Pound Falls as News Reports Say U.K. Subprime Losses Spreading

[FarCenter]

Source: Bloomberg -- By Kosuke Goto

June 2 (Bloomberg) -- The British pound fell against the dollar and euro after news reports said Bradford & Bingley Plc, the U.K.'s biggest mortgage lender to landlords, needs to raise money from shareholders and profit will be lower than expected. The currency declined the most in two weeks against the dollar after Bradford & Bingley said chief executive Steven Crawshaw will step down just weeks after the lender announced a 300 million pound ($592 million) rights issue aimed at bolstering its balance sheet. The bank said Crawshaw left because of ``a serious cardiovascular condition.''

``The pound fell sharply because of this news,'' said Kenichi Nishii, manager of the foreign-exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly traded lender. `There are some talks on the company's profit warning, raising concern over subprime- related losses in the U.K.''

The pound declined to $1.9737 against the dollar as of 9:14 a.m. in Tokyo, from $1.9823 in New York late last week. It also declined to 78.81 pence per euro from 78.46. It weakened to 208.23 yen from 209.16 yen. The U.K. currency will decline to 81 pence per euro within two weeks, Nishii said.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aQc0yO9CfB8U&refer=home

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London is the center of "creative" finance. Their mortgage situation is as bad as ours. Their economy is more dependent on financial services than ours, as agriculture and industry have waned.

[Zynx]

1. Additionally their housing bubble is out of control when it comes to prices.

Theirs got far far far worse than ours.

[dipsydoodle]

2. You need to bear in mind

that our prices have also been influenced by supply due to lack of building space.

Other than that one of the main current issues is that the bottom is about to fall out of the buy to rent market due to rental incomes becoming lower than mortgage outgoings. That will further increase the supply as mortagees sell and terminate their mortgages.

The overall winners will be first time buyers which is maybe how it should be.

[Joe Chi Minh]

3. Brilliant signature!

[dipsydoodle]

4. Courtesy of Tom Waits

Credit where it due :)

[Joe Chi Minh]

5. Thanks! Must Google Mr Waits.