Newspaper article The Evening Standard (London, England)

HBOS Is Downgraded amid House Price Woe

Newspaper article The Evening Standard (London, England)

HBOS Is Downgraded amid House Price Woe

Article excerpt

Byline: MICKEY CLARK

CREDIT Suisse has added its voice to those prophets forecasting a 10%drop in house prices across the UK this year, and that has led it to downgradeshares of HBOS, the UK's biggest mortgage provider.

Credit Suisse has dropped its rating in HBOS, down 15p at 534 1 2 p, fromneutral to underperform and slashed its target from 890p to 565p, claiming a10% drop in house prices will have a major impact on the bank's capital ratios.

According to the broker, it could lead to a 60% rise in mortgage risk weightedassets and would knock 40 basis points from its tier one capital ratio. Thisignores the impact on other asset classes which would compound the decline.

The broker insists this is an issue which affects the whole of the bankingsector and not just HBOS, which is the biggest player. Other banks to tradelower included Barclays , 8 1/2 p to 469 1/4 p, and Alliance & Leicester, 6 1/2p to 525p.

The performance of the banks reflected a drab showing by the rest of the marketwhich left the FTSE 100 index nursing a fall of 34.3 at 5955.9.

Cairn Energy was one of the few bright spots with the price advancing 46p to2879p after confirming its pipeline in western India will be ready by June,when production from its field in Rajasthan begins. Peak production is expectedto reach 175,000 barrels a day.

Have coal prices landed on the moon? That is the question from broker ABN Amroon reports that Australia's largest coal company BMA, a joint venture betweenAussie miner BHP Billiton and Mitsubishi of Japan, has just signed deals tosupply Lakshmi Mittal's global steel empire with the black stuff at prices 211%higher than a year ago.

That has got the broker rapidly revising upwards its estimates for BHPBilliton, which it says is a screaming buy with around 12% upside on thecurrent share price.

BHP gave back some of yesterday's gains, which had also been inspired by talkin the Australian press that the Chinese are ready to buy a 9% stake in theworld's biggest mining company as a way of guaranteeing future supplies of rawmaterials. …

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