The Credit Crisis Timeline

From 1SEPT09 to 20JUL10. Please go to the bottom of the article for a link to older updates.

The information here is based on news from sources including the BBC website and the Financial Times.

July 20

The level of new UK public sector borrowing in June was worse than expected, official figures have shown. Net borrowing last month totalled £14.5bn, according to the Office for National Statistics (ONS), exceeding the £13.1bn forecast by economists. The ONS also said total government debt was now equivalent to 63.9% of the UK’s annual economic output, the highest since that measure began in March 1993. Despite the news, the pound fell only 0.4% against the dollar to US$1.522.

July 19

Ratings agency Moody’s has downgraded the Irish Republic‘s sovereign bond rating to Aa2 from Aa1, citing by the government’s “gradual but significant loss of financial strength” and said it expects the country’s economic growth to be below its historical trend in the next three to five years.

July 16

Leading US stock markets tumbled more than 2.5% as poor company results and fresh economic data hit investor confidence in the economic recovery. The Dow Jones Industrial Average fell 2.5%, while the S&P 500 index was down 2.9%. Citigroup and Bank of America both reported falling revenues.

July 15

The Chinese Premier, Wen Jiabao, said that China will continue to invest in European markets, despite the debt problems affecting many eurozone countries.

July 14

The number of people unemployed in the UK fell by 34,000 to 2.47 million in the three months to May, according to the Office for National Statistics (ONS). Meanwhile, those claiming Jobseeker’s Allowance fell in June by 20,800 to 1.46 million, taking the jobless rate to 7.8%, the lowest since January and below forecasts of about 7.9%.

July 13

The US trade deficit widened to its highest level in 18 months in May, driven by demand for imported cars, computers and clothing. The deficit increased by 4.8% to $42.3bn – the largest since November 2008. The 2.9% rise in imports outpaced the 2.4% climb in exports.

Greece has successfully sold government bonds in its first attempt since the huge EU-International Monetary Fund (IMF) loan bail-out was launched in early May. It had sought to raise €1.25bn (£1.05bn; US$1.58bn), but the offer was oversubscribed, with bids totalling €3.6bn. Greece must repay the bonds after six months, with a return rate of 4.65%, which is lower than IMF loans.

July 9

Canada’s employment level increased by 93,200 in June, more than six times the amount that analysts had expected. The unemployment rate fell from 8.1% to 7.9% as a result. Employment has increased by 403,000 over the past year, and the gains offset almost all the job losses during the downturn that began in the autumn of 2008.

July 8

The International Monetary Fund (IMF) has raised its forecast for global growth this year, from 4.2% to 4.6%. It said the world economy grew strongly in the first part of this year, mainly thanks to robust growth in Asia. However, the UK was almost unique in having its 2010 growth forecast revised slightly down, while its 2011 forecast was cut by the IMF from 2.5% to 2.1%. The IMF also warned risks had increased and there had been a setback in progress towards financial stability.

The Committee of European Banking Supervisors (CEBS) released a list of 91 banks that will be subject to ‘stress-testing’ across Europe. Banks on the list include the UK’s HSBC, the Royal Bank of Scotland (RBS), Lloyds and Barclays and major European banks including Deutsche Bank and BNP Paribas. The banks on the list represent 65% of the EU’s banking sector.

July 7

The European Parliament is due to approve a deal placing new limits on bankers’ bonuses from next year. Under the deal agreed by the EU members in June, bankers will receive no more than 30% of their bonus immediately and in cash, or 20% for larger bonuses, with remaining bonus payments will be delayed and linked to long-term performance.

July 6

Shares on a range of world markets jumped as investors looked to take advantage of what they perceived as cheap, oversold stocks. The imminent announcement of pricing details for the flotation of Agricultural Bank of China (Agbank) helped to improve sentiment.

The UK economy continued to grow in the second quarter of this year, according to a survey by the British Chambers of Commerce (BCC). The organisation, which collected data from 5,600 businesses across the country, predicted growth for the three months to the end of June of between 0.6% and 0.7%. However, serious concerns over sustained recovery remained, particularly in the service sector.

