RATE CAPS - In Korea and Japan, GE Money, US subprime hurts Barclays' ABN Amro bid NOTE: Is it a trend? GE Money is moving to leave Japan due to interest rate caps, see below, and the same is being implemented in South Korea. Some wonder, so why is it still the Wild West in the USA? As only one example, the problems Barclays has gotten into with U.S. subprime, from buying Equifirst from Regions and the remainder of The Money Store from Wachovia, have weakened it so much, it ooks like Barclays is losing out to Royal Bank of Scotland, Santander and Fortis to buy ABN Amro. And so it goes... -Matthew Matthew Lee, Esq., InnerCityPress.org/Fair Finance Watch Board member, NCRC Tel: 718-716-3540 - Email: matthew.lee@innercitypress.com and this http://www.innercitypress.com/subcrime083107.html Paste - rate caps in Japan (and GE Money) and in South Korea, subprime's impact on Barclays All Options Open On GE's Japan Consumer Loan Unit - Executive DOW JONES NEWSWIRES August 30, 2007 3:54 a.m. TOKYO (Dow Jones)--General Electric Co. (GE) is keeping all options open on its Japanese consumer loan operations, including the possible sale of its embattled Lake unit, a senior executive at GE's finance wing said Thursday. Recent Japanese regulatory changes capping maximum interest rates lenders can charge and forcing them to refund excess interest rate payments to borrowers have sent the once-profitable sector into a tailspin and stoked speculation that the U.S. conglomerate may be considering selling off Lake. "We're considering all options although no decisions have been made yet," said Yoshiaki Fujimori, president of GE Money Asia. Lake is Japan's sixth-biggest consumer finance company by market share, making GE one of the largest foreign players in the Japanese consumer lending market alongside Citigroup Inc. In January, Citigroup said it was closing most of its Japanese consumer finance branches in response to the tough new operating environment, and over the past few months other lenders have been looking to consolidate operations in a bid for survival. GE bought Lake in 1997, giving it a platform to launch its business here. -- Copyright 2007 The Korea Herald All Rights Reserved THE KOREA HERALD August 31, 2007 Friday LENGTH: 337 words HEADLINE: Loan firms gear up for rate cap BODY: Consumer loan providers are gearing up for a tougher business environment ahead of the implementation of a new law that will lower the maximum interest rate they can charge customers. While major firms are getting ready to lower interest rates, some smaller players are moving to get off the radar of interest rate control. The interest rate cap, to be implemented in September, is set at 49 percent a year for consumer finance firms, down from the current 66 percent. The measure is affecting not only consumer finance firms but also mutual savings banks and other lending institutions. Loan providers in general, even though they are not subject to the interest rate cap, are moving to cut interest rates to maintain price competitiveness. LEAD Corp., a Kosdaq-listed consumer loan provider, already adjusted the maximum interest rates applied to its online loan products from 64 percent a year to 49 percent late last month. Other major consumer finance firms such as Rush & Cash and Sanwa Money are set to follow suit. "Once the law takes effect, we have no option but to lower the maximum rate," said an official at Sanwa Money. Mutual savings banks and auto financing firms, which sell cheaper loans to less riskier borrowers than the target audience of consumer finance firms, are moving to lower interest rates below 39 percent. Solomon Savings Bank adjusted their maximum interest rate applied on unsecured personal loans to 39 percent, while Hyundai Swiss Savings Bank now has a range of 6.5 percent to 38.9 percent a year. Previously they charged interest as high as 54 percent a year. Consumer finance industry officials argue that lowering the cap would drive high-risk consumers into the hands of loan sharks, as smaller firms that can not reduce the cost of funding are likely to go unregistered. A survey conducted by the Korea Consumer Finance Association found that two thirds of loan providers considered withdrawing their business registration to avoid the interest rate ceiling. FOCUS: Barclays' ABN Bid Hopes Sink As Subprime Issues Rise DOW JONES NEWSWIRES September 3, 2007 1:45 a.m. (This article was originally published Friday) By Henry E. Teitelbaum Of DOW JONES NEWSWIRES LONDON (Dow Jones)--As Barclays PLC (BCS) scrambles to support clients reeling from the collapse of the subprime debt market in the U.S., the prospects for it to address a widening shortfall in the value of its revised bid to acquire ABN Amro Holding NV (ABN) are withering. Analysts say that as Barclays responds to a continuing series of funding challenges stemming from the activities of