Citibank has come to an agreement with the US Securities and Exchange Commission (SEC) to buy back several billion dollars worth of auction rate securities, the risks of which had been misrepresented.
The SEC had recently looked into the situation and decided Citibank had mismarketed and sold the securities as being less risky than they were. Citigroup had promoted them as being as safe as similar cash based products though this is not the case.
Although Citibank are buying the securities back it is something they could really do without since they have been hit very hard by the collapse of the sub-prime lending market. Financing the buyback will damage the bank further as they will have to reimburse any customers who sold for a loss, on top of paying fines worth USD100 million.
Northern Rock has revealed plans to shed around 1,300 jobs as it reorganises operations and looks to the future.
This figure is lower than originally expected, which is good news for some members of staff who wish to stay. Northern Rock are anticipating around 500 people taking voluntary redundancy, leaving just 800 to be selected by management. The original estimate was for around 2,000 job losses, but discussions with staff representatives and management has lowered that number.
After being nationalised earlier this year Northern Rock has a duty to pay back the money loaned to it and in order to do this it has had to revise the way it operates. Cutting costs but remaining active in the key markets is how this will be achieved, hence the job losses now being applied.
According to a Lloyds TSB poll of UK consumers inflation is expected to rise yet again, this being the tenth month in succession where the people of the UK have felt that inflation would increase.
The monthly survey carried out by Lloyds TSB has seen the expectation of people for inflation in 12 months time to be at 5 percent, up from the 4.8 percent they had forecast a month earlier. It is interesting that the recent price reductions on fuel at the forecourt did not stop people from anticipating this further increase.
A different view comes from the Bank of England say Lloyds TSB, with their own forecast being that inflation will be lower than 2 percent within two years.
