Short sellers savage banks as Barclays toxic debt talks stall
Tagged: DebtBarclays shares came under renewed attack yesterday as talks over a taxpayer guarantee for £100billion of toxic loans appeared to break down.
Boss John Varley has in recent weeks held informal discussions with City minister Paul Myners over joining the government’s Asset Protection Scheme - an insurance programme for radio-active financial assets.
But talks are now on hold following the weekend deal that saw Lloyds hand majority control to the state in return for shouldering the losses on £260billion of soured loans.
Related News:
- Many savings accounts `to offer no interest`
- `Cut-price` supermarkets lead as shoppers look to avoid debt
- General Electric shares rise on debt sale plans
Synovate: Global survey shows six in ten women consider themselves financially independent
Tagged: Credit Cards, DebtLeading global market intelligence firm Synovate today released results from a new study on women and financial independence, which found that nearly six in ten (58%) women across 12 diverse countries believe themselves to be financially independent.
Most emphatically independent were French women with 80% considering themselves financially autonomous, followed by British women (76%) and South African women (69%).
The survey looked at the roles women around the world play in their household finances; whether they feel in control of their own cash; how many women believe they are financially independent; as well as attitudes on whether women are better with money than men. Synovate spoke with around 4,500 women and also posed some questions to the same number of men.
Why women?
Synovate’s Senior Vice President of Financial Services in the US, Claire Braverman, explained why Synovate took a particular interest in women and finances in this survey.
“A woman meets a man, falls in love, moves in, gets married, has kids (not necessarily in that order) and it all falls apart. It’s not until this moment that she realises just how dependent she is on her partner’s money.
“Some women have checks in place to guard against this happening to them; some don’t. Some are financially savvy, and some are simply not interested.
“And even if a relationship break up is not a catalyst, women live longer than men and typically have less money upon retirement.
“All this adds up to an urgent need for financial services companies to understand women and cater to their specific needs and the situations in which they are likely to find themselves, planned or unplanned,” she said.
Sisters doing it for themselves
Braverman continued: “It’s not many decades since women started entering the workforce en masse and, to varying degrees, some aspects of gender equality remain unaddressed in every country of the world. Yet the survey found that nearly six in ten women across 12 diverse countries believe themselves to be financially independent. That’s certainly encouraging,” she said.
Least likely to consider themselves financially independent were women in Bulgaria (where 37% said they were independent) and Indonesia (47%). Overall, the developed economies surveyed were significantly more likely to have women who consider themselves financially independent than the emerging economies (68% versus 51%).
Braverman says that American women were particularly intriguing in terms of their perceived financial independence.
“While 64% of American women feel financially independent, that leaves more than a third of us who do not. For a nation that prides itself on an independent spirit, this is surprising.
“It may be that American women have higher expectations of what financial independence actually means. In part, there are a lot of women in marriages and partnerships who willingly cede monetary control, and there are an alarming number of women (often single mothers) in risky financial situations.”
Also, fascinating is the South African situation. The relatively new democracy is one of the six still-developing economies surveyed but is apparently filled with self-sufficient women. Seven in ten women said they were financially independent, even more than in the majority of the developed markets that were surveyed.
Synovate South Africa’s Client Services Director for Financial Services, Debbie Amm, said: “This is partly because the women we spoke with were largely urban, but there are greater cultural and historical explanations at hand too.
“Since South Africa became a democracy there has been a very strong and very public focus on gender equality, providing opportunities for women to advance careers or simply to start one.
“Equally, in both black and white histories, there has always been a need for women to be able to look after themselves and their families. South Africa can be a tough place, so this need for self-sufficiency has given rise to a highly entrepreneurial mindset among the women of the nation,” she said.
Breadwinning broads or ladies who lunch?
The survey also asked women to choose what the term ‘financial independence’ meant to them. The top three answers across all 12 markets surveyed were ‘Financial independence is about not being dependent on my husband or partner for money’ (41%), ‘Financial independence is about living debt free (30%) and ‘Financial independence is about being able to afford the things I want without worrying about the cost’ (18%).
The feisty French were most likely to equate financial independence with not having to rely on a partner for money (68%), followed by Dutch and British women (both 51%).
Doing without debt is key for 42% of Malaysian and 40% of Mexican women who chose this as their top definition of financial independence.