its investment banking unit, Barclays Capital, the clock is ticking down on its EUR58.6 billion ($80.2 billion) offer for the ABN Amro, the future of which shareholders in the Dutch bank will ultimately decide, most likely in early October. "ABN Amro is looking increasingly unlikely by the day," said James Hutson, analyst at Keefe, Bruyette & Woods. He says that as the collapse of subprime lending plays out "things are emerging and Barclays is always there" trying to work out a solution for clients. In the latest chapter of the crisis, Barclays Capital on Friday announced a $1.6 billion rescue of Cairn High Grade Funding I, an investment vehicle it helped set up last year after it was unable to raise short-term funding. The "SIV-lite," a unit of London-based structured credit specialist Cairn Capital, is one of a number of similar vehicles that that have been hit by the rising cost of short-term funding and the declining value of their investments, which include subprime mortgage debt securities. The refinancing is only the latest in a series of mishaps that the investment bank has been forced to deal with in recent weeks and months. Last week, German state-owned bank Sachsen LB had to be rescued after the failure of another SIV-lite set up by Barclays Capital only three months previously. The vehicle, Sachsen Funding I, had assets of $3 billion, the bulk of which was also invested in securities backed by U.S. mortgages. Sachsen LB was sold late in the week to a rival state-owned German bank, Landesbank Baden-Wuerttemberg. Barclays Capital is also looking at how to recover losses estimated at $400 million relating to investments in two now-worthless hedge funds set up by Bear Stearns Cos. that had bet heavily in the U.S. subprime market. In the midst of all this, Barclays' head of collateralized debt obligations in Europe resigned last week. All of this is happening at a time when management is trying to regain the initiative in the largest-ever financial takeover battle. Barclays, in July revised its bid for ABN Amro to increase the amount of cash it would provide and to tap China Development Bank and Singapore's Temasek Holdings for an investment of up to EUR13.4 billion. The new cash-and-shares offer, which was valued at EUR67.5 billion at the time, put Barclays within shouting distance of a EUR71.1 billion cash and shares offer for the Dutch bank by a consortium of banks led by Royal Bank of Scotland Group PLC (RBS.LN). However, over the past month, the value of the Barclays offer has deteriorated due to a sharp decline in the value of its shares. Barclays' shares, which were at 725 pence at the time of the revised offer announcement in July, were late Friday at 613 pence. Barclays is offering 2.13 new Barclays shares and EUR13.15 in cash for each ABN Amro ordinary share and 0.5325 New Barclays American Depositary Receipt and $18.19 in cash for each ABN Amro ADS. But at the current share price, that leaves its offer at a 20% discount to the offer from the consortium, which includes Banco Santander SA (STD) and Fortis NV (FORSY). "We believe Barclays has very little chance of winning ABN," said Simon Willis, an analyst at NCB Stockbrokers Ltd., who has a buy rating on Barclays' stock but is currently reviewing his estimates. "The gap between the consortium bid and the Barclays bid is the biggest it has been since the bids were first flagged. Unless markets recover very quickly, it's difficult to see Barclays getting investor support or doing anything to raise the value of their bid." A U.K.-based fund manager who has investments in both RBS and Barclays said Barclays' almost daily problems with subprime issues are impacting its bid, more through the "rout of the share price" than through any perceived loss of credibility. He said that amid the ongoing distractions coming out of BarCap, the bank is also running out of time to go back to its Asian investors, find new ones or restructure its offer again. The fund manager, who declined to speak on the record but said he's leaning toward supporting the consortium bid, said he doubts Barclays will walk away just yet because there's still a chance that the consortium won't receive Dutch regulatory approval. An investment banker who advises on the deal said this could prove a significant factor because the Dutch Finance Ministry had granted Barclays a so-called declaration of no objection, clearing Barclays to open the offer period for ABN Amro. Dutch law requires the government to issue a DNO for entities holding or increasing a qualifying stake in the country's banks. "The DNO gives Barclays a significant tactical advantage. It makes sense for them to wait and see what conditions are attached to the other offer before changing their bid," he said. ID: 38313 Author(s): NCRC - Matthew Lee Publication date: 03/09/07

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