UK cuts interest rates to 1%
Drop comes as Deutsche Bank reports record loss and warns of more bad news ahead.
Meanwhile, Germany’s Deutsche Bank reported on Thursday a record loss of $6.2 bn and warned it still faced bad financial conditions in coming months.
“We are very disappointed at our fourth quarter result, and at the consequent full year net loss in 2008,” Josef Ackermann, the Deutsche Bank chief said.
“Looking forward, we see continuing very difficult conditions for the global economy, posing significant challenges for our clients and for our industry”.
David Buik, a senior market analyst with BGC Partners, told Al Jazeera that “Deutsche Bank’s loss was a little bit greater than we actually thought, particularly for the last quarter.
“Deutsche Bank has of course struggled as have all banks that have majored in investment banking during the course of the last year.”
Deutsche Bank, which has cut 1,200 jobs, has not turned to the government for aid through the current economic and financial upheaval.
European crisis
The European Central Bank, which also due to meet on Thursday, is set to keep interest rates on hold.
However, analysts said the ECB will make cuts next month to help the contracting economy.
“The problem is housing. Last month it was posted that in the US in 2008 something like 19 mn houses were not occupied, [of] which a high percentage of those were foreclosures,” Buik said.
“That is an astronomical sum of money. When you have a huge derivative market based on housing in the US flying in bits of paper, which are untradable around the world, it’s absolutely impossible for a bank to be completely transparent about what money it may or may not have lost.”