloyds-TSB - may only be available to existing customers who have reached the end of their deal and find their equity wiped out. So HBOS may not have much choice but it still leaves a sour taste in the mouth.

21 Apr 2009

Less Credit and more Equity is the way forward

Contrary to many commentators we do not think that the solution to the present economic crisis lies in restoring lending to unsustainable levels. If anything, business will have to de-leverage and the source of finance will have to be equity capital. In this context it would be useful to device a mechanism that prevents 'Private' Equity Capital from financing 'pass-the-parcel' transactions. Venture Capital should again be what it was originally designed for: a source of risk capital for new and growing enterprises.

Russian oligarchs and Western homeowners

BarCap's Rudloff calls for end to debt 'war' in Russia (FT, 21 April 2009). Many homeowners facing foreclosure would like to get veteran investment banker Hans-Joerg Rudloff on their side as well. Today he urges borrowers and creditors in Russia 'to forget about trying to enforce claims through legal action and focus on the effective restructuring of debts and assets'. We do not think that oligarchs merit a more charitable attitude than homeowners and if anything would have thought that the current crisis gives an opportunity to redistribute assets to more disserving owners.