A standout 42% of Bulgarian women think financial independence means being able to afford what they want without worrying about the cost. This is more than double the number who chose that definition in most other markets (other than Malaysia, which had the second-highest response at 22%).
Stoyan Mihaylov, Synovate Bulgaria’s Managing Director, explains why: “It may surprise some from other parts of the world, but the prevailing family model in Bulgaria is for both partners to be equal bread winners. At the same time, women are responsible for running the household.
“There are two main reasons for this. First, during the socialist period both genders were practically equalised by income. After that time the differentiation of incomes in favour of men took place, although a decline in living standards pushed women into working and therefore preserved the model. Throughout all this, women remained the housekeepers.
“Thus women’s spending is restricted by the dual responsibilities they have. The dream of independence is not one of freedom from a husband-as-provider but one of having the freedom to personally provide for the wellbeing of the family, able to afford needs and wants regardless of the cost,” he said.
Man the head of the house?
The survey also explored men’s and women’s attitudes about male roles in household finance, finding that an overall 43% of women agreed that ‘a man should be responsible for the mortgage / house payments’. When the same question was posed to male respondents, 53% agreed, showing men are more likely to consider themselves more responsible for this part of the household budget. Naturally, there is a great deal of discrepancy in the findings across markets. Standouts are:
* Indonesia where 83% of men and 82% of women agree that ‘a man should be responsible for the mortgage / house payments’
* The Netherlands where only 15% of men and 7% of women agree with this statement
* The UK where 48% of men versus 15% of women agree
* Similarly, France where 47% of men believe they are responsible but only 18% of women agree
* Australia with 34% of men and only 12% of women agreeing
The survey also asked whether providing for the family is a man’s responsibility. Overall, 58% percent of men and 38% of women agreed. The two Asian countries surveyed were most likely to agree, with an overall 87% in Indonesia and 73% in Malaysia putting the onus on men.
Managing Director of Synovate in Malaysia, Steve Murphy, said: “This shows the traditional nature of Malaysia where the man is still very much seen as the main breadwinner for the family. The role of the male is established very early, firmly and consistently.
“Of course this does not mean that women have nothing to do with the money. In many cases, Malaysian women control the purse strings,” he said.
Similarly, when asked whether ‘a man should be responsible for looking after the financial needs of his wife or partner’, the more traditional cultures were most in favour. Overall, 51% agreed, made up of 57% men and 45% women.
A near-universal 95% of both genders agreed in Indonesia and Robby Susatyo, Synovate’s Managing Director for Indonesia, explains why.
“This is 100 percent cultural. For centuries, women did not engage in paid work or earn a living. Until quite recently, when urban Indonesians began widespread use of banking systems, husbands would surrender all their income to their wives for them to manage.
“Today, women’s participation in the labour force in big cities is about 37% but the mindset remains. She does it to supplement the household income and her husband does the monetary ‘heavy lifting’. In Islamic law, the husband is obliged to disclose all his personal wealth to his wife, but not the other way around,” he said.
Miss Responsible meet Lady Luck
Just over half of all respondents (both men and women) agreed that ‘women are more responsible with money than men’. Perhaps not surprisingly there is a significant difference across gender - 61% of women think the fairer sex is more responsible with money but only 40% of men agree.
The highest level of agreement was found in Mexico with an overall 72%, comprised of 82% women and 62% men.
Evelyn Jabiles, Managing Director of Synovate in Mexico, was not overly surprised. “Mexican women commonly play the role of home administrators, handing out money for utilities, rent, credit cards, school and medical fees and so on. They know what’s coming in, and what’s going out.
“Women here tend to think of men as ‘big spenders’ and somewhat irresponsible,” Jabiles said.
It appears many women like to be in control of the household money, but some take their chances as well. Thirteen percent of women across the markets surveyed buy lottery tickets or enter raffles and competitions in an effort to become financially independent or maintain that status.
Women who wager were most likely to be found in Australia where 35% ‘have a go’, or the UK where 31% join them.
Synovate Australia’s Managing Director, Julie Beeck, says: “The Australian market for lottery products is mature, with a high incidence of participation. The dream of winning big and changing your life overnight is very much alive?and even more so in such uncertain economic times.”
Credit where it’s due
How people feel about credit tends to evolve as credit card use matures in a country. Overall, 42% of our female respondents use part of their monthly income towards credit card payments.