July 5

The Shanghai Composite Index has closed at a 15-month low after data pointed to slowing growth and rising inflation. The index dropped 19 points or 0.8% to 2,364 at the end of trading, its lowest close since April last year. Shanghai was one of the first markets to recover after the global financial crisis, but peaked in August last year. It has since fallen 32%. Growth in passenger car sales slowed in June, another sign that China‘s economy may be cooling down.

June 28

Leaders at the G20 summit in Canada have agreed to cut national budget deficits while endeavouring to promote economic growth. Canadian prime minister Stephen Harper said short-term stimulus measures would be needed to get economies moving.

June 21

Stock markets and Asian currencies have risen after weekend comments by China’s central bank about its yuan policy. US stocks climbed sharply in early trading, while major European markets were up about 1% by mid-afternoon. Earlier, Hong Kong’s Hang Seng index closed up 3.1%, while the Japanese Nikkei rose 2.4%. Currencies were also up on the news, with the Korean won and Malaysian ringgit both rising over 2% against the US dollar.

June 18

IMF head Dominique Strauss-Kahn has called on Spaniards to back the government’s austerity work. He was speaking after a meeting in Madrid with Spanish prime minister Jose Luis Rodriguez Zapatero.

June 17

EU leaders have agreed to open membership talks with Iceland, despite its failure so far to refund the UK and the Netherlands for lost savings. Iceland, reeling from the collapse of its major banks, submitted its EU application last July. The UK and Dutch governments want Iceland to reimburse €3.8bn that they paid out to savers who lost money when Iceland’s online bank Icesave went bust in 2008.

June 14

Greek government bonds have been downgraded four notches to ‘junk’ status by Moody’s credit rating agency. The agency said there was still “considerable uncertainty” surrounding the impact of measures introduced to cut the country’s high budget deficit. Greece is looking to slash its deficit from 14% of GDP to 3% by 2014.

June 10

UK interest rates have been kept on hold at 0.5% by the Bank of England for the 15th month in a row. The Bank of England also decided not to inject any more money into the UK economy under its policy of quantitative easing. Interest rates have now been at 0.5% since March 2009.

June 9

Finland’s economy slipped back into recession during the first three months of 2010, official figures have shown. During the January to March quarter, its economy contracted by a seasonally-adjusted 0.4%, after a decline of 0.2% in October to December of last year. It is the first eurozone country to undergo a double-dip recession.

June 8

The US trade deficit widened to a 16-month high in April, as both imports and exports fell slightly. According to the Commerce Department’s data the total monthly deficit was US$40.3bn, up 0.6% from March.

The pound has fallen after Fitch warned the UK faced a “formidable” challenge to cut its budget deficit. It fell 1% against the dollar to US$1.437 after publication of the report, but later pared losses. Fitch said the deficit must be reduced more quickly than set out by the former Labour government in April.

June 7

German Chancellor Angela Merkel has been given the backing of her coalition cabinet for a fiscal austerity programme. Berlin will cut the budget deficit by a record €80bn ($96bn; £66bn) by 2014. The plan would cut the deficit by about 3% of GDP. The total deficit in 2009 was 3.1%, but is projected to grow to more than 5% this year.

June 4

The value of Hungary’s currency has fallen sharply against the euro on fears the country could be facing a Greek-style debt crisis.

June 3

The Financial Services Authority (FSA) has fined JP Morgan Securities a record £33.32m ($48.2m) for failing to keep customers’ funds in separate accounts in case of insolvency.

European shares have risen strongly, buoyed by strong home and car sales data from the US. The UK‘s FTSE 100 index was up 1.9% in afternoon trading in London, while France‘s Cac had added 2.2% and Germany‘s Dax had advanced 1.7%.

June 2

Greece has outlined plans to part-privatise a number of publicly-owned companies in an effort to raise funds to boost government finances. The government plans to sell minority stakes in its state-owned rail company, the postal service and in two water companies.

Australia‘s economy grew for a fifth straight quarter in the first three months of the year, but at a slower rate than the previous quarter. Official figures show gross domestic product (GDP) in the three months to March was 0.5% higher than in the same period last year.

