Collapsing Financial Markets?

Citigroup, the largest bank in USA, needed to write down a record US$18.1 billion from their accounting books which caused a reported US$9.83 billion loss for the quarter ended 31 Dec 2007. Reduction of staff is the next thing to stabilise the bank. Will Malaysia's Citibank be affected?

Bank of America ("BOA"), the second largest bank, needed to retrench 650 staff from the corporate and investment banking jobs and required to sell off prime brokerage unit,. BOA's fourth-quarter profits could be down by 80% and 32% overall. Hmmmmm, wonder how is BOA Malaysian branch faring.

All this, partly due to the financial crisis involving the mortgage sector and it's slowly eating into the banking system. The above stated results are really bad and Malaysia should be ready for it. Malaysia's predicted 6% rise in 2008's economy could take a real beating.

Malaysians should be prepared for a USA recession and when it hits, it will really whack us. With rising costs in all aspects that could happen right after the general elections (rumoured to be in Mar 08), we have to tighten our pockets.

Those living on borrowed credits should take pre-cautions now and that's the issue which is bothering me as I'm hunting for a house. I'm sure the banking interest rates will rise above the current BLR rate of 6.75%. So, those BLR -2% offers are just blinding us common folks and will be meaningless when rates are increased. Banks will want to maintain high profits and when we didn't account for an increase, we will be caught with high interest and thus high monthly payment or worse, bankruptcy. Yeah, I do play real safe.

I met with a financial institution guy the other day to discuss on a potential housing loan and when he assessed my financial situation, he said financial institutions don't like people like me. HUH?????

What? With a low outstanding housing loan, no car loans, no personal loans, zero credit card debts, properly insured with diversified investments - this isn't good enough?

Nah, his meaning is financial institutions preferred people on high housing loans, with car loans, with many personal loans, with carried forward credit card balance so that the financial institutions could earn more. The more default payments the better. But if everyone is like me, the financial institutions will collapse.
Tags: Citigroup, Citibank, Bank of America, Financial Institutions, Mortgage, Housing Loan, Bank Lending Rate, BLR