Lehman Brothers filed for bankruptcy, and Merrill Lynch sold it to Bank of America and the Federal Reserve to establish a $70 billion stabilization fund.
14, the "Big Two" of the top five investment banks in the United States lost, and Lehman Brothers announced its application for bankruptcy; Merrill Lynch also agreed to sell it to Bank of America for about $44 billion. Alan greenspan, former chairman of the Federal Reserve, said that the United States suffered a once-in-a-century financial crisis, and more large financial institutions would fail in this crisis.
On June 5438+04, Barclays Bank announced that it would withdraw its bid for Lehman Brothers, a large American investment bank in trouble. This makes the rescue plan of Lehman Brothers promoted by American financial supervision authorities face difficulties, and also makes the fourth largest investment bank in the United States have to announce its bankruptcy liquidation plan on the evening of 14. Bank of America, which Lehman Brothers had hoped to acquire, has been sitting with Merrill Lynch, which has brought Lehman Brothers closer to bankruptcy liquidation.
However, some observers believe that things may turn around at the last minute. First, the Federal Reserve has allowed investment banks that need emergency funds to lend directly to the central bank like commercial banks. In addition, some private equity funds may eventually buy.
At the same time, the US government is fully engaged in rescue operations.
/kloc-On the evening of 0/4, the Federal Reserve announced several new measures to prevent the credit crisis from expanding. Among them, a $70 billion stabilization fund will be established in conjunction with the top ten banks in the United States to provide financial protection for financial institutions with bankruptcy risks. The new measures also include expanding the scope of collateral for loans from Federal Reserve financial institutions and increasing the auction frequency of some loans from once every two weeks to once a week.
Affected by the news that Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to sell to Bank of America, investors sold financial stocks one after another, dragging down global stock markets.
On Monday, Asia-Pacific stock markets opened lower. Australian stock market closed down 86. 1 point, or 1.8%, while financial stocks closed down 3.5%. The Taipei stock market fell sharply, and the stock index closed at a nearly three-year low.
Major European stock markets generally fell by 2% to 3% on Monday, and the intraday decline fluctuated around 4%, with bank stocks leading the decline.
On Monday, US stocks opened lower, and the Dow Jones index fell 94.04 points. The Standard & Poor's 500 Index fell 16.26 points; The Nasdaq Composite Index fell 57.22 points. By 24: 00 Beijing time on 15, the Dow was down 2.6% and Nasdaq was down 1.66%.
The collapse of five major investment banks and three American financial crises will become a "corrosive" force.
Lehman Brothers filed for bankruptcy protection and Bank of America bought Merrill Lynch for $44 billion.
Following the exposure of financial institutions such as Bear Stearns bankruptcy and the takeover of Fannie Mae and Freddie Mac, bad news came from Wall Street a few days ago. On June 4th, 65438, Lehman Brothers filed for bankruptcy protection, and Merrill Lynch also agreed to sell it to Bank of America for about $44 billion. At present, only two of the top five investment banks in the United States have survived-Goldman Sachs and Morgan Stanley. Some American media reported with the eye-catching headline of "Bloody Sunday" that there was a "tsunami" on Wall Street, and some reports compared it with the American stock market crash and the 1929 Great Depression.
On June 4th, 5438, alan greenspan, former chairman of the Board of Directors of the Federal Reserve, said that the United States was in a once-in-a-century financial crisis, and the possibility of economic recession caused by this crisis was increasing. Greenspan believes that the crisis will continue to be a "corrosive" force until the US real estate price stabilizes; This crisis will also induce a series of global economic turmoil; More large financial institutions may fall in this crisis.
Lehman Brothers filing for bankruptcy will trigger a "tsunami"
US Treasury Secretary Paulson, Chairman of the Securities and Exchange Commission Cox and senior executives from Citigroup, JPMorgan Chase, Morgan Stanley, Goldman Sachs and Merrill Lynch gathered at the Federal Reserve Bank Headquarters on 14, which was the third consecutive day that they met to discuss the rescue of Lehman.
