Banks squeeze property sellers to reduce prices.

August 18th, 2009 by tom | Filed under Central banks, Daily News, Exchage Rate, Global Credit Crisis, Recession, Retail, UK Bank Accounts, UK Banks.

financial news

U.K. home sellers lowered asking prices in August by the most in eight months as banks continued their credit squeeze.

The average cost of a home fell 2.2 percent to around £225,000 after gaining 0.6 percent in July. Prices in London dropped 3.8 percent, while in the East Midlands the asking price by sellers fell by the highest level, averaging 9 percent.

The number of new homes on the market was reported to be almost half of what they were before the financial crisis began. ,

Further evidence that the traditional UK high street banks catering manly to the private individual is about to be come scarcer over the coming years was provided in a recently published report. The reports points out that the major British banking groups are considering closing down a third of their branches in a drive to reduce cost and restore profitability. During the recession, retail banks lost money in droves as the public drew in their belts and in future retail banks will not be able enjoy profits personal loans and overdraft that they did during the so called “ boom years”..

Despite all the hooing and hahing on the subject, bonuses for the top directors of major UK companies remained at an unacceptably high level in 2008, showing that the trend is far away from disappearing, despite the country still being in the depths of a recession, and companies that succeed in making profits still reducing their dividends. A recent report showed that some of Britain’s largest companies were still voting to pay their senior executives around half of the bonuses they were receiving before the financial downturn began, around two years ago. A fact that has not been well received by company investors.

Bradford & Bingley plc has released its interim financial report, covering the first six months of the year and the figures are less than inspiring.

The company made pre-tax losses of £160 million, and bucking the UK trend they were substantially worse than the same period in 2008, when the bank succeeded in only losing £26.7 million.

As the financial crisis hit its peak late last year, Bradford & Bingley was nationalised, and has since been sold of to Spanish banking giant Banco Santander.

British Sky Broadcasting has expressed their “serious concerns” regarding the recent actions of the Project Canvas trust. Project Canvas is behind the plan to establish an internet-connected successor to Freeview, the free-to-air digital TV service that will compete with Sky.

Since February, the Trust has been conducting an assessment to ascertain whether Canvas, comprising the partnership of BBC with ITV, BT and Five, is doing justice to UK licence fee payers. Canvas was intended to be the blue-print for assessing and progressing on-demand video from the PC to the television. The introduction of a smarter set-top box would strengthen the competition from free-to-air broadcasting for pay-TV operators such as Sky and Virgin Media.

Trading was slow in the city with the only rising star being GlaxoSmithKline who gained 0.8 per cent to close on 1167½ pence after analysts advised investors to buy shares in anticipation of the news that the company’s long awaited cervical cancer vaccine is likely to win US regulatory approval early next month.

Also in the news were the world’s largest water company Veolia Environment SA who were rumoured to be selling £500 million-pound stake in its U.K. water business to either the Blackstone Group LP or the Goldman Sachs. On the news, Veolia shares fell 2.5 percent to 22.74 pence.

The FTSE 100 continued to indicate that profit taking was rife, dropping 68.96, points to close on 4645.01. The FTSE 250 collapsed by 2.84 percent on the day, meaning a 241.74 point fall to close on 8,274.09.

Sterling had another mixed day on pre-weekend trading yesterday’s markets, falling against the major currencies, apart from the Japanese Yen.

Pound/US dollar 1.6386
Pound/Euro 1.1606
Pound/Japanese Yen 155.4618
Pound/Swiss Franc 1.7624

US stocks suffered their worst day since the beginning of July on Monday after the global share sell-off caused the market to fall. Concerns over the health of the US consumer were at the forefront of investors’ minds after last week’s weak retail sales and consumer confidence figures. .

The Dow Jones Industrial Average plummeted 186.06 points on an edgy market to close on 9135.34 with the NASDAQ faring little better down 54.68 points to close on 1930.84. .

Japan’s economy grew by 0.9% in the April-to-June quarter meaning that the country has joined the fast growing list of industrialised nations to come out of recession.

The rise has been attributed to the Japanese Government’s huge stimulus package. The test for the Japanese economy will come when their stimulus package will come to an end and the economy will require standing alone.