The highest credit card use was in Canada at 77%, France at 72% and the US and Australia, both at 71%. The lowest use was 2% in Indonesia, 12% in Bulgaria and 19% in Malaysia.
Claire Braverman says that credit cards have had a negative image from the beginning, but convenience and rewards can make them a very attractive proposition.
“Some decades ago, when credit cards were first introduced, there was a dislike for debt and cash was king. Relying on credit meant you could not afford what you were buying.
“As people started using cards, that image switched to one of convenience. So in countries where the cards have become entrenched, they have been embraced for their ease of use and loyalty programmes.
“In countries where the use of credit cards is relatively new, there can still be a negative stigma associated with them. Among people who have low incomes, cards also pose control issues and people often shy away from them to ensure they do not go into debt.”
The Synovate survey also asked people whether they agreed with the statement ‘Having more than one credit card can lead to financial debt’. Overall 70% of women agreed, led by 90% of Mexican women.
Braverman continues: “It’s obviously not the card itself that causes anyone to use it. So the statement is really about control and temptation. The ability to spend more, money that you don’t have in the first place, can certainly lead to debt. It means people have to control themselves and their spouses. Not always easy!”
Evelyn Jabiles explains the danger in Mexico: “In Mexico, credit cards are perceived as ‘extra money’ rather than a line of credit, which is why they are considered dangerous by many. Interest rates on the cards are extremely high which only adds to the risk of debt.”
Curiosities
* Forty-seven percent of women believe that women spend more money than men – and 56% of men agree with them. Chances are high that much of this ‘big spending’ is done on behalf of the family.
* Brazilian and South African women are the most proactive when it comes to taking actions to become financially independent or stay that way. An example? 83% of Brazilian women and 71% of South African women make their own financial plans and / or budgets.
* Eighty percent of people believe it?s important to know about financial products and services offered by banks and insurance companies, led by South Africa (95%), the US (91%) and Canada (91%).
Contact(s) for this press release
Varian Ignatius
Marketing & Communications Manager, Southeast Asia
Synovate Sdn Bhd
Tel: +603 2282 2244
DID: +603 2297 5671
Send an email
About the Synovate Women’s Financial Independence global survey
This Synovate survey on women’s financial independence was conducted in December 2008 across 12 markets and with nearly 4,500 female respondents. Some of the questions were also posed to around 4,500 men. Synovate asked respondents about their financial independence; what the term means to them; looked at which financial instruments they might use; explored ways women choose to further their financial independence; as well as attitudes to the roles of men and women when it comes to managing money.
The markets covered by the survey are Australia, Brazil, Bulgaria, Canada, France, Indonesia, Malaysia, Mexico, the Netherlands, South Africa, the United Kingdom (UK) and the United States of America (US).
About Synovate
Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 6,000 staff across 62 countries.
For more information on Synovate visit www.synovate.com
Debt management - helping avoid mortgage repossession
Tagged: DebtFigures from the Council of Mortgage Lenders (CML) suggest that mortgagors around the UK are finding it harder to manage their debts. At the end of June 2008, 1.33% of mortgages were at least three months in arrears. Three months later, this figure had risen to 1.44% - and by the end of 2008, 1.57% (182,600 mortgages) were in this group.
The basic fact is simple: people miss payments when they don’t have enough money to pay all their bills. However, the ones they’re missing aren’t necessarily the ones that are causing trouble. Many people find they can’t make their mortgage payments because payments to their unsecured debts are taking up too much of their income. This is something debt management can help with.
Debt management - making money available for secured debts
When someone enters a Gregory Pennington debt management plan, we talk to their unsecured lenders, asking them to accept lower monthly payments and, where possible, to freeze interest and / or waive charges.
Basically, we tell them how much our client can afford to pay them per month once they’ve taken into account what they need for their unavoidable expenses, from mortgage payments to food and utility bills. Lenders will normally understand that mortgage payments must take priority over (for example) credit card payments: most would rather accept lower payments for a while than see the borrower lose their home.
Of course, making reduced payments will mean it’ll take longer to pay off those debts - and making smaller monthly payments than originally agreed will have an impact on a borrower’s credit rating, which can make credit more expensive and / or difficult to obtain for a while. Even so, the consequences of making lower payments to unsecured debts are less serious than the consequences of missing payments to a mortgage / secured loan.
