Finance fallout brings backlash against bankers
The impact of the crisis spread further with more companies around the world blaming major job losses on the financial turmoil. Top 10 US bank failures
By Agencies |
PARIS: Fallout from the financial crisis grew in the real economy Friday with job losses and a backlash against banking chiefs as shares ended a crazy week with a new roller-coaster ride.
European stocks strengthenend, fell and rose again in the turbulence after a French bank's admission that it lost 800 million dollars in a derivatives trading "incident" while the German parliament passed a 480-billion-euro (650-billion-dollar) rescue package.
Ukraine said it was negotiating a 14-billion-dollar emergency loan with the International Monetary Fund and Argentina announced it had struck a deal with three foreign banks to renegotiate annual payments on part of its 150-billion-dollar sovereign debt mountain.
The impact of the crisis spread further with more companies around the world blaming major job losses on the financial turmoil which saw bank lending freeze up in a crisis of confidence over "toxic" US mortgage debt.
Chinese toy maker Smart Union, which was heavily reliant on US brands such as Mattel and Disney, has gone bust due to the financial crisis , leaving up to 7,000 people jobless.
The firm closed its factories in southern China this week, leaving unpaid workers stranded outside the plants and leading to government concerns about protests.
Swedish plane maker Saab said it would cut 500 jobs over two years after announcing heavy losses. Unemployment has grown across Europe with key sectors such as car-makers particularly badly hit as the downturn gathers pace. Many governments and experts have warned of a tough recession looming.
Both houses of the German parliament approved the government's rescue package for the financial sector but 99 deputies voted against and Greens parliamentary chief Renate Kuenast said the proposals were a blank cheque for banks who could not be held accountable by taxpayers.
European stocks strengthenend, fell and rose again in the turbulence after a French bank's admission that it lost 800 million dollars in a derivatives trading "incident" while the German parliament passed a 480-billion-euro (650-billion-dollar) rescue package.
Ukraine said it was negotiating a 14-billion-dollar emergency loan with the International Monetary Fund and Argentina announced it had struck a deal with three foreign banks to renegotiate annual payments on part of its 150-billion-dollar sovereign debt mountain.
The impact of the crisis spread further with more companies around the world blaming major job losses on the financial turmoil which saw bank lending freeze up in a crisis of confidence over "toxic" US mortgage debt.
Chinese toy maker Smart Union, which was heavily reliant on US brands such as Mattel and Disney, has gone bust due to the financial crisis , leaving up to 7,000 people jobless.
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The firm closed its factories in southern China this week, leaving unpaid workers stranded outside the plants and leading to government concerns about protests.
Swedish plane maker Saab said it would cut 500 jobs over two years after announcing heavy losses. Unemployment has grown across Europe with key sectors such as car-makers particularly badly hit as the downturn gathers pace. Many governments and experts have warned of a tough recession looming.
Both houses of the German parliament approved the government's rescue package for the financial sector but 99 deputies voted against and Greens parliamentary chief Renate Kuenast said the proposals were a blank cheque for banks who could not be held accountable by taxpayers.
Luxembourg joined the scramble to strengthen bank deposit guarantees. The banking principality increased its guarantee from 20,000 euros to 100,000.
The finance industry's reputation took a new blow as France's Caisse d'Epargne bank said it lost about 600 million euros (800 million dollars) in a trading "incident."
"Because of the extreme volatility in the markets and the stock market crash of the week of October 6, the Caisse d'Epargne group underwent a major incident in the derivatives market," said a bank statement.
A company official, speaking on condition of anonymity, told reporters that a group finance director had been sacked over the loss. The bank, which is due to merge with Banque Populaire, insisted the loss did not affect its stability.
Josef Ackermann, head of Deutsche Bank, Germany's biggest bank, said he will give up his annual bonus of several million euros to show solidarity with staff.
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The Swiss national told Bild am Sonntag newspaper he wanted to show a "personal sign of solidarity," which would see him do without "a few million" euros in pay.Swiss newspapers angrily called on former top managers of banking giant UBS to return their bonuses after the bank had to be rescued by the state.
"Mr. Ospel, pay back your bonus! Now! Immediately!" screamed the front page of tabloid Blick, referring to former UBS chairman Marcel Ospel, who was forced to resign this year over billions in losses in the US subprime mortgage crisis.
French Finance Minister Christine Lagarde warned meanwhile that hedge funds could be the next victims of the crisis.
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"Initially everybody thought the hedge fund sector would be the first one to actually cause the collapse," she told Britain's Daily Telegraph newspaper. "They are vastly unregulated, they have been operating at the fringes, at the margin, and we need to be careful that there is no contamination effect," she was quoted as saying.
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Despite the swirling crisis, share markets in London, Frankfurt and Paris initially put on about four percent after Tokyo closed 2.8 percent higher and New York put on 4.7 percent, clawing back some of the huge losses suffered this week. But before midday most European markets had fallen back and after lunch were about 1.50 percent higher.
Tokyo's Nikkei index actually finished a volatile week -- in which it soared a record 14.15 percent on Tuesday and fell more than 11 percent on Thursday -- 5.04 percent higher.
"We are exhausted with the recent violent swings. Honestly, I want to take a little break," said Masatoshi Sato, a broker at Mizuho Investors Securities.
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