Subscribe Feed (RSS)Chelsea Building Society victims of multi-million pound fraud
August 24th, 2009 by tom | 0 Comments | Filed in Central banks, Daily News, Energy Prices, Exchage Rate, Money Management, Mortgages, Recession, Stocks and shares, The Markets, UK Banks, World Banks
Officers in charge of the Chelsea Building Society held their head in their hands on Friday as they sheepishly admitted that the society had fallen victims to £41 million fraud by some of their buy-to-let borrowers.
The Chelsea, UKs fifth-largest building society, hastened to explain that if the fraud hadn’t taken place their half year loss of £26 million would have been a £15 profit, which still looks bad when compared to their £23 million of last year, but will still be acceptable given the current economic circumstances.
In an act of accountability which is rare in the UK these days, the society announced that both Finance Director Andrew Parsons and Chief Executive Richard Hornbrook will be resigning their posts as details of the fraud began to unravel. Initial findings are Chelsea reveal that artificially inflated property values by professionals such as mortgage brokers and surveyors were the main factors, whilst acknowledging that the society’s risk controls may not have been as tight as they could have been at a time of booming demand for mortgage finance and runaway house prices.
Chelsea has since conducted a review of its risk management, setting up a number of risk committees.
The much heralded government scheme purporting to offer up to £5 billion to help protect suppliers from the collapse of their customers has so far attracted only minor interest with only £7 million of assistance being provided to a mere 52 UK companies to date. .
The thinking behind the scheme was to prop up private sector insurers who were growing increasingly nervous about their levels of exposure during the credit crisis.
The reasons for the scheme’s low take-up has been blamed on the scheme’s tight restrictions and comparatively high charges, amounting to 2 per cent of turnover, which is more than four times the cost of typical private sector insurance.
On Thursday, the UK business department announced that they would be cutting charges to 1 per cent in the hope that more entrepreneurs would take up the initiative.
Barclays has recently published research suggesting that business sentiment amongst the UKs businesses is on the rise.
Almost three quarters of UK businesses surveyed in the poll described their attitude towards the economy as more positive, with the research also revealing a confident stance towards recovery, with 15 per cent of respondents believing their company will move back into a sustained growth phase within the next six months.
An interesting point raised in the poll was that a significant number of business leaders believe that the current recession was positively affecting motivation levels of staff and management within their company.
Officials of the UKs largest state controlled bank, the Royal Bank of Scotland Group Plc have been asked to appear at a hearing due to take place in October where the subject of whether the Treasury violated its own environmental standards by bailing out the bank will be discussed
It was also revealed on Friday that clients of Lehman Brothers’ European operations are liable face further delay before they can recover part If not all of their $9 billion of assets. The news came after an English judge decided he could not approve a scheme mooted by PwC, administrator of the defunct bank’s main European operations that would have helped expedite the winding up of the collapsed bank’s complicated operations.
PwC had proposed a scheme that would have divided the bank’s more than 1,000 clients into three classes. A move that would have allowed the administrators to deal with claims by class rather than each one separately. .
Thelondonpaper, the free sheet published by News International, owners of the Sun and the Times, will be wound up after the company announced advertising income had “fallen short of expectations”.
Rupert Murdoch has vowed to charge for all the online content of his newspapers and television news channels. Price rises are now one of the few growth strategies available to newspaper publishers.
The UK Office of Fair Trading (OFT) could force some of Britain’s largest bus companies to sell off their buses or even entire depots after they ruled that a lack of competition in the local bus market may be a cause for inflated fare tariffs and sub standard services.
OFT’s proposal is one of a series suggested in a recent study that reach the overall conclusion that operators in the £3.6 billion market could be overcharging customers.
After a rapid wave of consolidation in 1986, currently almost y two-thirds of UK bus services are controlled by five operators – Go-Ahead, National Express, Arriva, FirstGroup and Stagecoach, with OFT revealing that passengers were paying 9 per cent more for fares in areas where there was only one national operator.
On the FTSE Friday, Cable and Wireless was among the risers, gaining 1.6 per cent to 143 pence amid hopes that the market rebound would allow it to revive plans to split out its worldwide division.
The insurance sector was also on the rise, boosted by Aviva rising 5.5 per cent to 411 pence and Friends Provident up 4.3 per cent to 82 pence
Legal & General also gained 5.6 per cent to 78 pence after major market analysts named the stock among their top picks in the sector.
The FTSE’s advance also favoured stocks with recovery potential, with British Airways being among the hottest rising 7.2 per cent to close at 188 pence.
A 2 per cent rise gave the FTSE 100 its fourth straight session of gains, up 94.31 points on Friday to its biggest gain in more than a month at 4,850.89. For the week, the benchmark was up 2.9 per cent, lifting the index to a 10-month high.
On its way back in some style is the FTSE 250 jumping a further 1.73 % or 147.47 points to close for the weekend on 8,678.83
Currency markets remained fairly stable on Friday.
- Pound/US dollar 1.6501
- Pound/Euro 1.1522
- Pound/Japanese Yen 155.7159
- Pound/Swiss Franc 1.746
World stock markets have risen after US central bank chief Ben Bernanke said the world’s biggest economy was nearing the start of a recovery.
The Fed boss said unemployment, which is expected to top 10% in the US, would fall "only gradually".
However, European Central Bank president Jean-Claude Trichet expressed concern at what he saw as premature talk of a full recovery.
On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher.
US stocks rallied to new highs for the year on Friday after early optimism from Europe was boosted by signs of a US recovery.
An unexpected jump in the sales of existing homes fuelled the US stock market’s best day since late July.
This gave investors further confidence that the recession is ending, after figures earlier in the week showed factory activity in the mid-Atlantic region and manufacturing in the New York area both rose impressively last month.
The Dow Jones Industrial Average continued its steady recovery, up a further 155.91 Points to close on 9505.96. The NASDAQ also crossed the 2,000 point barrier again up 31. 68 points to close on 2020.90
Monday evening in the US will see an end to the cash-for-clunkers scheme which has been described as "a victim of its own success" just a month after the scheme was introduced.
The decision to wind down the scheme was taken to ensure that payments do not exceed the $3 billion allocated by Congress.
By Thursday, the transportation department had recorded 457,000 transactions, worth almost $2 billion in rebates.
The board of General Motors was set to choose their preferred bidder for a controlling stake in Opel/Vauxhall on Friday. Amid intense pressure from the German government to favour Magna International, the Canadian parts maker, the decision is to be made amid growing disquiet over the sale process among other EU member states where the Detroit carmaker has operations. The UK government is concerned that the Germans will seek to call the shots in deciding which GM plants are closed or scaled back as the new owners work to put the unit on a more even financial keel. Magna is competing against RHJ International, the Brussels-based private equity group.
The price of oil has hit its highest level of the year, boosted by sharp rises in Chinese stocks and rising shares on Wall Street.
The price of US crude rose to $74.15 a barrel before settling at $73.89, a gain of 98 cents. London Brent was up 86 cents at $74.19.
Worldwide oil prices have been extremely volatile this year.
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Tags: Andrew Parsons, Arriva, Bank, Banking, Barclays, Ben Bernanke, British airways, buy-to-let, Chelsea Building Society, Currency, Dow Jones, Economy, European Central Bank, Financial News, FirstGroup, Fraud, FTSE, General Motors, Go-Ahead, Legal & General, Lehman Brothers, Mortgage, NASDAQ, National Express, News International, Office of Fair Trading, Opel, Richard Hornbrook, Royal Bank of Scotland, Stagecoach, Stock Markets, Stocks and shares, Thelondonpaper, UK Banks, UK business, Vauxhall, Wall Street