Debt management - negotiating with secured lenders
When the situation calls for it, our debt management experts will also talk to secured lenders. If one of our debt management clients is facing mortgage arrears, for example, we can talk to their mortgage provider and try to find a solution that suits both sides - a repayment plan that’ll help the borrower pay off the arrears at a realistic, affordable rate.
Are you struggling to pay your mortgage because of your debts? Click here for debt help from Gregory Pennington.
Savings still important, despite base rate cuts
Tagged: DebtLONDON, UNITED KINGDOM — 02/17/09 — Responding to new figures from the Bank of England showing that the most common types of savings accounts now offer the lowest rates on record, debt management company Gregory Pennington has advised consumers that savings should still be a very important aspect of most people’s finances, and added that they should not be discouraged by low interest rates.
In February, the Bank of England made the unprecedented decision of cutting its base rate to 1% - the lowest in its 315-year history. It was a further attempt to encourage lenders to offer loans and mortgages at lower rates, as well as an incentive for consumers to spend rather than save, which would increase cash flow within the economy.
However, the decision to cut the base rate was met with some criticism from a number of analysts, who claimed that base rate cuts are no longer an effective means of combating the economic downturn. They argued that base rate cuts would only serve to disadvantage savers, since the interest rates on offer are now significantly lower than the rate of inflation - meaning that savers are ‘losing’ money in real terms.
Take the following example: if a saver puts Pounds Sterling 5000 into a savings account with a 1.5% interest rate, they will make an additional Pounds Sterling 75 interest in a year. In the meantime, a 3.1% inflation rate would mean that the average price of goods would rise at more than double that rate - so in terms of purchasing power, the savings would be worth less after a year.
A spokesperson for Gregory Pennington said that although there has been some concern raised about low interest rates, it should not prevent people from making savings.
“The way the fall in interest rates has been reported almost seems to suggest that it is no longer worth making savings, but that is not the case,” she said. “A large proportion of people who put money aside are not doing so to make more money - they are doing it because they want to save their money for a later date. In this sense, savings would even be worthwhile if the interest rate was 0%.
“Even when interest rates are high, it would take a very large amount of money to make the interest a significant incentive. We advise consumers that savings should be an integral part of most people’s finances, since they provide a financial ’safety net’ that can be a lifeline if any financial emergencies arise.
“The only situation in which savings should not be a high priority is if the consumer is struggling to repay debts. Debt repayments should always be top priority, since debts often grow a lot more quickly than savings do. The long-term consequences of not repaying debt also tend to outweigh the benefits of saving.”
The spokesperson added that anyone in trouble with their debts should speak to their lenders, as well as a professional debt adviser, in order to discuss their options.
“In many cases, lenders will agree alternative repayment plans, or brief repayment holidays, to let the borrower get their finances back on track,” she said. “If that doesn’t solve the problem, then it may be time to speak to an expert debt adviser for a more specific debt solution.
“There are a number of ways borrowers can manage their debts, such as a debt management plan, debt consolidation loan or an IVA (Individual Voluntary Arrangement). Getting debt help from an expert adviser can help borrowers to establish the best debt solution for their needs.”
Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.
Useful resources:
Gregory Pennington homepage: http://www.gregorypennington.com/
Debt help page: http://www.gregorypennington.com/debt-help.asp
Debt management page: http://www.gregorypennington.com/debt-management.asp
Contacts:
Pennington House
Melanie Taylor
0845 056 6480
Email: Melanie.Taylor@GregoryPennington.com
Website: www.gregorypennington.com
Copyright © 2008 Market Wire. All rights reserved.
Irish government faces growing fears of debt default
Tagged: DebtFears are growing that Ireland could default on its national debt after the cost to insure against possible losses on loans to the country rose to record highs at the end of last week.
Credit ratings agency Moody’s recently followed rival Standard & Poor’s warning it might downgrade Irish debt, amid fears that one of Europe’s former success stories is falling into a deepening recession. The cost to hedge against losses on Irish debt tripled last week to a record 355 basis points - meaning that for every £100 of debt, investors have to pay £3.55 to insure against default, according to data firm CMA Datavision. It was about 262 basis points at the end of January.
Moody’s has warned there is a more than 50% chance Ireland will lose its triple A rating within 12 to 18 months.
The spread between Irish and German debt rose last week to 203 points, meaning Ireland has to pay 2% more interest than Germany to borrow in the financial markets because of its perceived higher risk.
