Member Article

IMF growth downgrades hit global markets

Major news for UK banking came from Barclays today, which announced it is to acquire the retail deposit and mortgage assets from the UK division of the Dutch bank ING Group. Barclays will reportedly pay par value for the £10.9bn of deposits but will acquire the £5.6bn mortgage book at a 3% discount its reported par value. ING’s exit from UK retail banking through the sale of ING Direct UK comes as the group tries to raise funds to repay the Dutch government for assistance it received during the turbulence of 2008. Equity markets were lower largely in response to the IMF’s quarterly World Economic Outlook report, which indicated a broad based downward revision to global growth in 2012 and 2013. In addition to the negative downgrades to emerging markets (particularly Brazil and India), Spain’s GDP is expected to contract 1.3% in 2013, compared to previous estimation of -0.6%. This has lead to suggestions by the IMF that Spain will miss its 2012 and 2013 deficit targets. The news came as Germany’s Angela Merkel met her Greek counterpart Antonis Samaras in Athens today. The meeting took place as protestors clashed with police, and despite reiterating her desire for Greece to remain in the Euro, the German leader failed to hint towards any softening in the central-European stance on deficit reduction and austerity. Oil traded higher, uncharacteristic on a day when global growth concerns are in focus, but support for the commodity was driven by further tensions between Syria and Turkey, with the Turkish President suggesting yesterday that the “worst case scenarios” between the two countries was now playing out. Fears over disruptions to supply and transportations spreading further into the Middle-East saw Brent crude add nearly 2%, with the FTSE 100 closing 0.68% lower at 5802, with US indices trading slightly lower at the time of writing.

This was posted in Bdaily's Members' News section by James .