Treasury rescue plan for Lloyds announced today

March 6th, 2009 by admin | Filed under Daily News, Money Management, Recession, UK Bank Accounts, UK Banks.

The bank’s board is expected to meet today to consider a Treasury rescue plan that could see the UK taxpayer take a 70 per cent stake in the floundering bank.

The cost and implications of Lloyds’ takeover of HBOS has seen the UK Government intervene by insuring toxic assets of £258billion held by the group. It is expected to take years, if ever for the UK taxpayer to recover their “investment”

As interest rates hit the floor on Thursday, the Bank of England pulled another rabbit out of its hat by creating £75 billion of new currency as if by magic. This influx of fresh and pure capital, to be dripped into the thirsty UK economy over the next three months, is as sure a sign as any that the Bank have run out of interest rates to cut and have resorted to other methods to keep the UK economy from seizing up altogether.

On the FTSE, specialist staffing agency Michael Page International reported that they had seen their profits fall by thirty per cent for the first two months of 2009. As a result they will be paying off about 500 staff.

Even the famous “black cab” appears to be under threat by the recession as news that the parent company of London Taxis International, Manganese Bronze announced their decision to scrap their dividend due to a significant downturn in new taxi sales. They also pointed out that the company was becoming increasingly stressed by the restriction of credit from suppliers.

The FTSE 250 index dropped by 0.79% or 46.88 points to 5888.49 while the FTSE 100 rose, finishing the session up 0.79 per cent, or 27.9 points, at 3557.72

Sterling fell slightly against the dollar and the Euro and remained stable against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4226

Pound/Euro 1.2684

Pound/Japanese Yen 123.44

Pound/Swiss Franc 1.466

US stocks slid after a warning from General Motors that it may need to file for bankruptcy drove Wall Street shares to 12-year lows and highlighted the severe troubles of major US companies and banks. US stocks slumped to new lows for the year on Thursday in New York, wiping out the gains made during the previous bullish session.

The Dow Jones Average dropped 281.4. To close at 6594.44 NASDAQ fell 54.15 points to 1299.59

Financial institutions were the furthest to fall, possibly as a result of warnings that that three of the largest US banks, Wells Fargo, JP Morgan and the Bank of America, may have their credit ratings downgraded.

On the global front, stocks struck their lowest levels for the last six years, with Japan’s Nikkei average fell, with shares in the country’s big exporters and banks being especially hard hit.

On a single yet highly significant positive note that emerged this week is that the fall in the oil price is liable to provide a major financial stimulus in 2009. The stimulus, expected to be over $1,000 billion to countries who import most if not all of their oil.

Experts estimate that the boost to oil-consuming countries created by cheaper oil ranks alongside the largest of government stimulus packages.