Debt advice in unpredictable times
Tagged: DebtThe less we know about what lies ahead, the more important it is to get the right debt advice, so we can take action - and be as prepared as we can be.
In December, the Halifax and the Nationwide (two of the UK’s largest mortgage lenders) shocked quite a few people when they announced they would not be publishing their house price forecasts.
While the Halifax said it was ‘not appropriate’ to comment due to the upcoming takeover by Lloyds TSB, the Nationwide simply said it was too difficult.
After all, with so many factors up in the air, there’s little difference between a prediction and a guess.
No-one knows what’s going to happen to lenders, in terms of wholesale funding costs, government legislation, debt write-offs, etc., and that means we don’t know whether the availability and cost of mortgages will improve or deteriorate.
That, in turn, will influence the number of would-be homeowners who can buy a property. It’ll also affect the number of mortgagors who’ll be unable to keep up with their mortgage payments (as will the unemployment rate, inflation, pay levels and the overall state of the economy).
The more repossessions there are, the greater the ‘downward pressure’ on prices we’re likely to see. And the more house prices come down, the less each bank will be able to recoup by selling the ones it is forced to repossess.
Making it even more complicated, this isn’t a linear equation - if the cost of mortgages goes up, for example, more people will find they can no longer afford to be a homeowner, reducing demand for housing at the same time as increasing the number of homes on the market.
So in many ways, it’s a ‘vicious circle’, with problems in one area affecting other areas on which it (in turn) depends. On top of all this, each piece of negative news can be perceived as being better or worse than it actually is, depending on how the public perceives it. House prices are famously dependent on ‘market sentiment’, so a feeling of doom and gloom can easily become a self-fulfilling prophecy. Perhaps that’s one reason the experts are reluctant to make any predictions.
On the plus side, homeowners in financial trouble may find there’s a lot of debt help available for them, from mortgage advice and ISMI (income support for mortgage interest) to promises of forbearance from mortgage lenders across the UK.
Spending is no remedy for mental health credit crisis
Tagged: DebtThe impact of the financial crisis on those with mental health problems is likely to be considerable. One in three people with serious mental health problems are in debt, and they are also approximately three times more likely than average to be in debt.
The reasons for this are manifold, ranging from the pressures of living on a low income - especially for an extended period of time - to patterns of spending associated with certain health conditions, in the case, for example, of manic spending sprees. People experiencing mental health problems may also find it difficult to access help and may tend instead to withdraw and let debts pile up, especially if they find communication difficult. This often leads to things reaching crisis point before anyone realises there’s a problem.
Insolvencies set to rocket in 2009 - IVA
Tagged: DebtMore than £1.1bn was written off in 2008 as a result of individual voluntary arrangements, with the average person entering into an IVA in 2008 owing £47,800.
KPMG expects more than 150,000 people to either enter into an IVA, be declared bankrupt or enter into a Debt Relief Order which will be introduced in April.
Mark Sands, director of personal insolvency at KPMG, says: “Most IVAs deal with personal loans, credit card balances and other forms of unsecured debts.
“Most of this money was borrowed to meet ‘current’ expenditure including lifestyle items such as holidays, or to meet monthly shortfalls in the household budget, rather than to acquire assets or to fund a business.
“By the time people realise the extent of their problems, their total debts will have been swelled by interest, charges and even further borrowing to fund the minimum repayments.
“In 2008, the average IVA debtor owed £47,800, however, this hides a wide spread of debt levels ranging from around £20,000 to more than £100,000 – KPMG estimates that more than 2,500 people entered into IVAs with debts exceeding £100,000 this year.
“This high average level of debt clearly indicates that too many people have borrowings that they have no realistic hope of repaying.”
In April 2009 the government plans to introduce Debt Relief Orders which will allow consumers with debts of less than £15,000, and minimal assets or surplus income, to write off their debts without entering into a full blown bankruptcy.
Sands says he expects that the new approach will increase the number of people using personal insolvency as the way to deal with their debts.
Read more at Mortgage Strategy
Four Seasons merger is rejected
Tagged: DebtA merger proposal by Priory Group to join with Four Seasons, the highly indebted nursing home business, has been rejected by creditors of Four Seasons, the company said
Buy-out bosses see halcyon days fade away
Tagged: DebtOne of the biggest headaches for the private equity industry is that banks have stopped lending money for buy-outs. As the debt has dried up, so have the deals