Banks are back in the headlines for all the wrong reasons. Following reports of a credit squeeze in the European interbank market, this week US banking giant Bank of America (BoA) saw its shares slump again. They've lost a third of their value since the beginning of the month. Investors fear the bank will have to raise at least $50bn in new capital because it is exposed to the deteriorating housing market. Swiss bank UBS will axe 5% of its staff, or 3,500 people. European banks have slashed a total of 60,000 jobs this year, 50,000 of them in Britain.
What the commentators said
As for BoA, nobody is convinced it has enough money to offset the fact that foreclosures and early arrears among borrowers are high and rising while house prices are still sliding, said Tom Bawden in The Guardian. The cost of insuring its debt against default has hit record levels. The "stroke-inducing levels of anxiety affecting the banks", said Phillip Inman, also in The Guardian, "feel like a re-run of 2008".
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