phenorbitalBlog of a graduate working in banking IT in London.

Bear StearnsFiled Under: Current Affairs

This last week saw Bear Stearns, a US bank, fall into the same situation as Northern Rock in the UK and require a cash injection from the Fed (with JP Morgan Chase being involved at some stage in this, although a couple of us at work couldn’t quite work out how).

Well, I guess we can see where JPM were getting involved now, as today it’s hit the press that they are to buy out BSC for just $2 a share. This is a fraction of the price that BSC were trading at at the close of business on Friday ($30 a share, which was a 47% loss on Friday alone).

This is going to particularly hurt people, such as English billionaire Joe Lewis who owned 7% of BSC, which he had picked up at a cost of $860m, back when the share price was over $100… so I’m sure that that will sting a bit. Of course, he’s a billionaire who now lives in the Bahamas so it can’t be going too badly for him.

It’s interesting to see that this situation was solved much faster than the equivalent Northern Rock situation in the UK, which dragged on for months before the government finally decided to nationalise the bank, and it’s probably going to be for the best that the situation has been resolved sooner rather than later, although we’ll see what happens with the markets when they open.

Tags: banks, Bear Stearns, credit crunch, Fed, finance, JP Morgan Chase, Northern Rock, sub prime