However, Barclays Bank and Bank of America, which are interested in buying Lehman, both announced their withdrawal. Lehman Brothers prepares to file for bankruptcy. Because Lehman is inextricably linked with investment banks, brokers, hedge funds and even insurance institutions, once it goes bankrupt, the shock wave will quickly spread to the entire financial market. In addition, the bankruptcy of Lehman may also lead to a sharp rise in credit spreads, and investors will suffer even greater losses.
Bill gross, the manager of PIMCO, the world's largest bond investment fund, once said that the bankruptcy of Lehman would trigger a "financial tsunami". At the suggestion of the Federal Reserve, the financial derivatives trading market opened by the International Swaps and Derivatives Association (ISDA) was temporarily opened on June 5438+04 to facilitate all kinds of traders to hedge related risks.
Lehman was on the verge of bankruptcy at least four times in its history, namely: 1929, the stock market crashed; In 1973, the company lost $6.7 million on the betting rate; 1984, internal differences led to its acquisition by American Express; From 65438 to 0994, the newly independent Lehman faced a shortage of funds. However, this time Lehman seems to have "finished". A Lehman Singapore executive said in an interview earlier on June 5438+05, "The situation is changing rapidly and the future is unpredictable. We have not received any news from new york. " He further pointed out pessimistically, "I personally think that we will have to wait for the dismissal order." In view of this sensitive situation, the executive asked not to disclose his name.
In early June 5438+05, a large number of Lehman employees in Asia were difficult to contact, while there were relatively more Lehman employees in Hong Kong and Tokyo. Another Lehman employee in Singapore also said, "Everyone is very worried and anxious about the next situation." The employee also revealed that due to the rising anxiety and impatience of employees, the management issued a notice to employees last week to try to reassure people.
In Lehman Brothers' office in Xinda Building, Singapore's financial center, only a few employees reported to work on June 5438+05, and everyone avoided answering questions.
Employees of Lehman Brothers Australia Branch are also facing uncertainty. Lehman Brothers bought Grange Securities, a local broker, for $98 million last year, thus entering the Australian market.
Merrill Lynch sold $44 billion to Bank of America.
In order to survive the current storm sweeping the US financial industry, 94-year-old Merrill Lynch 14 agreed to sell itself to Bank of America for about $44 billion.
The agreement reached by the two sides after 48 hours of intense negotiations may reshape the American banking industry in an instant and make the financial giant Bank of America bigger. According to informed sources, the boards of directors of the two companies approved the transaction on the evening of 14.
Driven by Kenneth Lewis, CEO of Bank of America, the bank has made dozens of mergers and acquisitions of different sizes, including the acquisition of the troubled mortgage company Rural Finance Group earlier this year. After the acquisition of Merrill Lynch, the company will control the largest stockbroker team in the United States and a respected investment bank.
The combination of the two will create a banking giant with a wide range of businesses, involving almost all aspects of the financial field, including credit cards, auto loans, bond and stock underwriting, M&A consulting and asset management.
The deal also shows how the credit crisis has brought investment opportunities to financially sound buyers. Bank of America plans to spend $44 billion on Merrill Lynch at a price of $29 per share, which is only two-thirds of the market value of Merrill Lynch a year ago and only half of the market value of the bank at the beginning of 2007. Affected by the news that Lehman Brothers was facing bankruptcy, Merrill Lynch's share price fell sharply last Friday and closed at 17.05 dollars that day.
Nancy Bush, an analyst at NAB Research LLC in New Jersey, said that Lewis always likes to buy the biggest thing he can buy. Take Merrill Lynch as an example, he is the overlord in the financial field.
The acquisition of Merrill Lynch will help Bank of America strengthen its global strength, including in emerging markets such as India. In addition, Merrill Lynch also has strong strength in underwriting business, and Bank of America said at the investor conference last week that it hoped to make great progress in this field.
The international group urgently raised funds to make a survival plan.
According to people familiar with the matter, American International Group (AIG) is working out a survival plan, which includes selling some of its most valuable assets, increasing the scale of financing and possibly seeking help from the Federal Reserve. Driven by tremendous pressure from investors, the company's share price fell by 3 1% in one day last Friday.
American International Group rejected J.C. Flowers &; A consortium of private capital operating companies led by Co. makes capital injection, because according to an option attached to the capital injection proposal, this consortium will actually obtain the controlling stake of the company.
