Chapter 646 Rescue Plan

"Last month, after the United States launched a US$700 billion rescue plan, the London stock market intensified panic and suffered a rare plunge. Among them, the stocks of the British banking system suffered the worst..."

After the meeting with Brown, Barron went to the DS Financial Center and heard Daisy’s summary:

"This has also expanded our profits. So far, our total investment in shorting British and European stock markets includes Caesars Fund and Bucks Fund (investment funds established by Cavendish Trust Fund and Devon Hill Family Trust) A total of 10 billion pounds of capital invested has generated profits of more than 24 billion pounds..."

Compared with the Black Swan Fund in the United States, which had an initial investment of more than 5 billion U.S. dollars and now has profits close to 100 billion U.S. dollars, the DS Group's short selling in England and Europe only has a profit of about 2.4 times, which is indeed not high, and even a little. Low.

But there is nothing that can be done about it. After all, in the United States, the Black Swan Fund directly shorted CDO bonds and bought CDS swap insurance at the beginning, and the profits were extremely generous. In addition, the subsequent short selling of the stock market was also due to the American market. Larger scale and the ability to use higher leverage - It has to be admitted that although London is still one of the world's financial centers, it is far lower than New York in terms of the total scale of funds and the breadth of participation.

Even so, if the amount of funds of the Black Swan Fund is increased to 10 billion U.S. dollars, the profit rate it can obtain will decrease slightly. This is the reason why short selling of this size is more suitable for the amount of funds of 5 billion U.S. dollars. .

On the European side, their short-selling investments are mainly aimed at the stock market. Even if the scope is the entire Europe, they need to be more cautious. The current profits can satisfy Barron.

"Start closing short positions in the British market. As for Europe... you can retain a certain proportion of positions and make adjustments according to the situation."

Barron's has promised Brown that he will "stabilize the British stock market." In addition, now, the decline in the British stock market is basically in place.

The fattest fish head and body have already been eaten, so there is no need to eat the tail.

The next thing he needs to consider is that with the coming of the British government's large-scale bailout policy, he can observe the market situation, carry out bargain hunting and build positions, well, including the funds from the government's public funds that he is about to receive, and wait for the market to pick up. .

…

Just a week after Barron's meeting with Brown, the British government announced a series of bailout policies.

First, they announced that they would increase the upper limit of all personal bank deposit guarantees from 35,000 pounds to 50,000 pounds. This can only be regarded as an appetizer. It mainly stabilizes some depositors of the Bank of England and can reduce the possibility of another bank run. Reduced somewhat.

Then, the British government announced that it would buy shares in a number of banks and provide guarantees for them to ease the credit crunch.

These include the possibility that the government will inject a total of more than 50 billion pounds into the eight largest banking institutions in the UK, the central bank, the Bank of England, will provide another 200 billion pounds in short-term loans, and the government will use 250 billion pounds to guarantee medium-term debt to strengthen banks. inter-bank capital flows, helping to restore confidence in banks.

After the announcement of this policy, at the request of the banks, the British government announced in early December that it would inject 37 billion pounds into Royal Bank of Scotland, Lloyds TSB and Halifax Bank of Scotland to partially nationalize them.

Among them, the British Treasury will exchange 20 billion pounds for 60% of the shares of Royal Bank of Scotland, and will inject 17 billion pounds into the acquired Lloyds TSB Bank and Halifax Bank of Scotland, holding 40% of the shares of the merged bank. .

At this time, Barclays Bank is still holding on, hoping to seize the time to raise 7 billion pounds to replenish its capital. If Barclays Bank accepts government bailout, the bailout provided by the British government this time will reach 20 billion pounds. However, faced with the "stringent" conditions of this subsidy, Barclays hopes to find a way to solve the liquidity problem on its own first.

Of course, with the implementation of this round of rescue plans, the British government also requires Halifax Bank of Scotland to raise 12 billion pounds, Royal Bank of Scotland to raise 20 billion pounds, Lloyds TSB to raise 5 billion pounds, and Barclays needs to raise 12 billion pounds. £8 billion to remediate bad debt - recapitalized banks must restore their mortgage and small business lending to 2007 levels.

As one of the policies of this round of rescue plan, the Bank of England announced that it will start to cut interest rates. This will be the third interest rate cut by the Bank of England in the past two months and the sixth interest rate cut by the Bank of England since February this year. Lowered the base interest rate from 5.5% to 2%!

This also means that Britain will begin to implement quantitative easing monetary policy.

"Looking at the economic crises that have occurred around the world in the past 120 years, each economic crisis usually has an economic decline that lasts for 2 to 3 years and a loss of 5% to 10% of GDP growth. In this economic crisis, although the current GDP growth has We have entered the bottom, but it will take some time for the economy to truly recover..."

What Barron has in hand at this time is an analysis article made by his think tank on the current process of the subprime mortgage crisis and subsequent economic forecasts.

Although he knew the detailed progress of the subprime crisis in the original time and space, after all, in this world, the progress of the subprime crisis was affected by him, and it was obviously accelerated.

Therefore, he also needed more data and analysis to determine the subsequent actions.

"From the rescue plan launched by the government this time, it can be seen that it is indeed greater than originally thought..."

As the largest listed bank in the UK besides HSBC Holdings, Standard Chartered Merrill Lynch CEO Davis is naturally very concerned about the government's rescue plan. Even if Standard Chartered Merrill Lynch does not need any government assistance, from the point of view of the government increasing the liquidity of the financial industry, it is also very beneficial to their Standard Chartered Bank.

"This is also the result of the joint efforts of many parties, and the Prime Minister has also realized that if he does not try his best to maintain the confidence of the market, then even if it is a comparison of the worst, then Britain's performance will be the most outstanding one. This is not good news for him and the entire Labour Party. After all, the Labour Party has clearly lost the local council elections in May this year."

Barron's words were recognized by Davis:

"Indeed, not only the people, but also the bankers are complaining about the government's slow action..."

He took off his glasses, took out the glasses cloth from the inner pocket of his suit, wiped it carefully, and said to Barron:

"Your Highness, the most anxious one now is probably Barclays Bank. After yesterday's meeting, Mr. Diamond came to me to talk about Barclays Bank's financing..."

Robert Diamond is the president of Barclays Bank. Yesterday, he, Davis and some major British bank managers attended a meeting initiated by the government on this bank rescue and ensuring bank liquidity.

After that meeting, Robert Diamond took the opportunity to talk to Davis about their financing plan.

Because of the government's requirements, Barclays Bank needs to come up with up to 8 billion pounds of funds as soon as possible to solve their bad debt problems. Otherwise, after the Royal Bank of Scotland and Lloyds TSB Bank, Barclays Bank will also need to accept government aid and partially nationalize it.

They naturally don't want to end up like this - because the aid is not for nothing. In order to show the public that the government's aid is not to pay for the mistakes of bankers, those banks that accept the aid need to accept strict conditions.

For example, as a condition for obtaining government aid funds, the president and chairman of the board of directors of the Royal Bank of Scotland and Halifax Bank of Scotland will be forced to resign. The executives of the rescued banks will not have cash bonuses this year, and their bonuses in the future will be determined by stocks based on the company's performance...

If there is no other way, then Robert Diamond naturally does not want to end up like this, so in order to save themselves, they are ready to obtain some of the urgently needed funds through financing.

Not only Davis of Standard Chartered-Merrill Lynch, I believe that at this time, Barclays Bank is also contacting other possible capital injection targets to help them obtain funds to avoid "being rescued."

"Really? What kind of plan did they propose?"