Citibank parent Citigroup is understood to be under investigation by the financial regulator of the United States with regard to some potential breaches of securities law.
The issue revolves around the marketing and selling of what are called auction rate securities. These are a type of bond, most commonly used by municipal authorities when looking to generate funds and the question being looked into is whether the actual risks were understated by Citibank.
No comments have been forthcoming from Citibank so far regarding their discussions with the regulators. Instead they have a statement that says they have worked closely with all parties to make everything go smoothly.
The May Fundamentals report produced by Legal and General suggests that the economic outlook for the UK is a negative one.
There are some positive factors said the Legal and General, such as low unemployment, the weaker pond helping exports and the fact that consumer spending is still active. However they see more negative elements than positive ones which leads them to rating the economic forecast as poor.
Key pointers include the much more difficult lending conditions facing borrowers, higher levels of debt and also a rate of inflation that is rising much too quickly. All in all the Legal and General view is that, unless changes are seen in this factors the UK economy could face real difficulties.
Representatives from Virgin Money have been discussing the potential purchase of troubled Northern Rock, they being part of a larger consortium.
The plan, if accepted, will be to make an initial GBP 11 billion payment, via commercial debt providers, and then put in a further GBP 1.3 billion for fresh capital investment. At the moment Northern Rock appear to accept the proposal put before them although there are questions over the longer term risk that taxpayers would face on the outstanding debt position.
The government will no doubt acknowledge this risk but it will be mitigated in some way by the interest rate they will earn on it, bringing extra revenue in to cover the risk, to a certain extent anyway. Right now Virgin Money look like firm favourites to take the Northern rock situation on, though only time will tell if that is the case.