June 1

Canada has become the first member of the G7 group of industrialised nations to raise interest rates since the global financial crisis. The Bank of Canada has increased its key lending rate by one quarter of a percentage point to 0.5%.

Unemployment in the eurozone rose again in April to a fresh all-time high, figures from Europe’s statistics office have shown. Unemployment in the 16 nations that use the euro now totals 15.86 million – equivalent to 10.1% of the population.

The euro has hit a four-year low against the dollar.

May 26

A network of national funds should be introduced so the cost of bank failures are not met by the taxpayer, the EU internal market commissioner has said. Michel Barnier said such funds would provide part of a broader system aimed at preventing future financial crises.

25 May

Global stock markets have fallen heavily over continued fears about eurozone debt problems.

The Dow Jones has fallen by 2.02%, the S&P 500 index was 2.04% lower, and Nasdaq 2.33% lower.

In Europe, the FTSE 100 in London was down by 2.53%, Germany’s Dax index was 2.82% lower, while in France the Cac 40 index had dropped 3.41%. The FTSE fell as low as 4,939.6 points at one point, its lowest level for eight months, while stocks in South Korea and Japan fell due to North Korea moving on to military alert

18 May

The euro has fallen below US$1.22 for the first time since April 2006. In afternoon trading in New York, it dipped by 1.7% to US$1.216, before rallying.

UK inflation increased in April to hit its highest rate in 17 months, according to the Consumer Prices Index (CPI) measure. Inflation hit 3.7%, nearly twice the target of 2% and its highest rate since November 2008. On the Retail Prices Index (RPI) measure, which includes housing costs, inflation was up to 5.3%. This is its highest rate in 19 years.

Greece has received the first tranche of its €110bn (US$136bn or £94bn) loan to help it overcome its debt crisis. The European Commission said that €20bn euros the European Union (EU) and the International Monetary Fund (IMF) had been drawn on. Greece has an €8.1bn bond repayment due on 19 May.

17 May

Chinese shares have fallen to their lowest point in a year, after Chinese Premier Wen Jiabao was quoted by the official Xinhua news agency as saying the government would curb excessive rises in property prices. The Shanghai Composite index fell by 5.07% to close at 2,559.93 points.

The new UKcoalition government will hold its emergency Budget on 22 June, Chancellor George Osborne has announced.

14 May

The International Monetary Fund (IMF) has warned developed nations they face an “urgent” need to cut their budget deficits. In its latest Fiscal Monitor report, it said failure to do so would harm the nations’ economic recovery. The IMF said current policies could end in average debt ratios of 110% of gross domestic product (GDP) by 2015.

US retail sales rose more than expected in April, helped by a surprise increase in motor vehicle sales. The Commerce Department said total retail sales rose by 0.4% following an upwardly revised 2.1% rise in March. Compared to April 2009, sales were 8.8% higher, and have now increased for seven straight months.

11 May

Stock markets have fell back in early trading today, after shares across the world surged earlier in the week following the deal to tackle Europe’s debt crisis. In London and Frankfurt, leading shares fell 1.5% after gaining 5% on Monday, while in Paris they lost 2% after rising 9% in the previous session. Analysts had expected shares to slip after such large gains.

China’s inflation accelerated in April after house and food prices jumped and bank lending increased. As a result, Beijing may need to raise interest rates. April’s consumer prices were up 2.8% from a year ago, the highest rate in 18 months, and property inflation hit 12.8%, according to China’s statistics bureau. New bank lending of RMB774bn (US$8.4bn; £5.65bn) exceeded predictions.

10 May

Latvia’s economy grew by 0.3% in the first three months of 2010, compared with the previous quarter, preliminary government figures have shown. The data suggests that the country, which was the EU nation worst hit by the global financial crisis, had moved out of recession.

The Bank of England has maintained UK interest rates at the record low of 0.5%. The Bank also decided not to pump any more money into the economy through quantitative easing (QE). Interest rates been at 0.5% since March 2009.

8 May

Leaders of the 16 EU member states that use the euro have approved an €110bn (US$145bn or £95bn equivalent) loan to Greece to prevent its debt crisis from spreading. European Commission President, Jose Manuel Barroso, said the eurozone would do whatever it took to safeguard Greece’s financial stability. In return for the three-year loan, Athens must cut public spending.

