Rebirth of England.

Chapter 646 Rescue Plan
"Last month, after the United States launched a $7000 billion rescue plan, the London stock market panicked and experienced a rare plunge, with the stocks of the British banking system falling the most..."

After the meeting with Brown, Barron went to the DS Financial Center and heard Daisy’s summary:

"This has also expanded our profits. So far, we have invested a total of 100 billion pounds in shorting the British and European stock markets, including the Caesar Fund and the Bucks Fund (an investment fund established with funds from the Cavendish Trust and the Devonshire Family Trust), and have made a profit of more than 240 billion pounds..."

Compared with the American Black Swan Fund, which had an initial investment of more than 50 billion US dollars and now has a profit of nearly 2.4 billion US dollars, the DS Group's short selling in Britain and Europe has only made about times the profit, which is indeed not high and is even a bit low.

But there was no way around it. After all, in the United States, the Black Swan Fund directly shorted CDO bonds and bought CDS swap insurance at the beginning, and the profits were extremely lucrative. In addition, the subsequent shorting of the stock market was also due to the larger scale of the American market, which allowed the use of higher leverage. It has to be admitted that although London is still one of the world's financial centers, its total capital scale and the breadth of participation are far lower than New York.

Even so, if the Black Swan Fund's capital is increased to US$100 billion, its profit margin will actually decrease slightly. This is because short selling of this scale is more suitable for a capital of US$50 billion.

In Europe, their short-selling investments are mainly targeted at the stock market. Even though the scope is the whole of Europe, they need to be more cautious. The current returns are enough to satisfy Barron.

"Start closing your short positions in the UK market. As for Europe... you can keep a certain percentage of your positions and make adjustments based on the situation."

Barron has already promised Brown that he would "stabilize the British stock market." In addition, by now, the current wave of decline in the British stock market has basically been completed.

The most delicious fish head and body have already been eaten, so there is no need to eat the tail.

What he needs to consider next is that with the arrival of the British government's large-scale rescue policy, he can observe the market situation, buy at the bottom and build positions, including the funds from the government public funds that he is about to receive, and wait for the market to recover.

……

Just one week after Barron met with Brown, the British government announced a series of rescue policies.

First, they announced that the upper limit of all personal bank deposit guarantees would be increased from 3.5 pounds to 5 pounds - this was just an appetizer, mainly to stabilize some depositors of the Bank of England and reduce the chances of another bank run.

Then, the British government announced that it would buy shares in several banks and provide guarantees for them to ease credit tightening.

This includes the government's possible capital injection of more than 8 billion pounds into the UK's eight largest banking institutions, the central bank, the Bank of England, will provide an additional 500 billion pounds in short-term loans, and the government will use 2000 billion pounds to guarantee medium-term debt to enhance interbank capital flows and help restore confidence in banks.

After the policy was announced, at the request of the banks, the British government announced in early December that it would inject £12 billion into Royal Bank of Scotland, Lloyds TSB and Halifax Bank of Scotland and partially nationalize them.

Among them, the British Treasury will exchange 200 billion pounds for 60% of the shares of Royal Bank of Scotland, and inject 170 billion pounds into the acquisition of Lloyds TSB Bank and Halifax Bank of Scotland, holding 40% of the shares of the merged bank.

At this time, Barclays Bank is still holding on, hoping to seize the time to raise 70 billion pounds to supplement its capital. If Barclays Bank accepts government aid, the bailout funds offered by the British government will reach 200 billion pounds. However, facing the "strict" conditions of this subsidy, Barclays Bank would rather find a way to solve the liquidity problem on its own first.

Of course, with the implementation of this round of rescue plan, the British government also requires Halifax Bank of Scotland to raise 120 billion pounds, Royal Bank of Scotland to raise 200 billion pounds, Lloyds TSB to raise 50 billion pounds, and Barclays to raise 80 billion pounds to remedy bad debts - the banks that are recapitalized must restore their mortgage loans and small business loans to 2007 levels.

As one of the policies of this round of rescue plan, the Bank of England announced that it will start cutting interest rates. This will be the third interest rate cut by the Bank of England in the past two months and the sixth interest rate cut by the Bank of England since February this year, reducing the benchmark interest rate from 2% to 6%!

This also means that the UK will begin to implement a quantitative easing monetary policy. "Looking at the economic crises that have occurred in the world over the past 120 years, each economic crisis usually leads to an economic downturn lasting 2 to 3 years and a loss of 5% to 10% of GDP growth. Although GDP growth has reached the bottom in this economic crisis, it will take some time for the economy to truly recover..."

In Barron's hand at this moment is an analytical article made by his think tank on the progress of the current subprime mortgage crisis and subsequent economic forecasts.

Although he knew the detailed progress of the subprime mortgage crisis in the original time and space, the progress of the subprime mortgage crisis in this world was affected by him and was clearly accelerating.

Therefore, he also needs more data and analysis to determine subsequent actions.

"From the rescue plan launched by the government this time, it can be seen that the extent of the relief is indeed greater than originally thought..."

Standard Chartered Merrill Lynch has become the largest listed bank in the UK by market value besides HSBC Holdings. Its CEO Davis is naturally very concerned about the government's rescue plan. Even though Standard Chartered Merrill Lynch does not need any government assistance, from the point of view of the government increasing liquidity in the financial industry, it is also very beneficial to their Standard Chartered Bank.

"This is also the result of the joint efforts of many parties, and the Prime Minister has also realized that if he does not do his best to maintain market confidence, then even if there is a comparison of the worst, Britain's performance will be the more outstanding one. This is not good news for him and the entire Labour Party. After all, the Labour Party has clearly lost in the local council elections in May this year."

Barron's words were recognized by Davis:

"That's true. Not only the public, but also the bankers are complaining about the government's slow action..."

He took off his glasses, took out a glasses cloth from the inner pocket of his suit, wiped them carefully, and said to Barron:
"Your Highness, the most anxious bank right now is probably Barclays Bank. After yesterday's meeting, Mr. Diamond came to me to discuss Barclays Bank's financing matters..."

Robert Diamond, president of Barclays, attended a government-sponsored meeting yesterday with Davis and some of Britain's leading bank managers on the bank rescue and ensuring bank liquidity.

After that meeting, Robert Diamond took the opportunity to discuss their financing plans with Davis.

Due to government requirements, Barclays Bank needs to come up with up to 80 billion pounds as soon as possible to solve its bad debt problem. Otherwise, following the Royal Bank of Scotland and Lloyds TSB, Barclays Bank will also need to accept government aid and be partially nationalized.

Naturally, they do not want to end up like this - because the aid is not free, and in order to show the public that the government's aid is not to pay for the mistakes of bankers, those banks that receive the aid need to accept strict conditions.

For example, as a condition for receiving government rescue funds, the president and chairman of the board of directors of the Royal Bank of Scotland and the Halifax Bank of Scotland will be forced to resign. The executives of the rescued banks will not receive cash bonuses this year, and their future bonuses will be determined by stocks based on the company's performance...

If there was really no other way, Robert Diamond naturally would not want to end up like this. Therefore, in order to save themselves, they planned to obtain some of the much-needed funds through financing.

It's not just Davis of Standard Chartered Merrill Lynch. I believe that at this time, Barclays Bank is also contacting other possible capital injection targets to help them obtain funds to avoid being "rescued."

"Really? What kind of plan did they come up with?"

(End of this chapter)