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| Version 1 | Version 2 |
|---|---|
| Bear Stearns gets emergency funds | Bear Stearns gets emergency funds |
| (10 minutes later) | |
| US bank Bear Stearns has got emergency funding, in a move that raises fears that even the top Wall Street names are suffering amidst the credit crunch. | US bank Bear Stearns has got emergency funding, in a move that raises fears that even the top Wall Street names are suffering amidst the credit crunch. |
| JP Morgan Chase will provide the money to Bear Stearns for 28 days with the Federal Reserve of New York's backing. | |
| JP Morgan is also trying to get long-term financing for Bear Stearns. | JP Morgan is also trying to get long-term financing for Bear Stearns. |
| Bear Stearns has been at the centre of the US mortgage debt crisis, and there has been speculation that it was struggling to fund its daily business. | Bear Stearns has been at the centre of the US mortgage debt crisis, and there has been speculation that it was struggling to fund its daily business. |
| Bear Stearns shares dropped as much as 53% to $28 on the news. | Bear Stearns shares dropped as much as 53% to $28 on the news. |
| 'Other banks' | 'Other banks' |
| The credit crunch was caused because banks became less willing to lend to each other after they suffered large losses on investments linked to the US housing market, and the sub-prime sector in particular. | The credit crunch was caused because banks became less willing to lend to each other after they suffered large losses on investments linked to the US housing market, and the sub-prime sector in particular. |
| Our liquidity position in the last 24 hours had significantly deteriorated Bear Stearns | Our liquidity position in the last 24 hours had significantly deteriorated Bear Stearns |
| Sub-prime lenders focus on clients with poor or non-existent credit histories, and a record number of borrowers have defaulted on loans. | Sub-prime lenders focus on clients with poor or non-existent credit histories, and a record number of borrowers have defaulted on loans. |
| The subsequent freezing-up of the credit markets created problems for a number of companies which relied on borrowing money to fund their business. | The subsequent freezing-up of the credit markets created problems for a number of companies which relied on borrowing money to fund their business. |
| In the UK, Northern Rock ran into trouble when its line of relatively cheap credit dried up. | In the UK, Northern Rock ran into trouble when its line of relatively cheap credit dried up. |
| At the end of last year, Bear Stearns reported that it had made its first ever quarterly loss after buying investments linked to the US mortgage market. | At the end of last year, Bear Stearns reported that it had made its first ever quarterly loss after buying investments linked to the US mortgage market. |
| MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bnUBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnJP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197mSource: Company reports Timeline: Sub-prime crisis | MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bnUBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnJP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197mSource: Company reports Timeline: Sub-prime crisis |
| It was one of the first to admit it had problems linked to sub-prime mortgages, after two of its hedge funds had to be bailed out. | It was one of the first to admit it had problems linked to sub-prime mortgages, after two of its hedge funds had to be bailed out. |
| Analysts said that Bear Stearns may not be the only bank suffering in the US. | Analysts said that Bear Stearns may not be the only bank suffering in the US. |
| "The situation is very much that Bear Stearns was very close to the edge and it was much worse than we all thought," said Michael Klawitter of Dresdner Kleinwort. | "The situation is very much that Bear Stearns was very close to the edge and it was much worse than we all thought," said Michael Klawitter of Dresdner Kleinwort. |
| "It raises severe concerns over other banks." | "It raises severe concerns over other banks." |
| 'Restore confidence' | 'Restore confidence' |
| Alan Schwartz, president and chief executive officer of Bear Stearns, said: "Bear Stearns has been the subject of a multitude of market rumours regarding our liquidity. | Alan Schwartz, president and chief executive officer of Bear Stearns, said: "Bear Stearns has been the subject of a multitude of market rumours regarding our liquidity. |
| "We have tried to confront and dispel these rumours and parse fact from fiction. | "We have tried to confront and dispel these rumours and parse fact from fiction. |
| "Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated," he added. | "Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated," he added. |
| "We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations." | "We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations." |