7 May

Germany’s parliament has approved a €22.4bn (£19bn) contribution to the overall €80bn eurozone bail-out plan for Greece. The lower house, the Bundestag, passed the bill after severe criticism of Chancellor Angela Merkel. The upper house has also endorsed it.

Spain’s economy emerged from recession by growing 0.1% in the first three months of 2010, according to the country’s central bank. The growth ended six successive quarters of contraction. Earlier this week, official figures showed Spain’s jobless rate had hit 20% for the first time in nearly 13 years, while Standard & Poor’s downgraded Spanish government debt over fears for the country’s economic outlook.

The US unemployment rate rose last month, despite more jobs being created than in any month in the past four years. The jobless rate increased to 9.9%, up from 9.7% in March. However, an extra 290,000 jobs were created in April, mainly in manufacturing, healthcare and hospitality, the Labor Department said. The reason that overall unemployment rose was because more people started looking for work, boosting the size of the labour force. The total number of people unemployed in April was 15.3 million.

6 May

The number of pay freezes in the UK fell in the three months to March this year, according to a survey from pay analysts Incomes Data Services (IDS). The survey found that 31% of settlements recorded in this period resulted in no change to pay, compared with 34% in the three months to February. Pay rises also showed a small improvement, , with the average increase rising to 1.9% from 1.8%. Most of the upturn came from the private sector.

US productivity grew at a better annual rate than expected, up 3.6% in the first quarter of 2010. Separate figures also showed that applications for jobless benefits dropped for the third week running.

Romania is to cut wages and pensions in the public sector in order to comply with an IMF-led rescue deal. The country’s president, Traian Basescu, said the “programme to cut public expenses was inevitable.” Public sector wages will be cut by 25% and all salaries, including the minimum wage, will be affected. Jobless benefits and pensions will be cut by 15%.

4 May

Eurozone finance ministers have approved a €110bn package of emergency loans aimed at averting a sovereign default by Greece and preventing a confidence crisis spreading to countries such as Spain and Portugal.

China’s central bank said it will raise the amount banks must hold in reserve for a third time this year, the latest move by Beijing to cool its booming economy. The increase came after regulators ordered China’s largest banks to re-examine their loan books and provide estimates of their exposure to un-collateralised loans, especially to provincial governments, according to Chinese bankers and analysts.

Swiss banking giant UBS has reported a big increase in profits after seeing its investment banking business recover from the financial crisis. The bank said it made a profit of 2.2bn Swiss francs (US$2bn) in the first three months of the year. That compares with a loss of nearly 2bn Swiss francs this time last year, when UBS was one of the banks worst hit by the sub-prime mortgage crisis.

30 April

Greece has agreed the outline of a €24bn austerity package, including a three-year wage freeze for public sector workers, in return for a multibillion-euro loan from the eurozone and the International Monetary Fund, according to the Financial Times.

High street banking giant Barclays has reported a big rise in pre-tax profits for the first three months of 2010. Profit for the first three months to 31 March was £1.82bn, up 47% on a year earlier, boosted by reducing bad debts. Underlying profit, which excludes gains on acquisition and disposals, climbed 90%.

UBS is returning to Brazil a year after the global crisis forced it to sell its local investment bank and reduce its presence in one of the world’s fastest growing markets to a skeleton staff. The Swiss bank said it would buy Link Investimentos, a broker dealer with offices in São Paulo and Curitiba, for R$195m (US$112m). It described the deal – a small fraction of its previous investment in Brazil – as the first step in rebuilding its physical presence in the country.

Japan’s central bank has kept interest rates on hold as it continues its efforts to boost the country’s economic recovery. As widely expected, the bank’s rate-setting committee voted unanimously to keep rates at 0.1%.

29 April

Fears that Greek debt crisis will spread to other eurozone nations intensified when Spain suffered a debt downgrade from Standard & Poor’s, sending the euro to fresh lows against the dollar. The downgrade, by one notch from AA plus to AA, dealt a blow to Spain’s frantic efforts to avoid contagion from Greece and followed S&P downgrades this week of Greece and Portugal.

