Alliance and Leicester to be Bought by Abbey Owners
July 14, 2008
A deal has been agreed for the UK’s Alliance & Leicester (A&L) to be bought out by Santander, a Spanish bank for approximately £1.26 billion.
Monday saw shares soar by nearly 50 percent after it was disclosed that A&L had received an offer by Santander. The offer of 317p per share from the Abbey National owner Santander has boosted the lenders value and will hopefully be completed by October 2008.
A&L is set to merge with Abbey once the takeover is complete and this has lead unions to worry about job losses. In these uncertain times, the FSA will be relieved with the merger as larger banks are stronger in the current market conditions.
Though with that said, the bigger banks do have too much power, with limited numbers of small banks to bring competition to the market.
The A&L shareholders have had the bid recommended to them and they will have to approve before the sale can go ahead. This offer seems viable however, while stuck in the middle of the credit crunch. Plus, preventing another Northern Rock saga is imperative.
Businesses and the Economic Squeeze
July 10, 2008
What with the economic slowdown and increased costs, businesses are really starting to feel the financial sting. We consumers have begun to tighten our purse strings and now companies are failing to turn over what they used to.
Many small businesses are downsizing where possible and the revolution of virtual offices has become widely used by people who don’t necessarily need office space. A virtual office is where you can make use of the services offered, such as telephone answering or message taking, or the address, so you can have a prestigious address without the overheads of a complete office.
It seems sooner or later we are going to feel the effects of the credit crunch and the media this week have been predicting a recession within the next three months.
House Prices Continue to Fall
July 2, 2008
The last eight months have seen a continuation in the fall of house prices, with nearly a 1% drop in the last month alone. Compared to this time last year, the decrease has now reached 6.3%. Though this is a bitter pill to swallow for those already on the housing ladder, particularly those who have only recently dared to jump on, it does give some hope to those first time buyers that have slowly bided their time.
There is much speculation by experts and it has been said that we could experience another 20% fall before the next twelve months are out. Fionnuala Earley, the Nationwide’s chief economist has said
“The tightening of credit conditions, along with changing expectations of house price growth and a general weakening in consumer confidence in the economy have led to a severe slowing in housing market activity. With house purchase transactions so far below their long-term trend, it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months. However, as prices continue to fall, affordability measures become more favourable for those in a well-financed position to be able to buy.”
So then, there is a sector of the population that will do well from the current credit crunch. But let’s face it, with the highest ever debt to credit ratio, the benefiting minority, really is an insignificant proportion of Britain. How the main bulk of Britons (including our very own government) are going to sort their financing issues is still unclear.
With hints that interest rates will increase, the future looks slightly bleak. Another figure to think about is that the number of repossessions increased by 17% in the first quarter of 2008. So basically, if you have a home you may lose it and if you don’t you are unlikely to anytime in the near future!