The above options will allow the consortium to acquire AIG for $8 billion under certain conditions, which is only a quarter of the company's current market value.
After AIG's board of directors refused to inject capital, Robert Villam Stade, the new chairman and CEO of AIG, made an important decision and asked the Federal Reserve for help. Villam Stadt asked Gisena, president of the Federal Reserve Bank, if he could support the sale of some assets.
According to people familiar with the matter, AIG plans to sell assets including domestic auto business and annuity business; At the same time, the company seeks to sell its aircraft leasing subsidiary, International Leasing Finance Corporation, but it is not clear whether the relevant measures of International Leasing Finance Corporation will become part of the emergency plan.
The company is also considering transferring the assets of its insurance supervision business to the holding company, which will help the holding company meet the demand for cash or collateral. However, the plan was resisted by the regulatory authorities, and as of last Sunday night, the hope of approval of the plan was still slim.
American International Group has a history of 89 years, and its business scope covers almost every corner of the world.
Gaoshengmo will announce its performance to prove its strength.
Last week, investors witnessed the tragic fate of Lehman Brothers Holdings. This week, investment banks such as Lehman Brothers' rivals Goldman Sachs Group and Morgan Stanley will try their best to prove that they are completely different from Lehman Brothers.
Goldman Sachs and Morgan Stanley will announce their third-quarter results on Tuesday and Wednesday respectively. Wall Street is eager to find out how much losses will be caused by the problems that hit Lehman, especially the losses caused by the miscalculation of real estate-related assets.
Analysts expect Goldman Sachs and Morgan Stanley to write down $654.38+0 billion to $2 billion respectively, so the financial reports of the two companies will not be too beautiful. Fortunately, however, many business performances of the two companies are passable enough to keep the two companies profitable in the third quarter.
On the contrary, Lehman Brothers announced last Wednesday that it expected a loss of $3.9 billion in the third quarter and a write-down of $7.8 billion, which led investors to sell their shares and forced its chairman and CEO Fuld to reluctantly look for potential buyers.
Even though the situation of Goldman Sachs and Morgan Stanley looks much better than that of Lehman Brothers, their operating results may also show the outside world how bad the prospects of Wall Street, which has suffered from the credit crisis for more than a year, are. Trading business has declined, and reducing dependence on debt makes it more difficult for investments that have escaped the credit crisis to maximize profits.
Goldman Sachs may be particularly hard hit. Analysts surveyed by Thomson Reuters predicted last week that Goldman Sachs' earnings per share in the third quarter was about $65,438+$0.73, down 72% from the same period last year, which was the company's worst performance since the beginning of the credit crisis. Morgan Stanley expects earnings per share to be $0.77, down 44%.
Until recently, Goldman Sachs was lucky. It correctly estimated that the subprime mortgage would fall into crisis and cleverly avoided other crises. Morgan Stanley made some misjudgments in mortgage loans last year, but its performance since then has satisfied investors and reduced its risk exposure.
The turmoil in the American banking industry has severely hit the financial industry.
On Monday, some markets in the Asia-Pacific region traded as usual. Stimulated by the news that Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to sell to Bank of America, investors sold financial stocks and dollars in succession.
Financial stocks in the Asia-Pacific region generally fell, and major European stock markets generally fell by 2% to 3% on Monday.
On Monday, the benchmark Australian S&; The P/ASX 200 index closed down 86. 1 point, or 1.8%, to 48 17.7 points, with an intraday low of 4,770.9 points. Financial stocks closed down 3.5% overall, while Australian banking stocks fell 4.8% to A $22.82. Commonwealth Bank of Australia fell 2.4% to A $465,438+0.98; Macquarie Group fell 10.3% to A $39.46; QBE Insurance fell 5.0% to A $23.00.
However, raw material stocks closed up 0.5%, as the falling dollar triggered a strong rise in commodity prices. BHP Billiton closed up 0.05 Australian dollars to 36.05 Australian dollars, benefiting from the 2.7% increase in copper futures on the London Metal Exchange; OZ Minerals rose 7.0% to A $65,438+0.445, after LME zinc futures rose 5.2%.