The US Federal Reserve is to keep its main interest rate at a near zero level, saying it expects to hold it there for an “extended period”. The Fed said “subdued inflation” and other factors “are likely to warrant” keeping rates at their historic lows.

Brazil’s central bank raised its core interest rate by three-quarters of a percentage point, confirming market expectations that it would act aggressively to deal with rising inflation and the threat of an overheating economy. In a short statement the bank said that to ensure convergence with the government’s inflation target its monetary policy committee had decided unanimously to raise the bank’s target overnight rate, known as the Selic, to 9.5% a year from 8.75%.

Sweden’s biggest banks produced better-than-expected results in the first quarter in another sign that the Swedish financial sector has survived a surge of bad loans from the Baltic countries. Nordea, SEB and Handelsbanken were the latest to report upbeat figures, a day after Swedbank announced its first quarterly profit in more than a year.

Nasdaq OMX, the transatlantic exchange operator, has abandoned an 18-month attempt to break into pan-European share trading by saying it would close down Nasdaq OMX Europe next month.

28 April

Goldman Sachs’ chief executive has denied his bank contributed to the US financial crisis by betting some of its own investment products would fail. Lloyd Blankfein and other executives at the Wall Street giant were accused by a US Senate panel of acting unethically, while Americans lost jobs and homes. Blankfein said clients came looking for risk “and that’s what they got”.

The International Monetary Fund (IMF) is looking at raising its share of Greece’s financial rescue package by €10bn amid fears that the planned €45bn bail-out will fail to prevent the country’s debt crisis from spiralling out of control. Greece’s securities regulator banned short-selling in shares on the Athens bourse until June 28, after investors responding to the country’s deepening debt crisis ditched Greek assets a day earlier.

CIT Group, the large commercial lender that became a casualty of the credit crisis, returned to profit following its emergence from bankruptcy protection last year and said it planned to pay down US$1.5bn in high-cost debt. The bank, a big lender to small and medium-sized businesses, ran into trouble when it expanded into residential mortgage lending during the housing bubble. It sold that division before filing for Chapter 11 bankruptcy protection last November.

Banco Popular unveiled a 9.2% year-on-year decline in first-quarter net profits, as loan growth and lower provisions failed to offset tighter interest margins and weaker fee income at Spain’s third-largest listed bank.

27 April

Germany’s biggest lender Deutsche Bank has announced a near 50% jump in net profits to €1.8bn for the first three months of the year. Deutsche Bank credited record profits at its corporate and investment banking arm for its strong performance.

Lloyds Banking Group has said it has returned to profit for the first three months of the year. The news sent shares in the bank, which is 41%-owned by the taxpayer, up 4% in early morning trading. Lloyds did not release a profit figure, but said it expected to make profits through the rest of the year.

26 April

The global economy is emerging faster than expected from the deep recession, finance ministers from the world’s leading economies, the G20, have said. After talks in Washington, they said the pace of the recovery was largely due to the huge amounts of government money pumped into national economies.

Bank of Ireland has announced plans to raise €3.4bn in order to help its recovery from the financial crisis. The Irish Republic’s biggest lender said it would raise up to €1.9bn through a rights issue. The bank hopes to raise the rest of the money by placing shares with institutional investors, and through a debt-for-equity swap.

US Treasury secretary Timothy Geithner has said that World Bank members have agreed to two new developments. They will raise extra capital and give more of a voice on running the organisation to developing countries. Geithner said the bank had made a “strong and compelling case” for a funding increase of US$3.5bn.

23 April

The global economy will grow a faster than expected 4.2% this year, according to the International Monetary Fund (IMF). However, recovery in many advanced economies remains “tepid” and high government debt levels need to be addressed, the IMF said.

A €40bn rescue of Greece loomed closer after another debt downgrade and news that the country’s finances were worse than thought drove its borrowing costs even higher. A sharp fall in share prices on the Athens stock exchange and fears that Greek banks are about to face a funding crisis raised expectations that George Papandreou, prime minister, would bring forward a formal appeal for help from Greece’s eurozone partners and the International Monetary Fund (IMF).

