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Money for nothing

Moving to play down potential losses from crippling mortgage-backed credit
products languishing on their books, the three banks decided to leave nothing to
chance following negative economic forecasts and sought to strengthen their
capital bases for ongoing difficulties. “We are planning for a more challenging
environment ahead and the proceeds of the rights issue should ensure that we
benefit from strong ratios even if the macro-economic environment deteriorates
further,” HBOS group chief executive Andy Hornby said. His bank’s decision was
aimed at planning for “a more challenging environment ahead”, while RBS chief
executive Sir Tom McKillop said the bank expected pre-tax write downs of about
£5.9bn in 2008 to credit market exposure. But as share prices fall, underwriters
may be left with unwanted rights.

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