Financial Times Summary

Tue 14 Oct 2008

Overview
Three British high street banks yesterday got their first taste of public ownership as Gordon Brown blocked their dividends and slashed their executive bonuses as part of a £37bn part-nationalisation that saw the departure of four of their leaders. The bail-out is expected to leave the government with a majority stake in Royal Bank of Scotland, and holding more than 43% of the merged HBOS and Lloyds TSB. The UK bail-out claimed the jobs of: Sir Fred Goodwin, RBS chief executive, and Sir Tom McKillop, the bank's chair and, who yesterday announced he would step down in August 2009, Andy Hornby, HBOS chief executive, and Lord Stevenson, the bank's chairman will leave when the Lloyd's TSB deal is completed. None of the executives is expected to receive a pay-off.
Morgan Stanley
Morgan Stanley shares soared yesterday after the bank secured a £5bn investment from Mitsubishi UFJ Financial Group that will give the Japanese group a 21% stake on better terms than previously announced. The deal does not commit MUFG to support Morgan Stanley, but the Japanese bank's $1,100bn deposit base appeared to help restore investor confidence in Morgan Stanley's ability to secure critical short-term funding.
ICICI
India's ICICI Bank has asked the police to hunt down a "bear cartel" that it alleges launched an SMS, email and internet blog smear campaign in an attempt to bring down the country's largest bank.
Citigroup
Citigroup is changing the way it pays top executives in its securities and investment banking unit to encourage greater co-operation and minimise the internal battles that have hampered its performance in the past. John Havens, the division's head since March, has told senior managers that a large part of their bonuses will depend on how well depend they interact with colleagues from other parts of the securities business.
JP Morgan
Sterling rallied strongly yesterday, tracking equities higher, on news that the UK Treasury would inject £37bn of capital into Britain's three largest banks. The pound advanced 1.5% against the dollar to $1.7368, paring the 8.1% fall it has suffered since September 22nd. Paul Meggyesi at JP Morgan said, "The UK system was rightly regarded as amongst the most vulnerable globally, but ironically is now one of the least risky due to partial nationalisation and meaningful guarantees for £250bn of bank debt."
FTSE 100
The London market bounced back yesterday, with the FTSE 100 posting the second biggest gain in its 24 year history as investors drew comfort from a series of government and central bank moves to tackle the financial crisis. These included a £37bn cash injection for three UK banks.

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