In addition, the Taipei stock market plummeted on Monday, and the benchmark stock index closed at a nearly three-year low due to the chaos in the US banking industry. The weighted index of Taipei Stock Exchange fell 258.23 points to 6052.45 points, or 4. 1%, which was the lowest closing level since it closed at 6020.94 points on October 7, 2005. The turnover totaled NT$ 72.94 billion, compared with NT$ 965.438+62 billion in the previous trading day. 1832 stocks fell, 15 1 stocks rose, and 267 stocks were flat. Many markets in Asia were closed on Monday, and the Taipei stock market became an "ATM" for overseas investors.
The Singapore stock market closed down, and Lehman Brothers' plan to file for bankruptcy protection triggered a strong panic in the US financial market, so investors sought safety. Singapore Straits Times Index closed down 84. 12 points, or 3.3%, at 2486.55 points, with 520 stocks down and 88 stocks up. Volume was 922.8 million shares, compared with 880 million shares last Friday. Only one of the 30 constituent stocks of the Straits Times Index closed up, and all the others fell.
Major European stock markets generally fell 2% to 3% at the opening on Monday. Lehman Brothers' share price fell by more than 80%. However, after Merrill Lynch received an offer from Bank of America, its share price rose by nearly 40%.
European stock markets continued to fall after opening lower, with bank stocks leading the decline. Lehman's share price in Frankfurt, Germany fell by more than 80%, and AIG's share price fell by more than 30%. Share prices of other American financial companies-Morgan Stanley, Goldman Sachs and Citigroup-also fell by 7% to around 17%. European banking stocks also generally fell. Shares of BNP Paribas, Societe Generale, UBS Group AG and Credit Suisse all fell more than 5%.
The Federal Reserve and ten banks have established a 70 billion pound stabilization fund.
In order to cope with the worsening domestic financial crisis, on June 4th, 65438, the US Federal Reserve and 10 banks set up a $70 billion stabilization fund to provide financial guarantee for financial institutions at risk of bankruptcy.
After the American government announced the takeover of Fannie Mae and Freddie Mac, the domestic financial crisis in the United States did not appear the expected temporary stability. On the contrary, Wall Street suffered a triple blow last Sunday: Lehman Brothers prepared to file for bankruptcy protection; American International Group (AIG) asked the Federal Reserve for a $40 billion bridging loan to tide over the difficulties; Merrill Lynch was acquired by Bank of America for nearly $44 billion. After such an incident, the Federal Reserve and American banks had to be nervous.
After urgent consultations, the Federal Reserve and Bank of America, Barclays Bank, Citigroup, Credit Suisse Group, Deutsche Bank, Goldman Sachs Group, JPMorgan Chase, Merrill Lynch, Morgan Stanley and UBS Group AG AG jointly established a stabilization fund with a total amount of 70 billion US dollars. The fund will be mainly used to provide financial guarantees for financial institutions with bankruptcy risks. 10 Any one of the banks will be allowed to borrow up to one third of the total assets of the fund. If other banks are allowed to join, the size of the fund may grow further.
In addition, the Fed has decided to take temporary regulatory measures and plans to expand the scope of collateral applicable to its credit plan. At the same time, the US Securities and Exchange Commission said that it is taking action to ensure that Lehman Brothers' customers will not be negatively affected by recent market events.
The Federal Reserve also announced the expansion of the collateral scope of the investment bank credit plan, which is basically the same as the tripartite repurchase system applied by the two major clearing banks. Previously, the types of collateral for credit instruments of primary dealers were limited to investment-grade bonds. (Feng Jia)
Greenspan: The United States is caught in a once-in-a-century financial crisis.
On June 4th, 5438, alan greenspan, former chairman of the Board of Directors of the Federal Reserve, said that the United States was in a once-in-a-century financial crisis, and the possibility of economic recession caused by this crisis was increasing.
In an interview with NBC, Greenspan said that this is the worst financial crisis he has ever seen in his career, and it may last for a long time and continue to affect the real estate prices in the United States. He believes that the probability that the United States will escape the recession is less than 50%.
Greenspan believes that the crisis will continue to be a "corrosive" force until the US real estate price stabilizes; This crisis will also trigger a series of global economic turmoil.
Greenspan also predicted that more large financial institutions will fail in this crisis.