First up is news that Barclays has had to call in a £1.6bn loan from the Bank of England’s credit facility – its second request for emergency funding in just over a week. The bank put the request down to a ‘technical glitch’, and was keen to point out it was back to business as usual within an hour. This is all well and good, but that it falls at a time of such uncertainty in the markets still makes it rather worrisome. Not to mention expensive. The London Interbank Offered Rate (Libor), the wholesale rate at which banks lend between each other for 90 days, has shot up to 6.63%, leading some to suggest banks are refusing to lend to one another despite the potential windfalls.
Elsewhere comes the news that investment banks are set to cut 10-15% of their staff across the board, as a result of the ongoing market turmoil. RBS has already scaled back its collateralised debt obligations team, Barclays Capital and HSBC have lost heads of structured finance and Deutsche Bank announced on Thursday it is closing one of its credit propriety trading desks in London. Last year was a record-breaker in terms of new appointments, with the creation of 10,000 City jobs. It’s estimated that half of those may now get the chop. Looks like the streets of the Square Mile may yet be littered with the abandoned Porsches and Prada bags of axed financiers.