The UK economy continued to recover from recession in the first three months of the year, according to official estimates. Gross domestic product (GDP) grew by 0.2% between January and March, the Office for National Statistics (ONS) said.

The behaviour of two credit rating agencies in the run-up to the financial crisis has been criticised by US senators following an investigation. The Senate committee said Moody’s and Standard & Poor’s instilled “unwarranted high confidence” in certain risky financial products. It also said that they were influenced by the banks that paid their fees.

22 April

UK government borrowing hit a record high of £163.4bn this year, official figures have shown. The borrowing figure for the 2009-10 financial year is lower than the £166.5bn predicted by Chancellor Alistair Darling in April’s Budget. Including financial intervention measures, borrowing totalled £152.8bn – lower than the £155.9bn forecast.

The Federal Reserve sent US$47.4bn of its 2009 profits to the US Treasury, a record payment that highlights how the US central bank was able to turn its massive intervention to rescue the financial system into a successful investment.

Morgan Stanley opened the James Gorman era with quarterly results that beat analysts’ expectations and began to erase doubts that the bank would regain its footing in crucial trading businesses. Net income totalled US$1.4bn, or US$0.99 a share, in the first quarter. The bank recorded a US$382m gain from a tax benefit. A year earlier losses were US$578m. Revenue more than tripled, to US$9.08bn.

21 April

The International Monetary Fund (IMF) has cut its estimate of the total cost of the global financial crisis to US$2.3 trillion. The new estimate represents an 18% cut on the IMF’s previous calculation of US$2.8 trillion.

The world’s leading economies should impose new taxes on bank balance sheets to pay for future financial clean-ups and consider an additional levy on bank profits and pay, the International Monetary Fund (IMF) has proposed. In a widely anticipated report ahead of this week’s meeting of the Group of 20 finance ministers, the IMF outlined two taxes that the group should consider and warned that international harmonisation would be critical to prevent regulatory arbitrage.

US bank Goldman Sachs has seen its profit for the first quarter of 2010 nearly double. The bank reported net earnings of US$3.46bn for the three months to March, up from US$1.8bn a year ago. Goldman also revealed that it paid its employees about US$5.5bn in compensation, equivalent to 43% of its revenue.

Nordic countries – Sweden, Denmark, Norway and Finland – gave the go-ahead for up to €444m more aid for Iceland’s stricken economy even as northern Europe counted the mounting cost of travel disruption caused by the eruption of an Icelandic volcano.

The number of people unemployed in the UK rose by 43,000 to 2.5 million during the three months to February, official figures have shown. The jobless total is now at its highest since 1994.

20 April

Citigroup said it had “turned the corner” after reporting its best quarterly results in more than two years. Citi announced net income of US$4.4bn in the first three months of 2010, compared with US$1.6bn in the same period last year. Earnings per share were US$0.15 compared with a loss per share of US$0.18 last year.

The UK inflation rate rose sharply to 3.4% in March from 3% the month before, official figures have shown. The rise in the Consumer Prices Index (CPI) inflation rate was greater than analysts had expected. Retail Prices Index (RPI) inflation, which includes housing costs, also rose sharply to 4.4% in March from 3.7%.

The Reserve Bank of India (RBI) has raised key interest rates by a quarter of a percentage point in an attempt to curb near double-digit inflation. The rise was the second in a month and was in line with analysts’ forecasts. The repo rate – the rate at which the central bank lends to commercial banks – was raised to 5.25% from 5%.

The Greek government’s cost of borrowing hit a new record high following delays to Greece’s economic recovery plans. The interest rate charged by investors for 10-year bonds hit 7.6% – the highest since the euro was introduced.

19 April

China’s economy grew at an annual rate of 11.9% in the first quarter of the year, which experts say could lead to a revaluation of the yuan. The growth figure was slightly higher than expected, while consumer price inflation was surprisingly low at 2.2%.

The UK economy will remain stuck in the doldrums this year with growth of 1% or less predicted in 2010, a leading forecaster has warned. The Ernst & Young ITEM Club, which uses the Treasury’s economic model f

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