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Jun 27, 2010

NASDAQ : Latest Forex News. June 27th., 2010 at 10:21 EST Perü

NASDAQ

Latest Forex News

UK banks told to boost funds by £130bn - Telegraph

UK banks told to boost funds by £130bn - Telegraph: "By Edmund Conway and Andrew Porter
Published: 9:09PM BST 27 Jun 2010

The heads of state and finance ministers at the Toronto G20 summit agreed that in future banks should keep enough capital on their balance sheet to have withstood the aftermath of Lehman Brothers' collapse in 2008. The ruling, endorsed by the Chancellor, George Osborne, is likely to have profound consequences for banks both in the UK and overseas.

Whereas under the previous international banking accords, Basel I and II, banks were obliged to hold only 8pc of safe capital - largely comprised of equity - on their books to provide a buffer against insolvency, the new rules sketched out at the Canadian summit threaten to go some way further. Capital requirements act as an effective speed-limit for banks, with higher requirements preventing them from making bigger profits.

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The G20's final communiqué said: 'The amount of capital will be significantly higher, and the quality of capital significantly improved, when the new rules are fully implemented. This will enable banks to withstand, without government support, stresses of the magnitude associated with the recent financial crisis.'

Since the start of the crisis, British banks have had to bolster their balance sheets by £127bn, with around half of this coming from taxpayer cash infusions, according to Bank of England figures from the turn of the year.

Since then, banks have raised a further £15bn from the open markets as they seek to improve their financial health. The Toronto agreement implies that this balance sheet rebuilding - and effective fall in bank profitability - will be permanent rather than an aberration.

The consequences for the financial system and wider economy are likely to be far-reaching, with banks remaining reluctant to lend as they funnel cash towards strengthening their balance sheets.

However, countries will be allowed time to implement the rules, so the rush to re-capitalise does not trigger a further plunge in economic activity.

The document said that the countries will adopt the new standards 'over a time frame that is consistent with sustained recovery and limits market disruption'.

Mr Osborne also stressed that regulators would demand 'higher quality capital' - usually simple shares - rather than other less reliable items such as deferred tax assets and software, so as to ensure banks would not attempt to circumvent the rules.

However, it will take until the next G20 meeting in South Korea in November for countries to agree on how much the 8pc capital ratio should be increased by, and the requirements will not kick in until 2012. The indication, following yesterday's agreement, is that the target may be well into double figures.

Officials pointed to the decade it took for previous banking accords to be signed and said that the timetable for Basel III was 'warp-speed' in comparison.

The new rules are likely to be resisted by banks in France and Germany, which hold less capital on their balance sheets than their UK or US counterparts.

The G20 leaders also agreed on an unprecedented plan to cut government debt worldwide, pledging to halve their deficits by 2013, and 'stabilise' national debt by 2016. It follows the onset of a sovereign debt crisis in Europe which has seen Greece bailed out by the IMF and Spain face an investor exodus.

- Sent using Google Toolbar"

MarketClub : Learn the Market Divergences. June 27th., 2010




In the market there are two types of market divergences that can occur:
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Co-founder of MarketClub

FGC BOLSA - FGC FINANCIAL MARKETS : MarketWatch - Industry Financial Services .- These ETFS rally when markets are roiled


 
INDUSTRY: FINANCIAL SERVICES

ETF Investing: These Treasury ETFs rally when markets are roiled

By John Spence MarketWatch
6/27/2010 12:01:00 PM



Exchange-traded funds that track long-term Treasurys have rallied strongly since the beginning of April on Europe’s lingering debt problems and worries the U.S. economic recovery is stalling. See full story

G-20 close to setting deficit-reduction goals  
By Ronald D. Orol MarketWatch
6/27/2010 10:20:00 AM



European Commission president tells reporters in Toronto that agreement is near. See full story