Sunday, February 03, 2008

UK : Egg/Citigroup Clamps Down On Riskier Credit Card Customers

Probably no coincidence that Citigroup is forced to make the move first and one of the largest US pawnbroker & payday lender is entering the market at the same time..... Once again their risk modeling wasn´t quite perferct...... How can you buy a UK credit card company close to a top in the UK housing market...... But i think it is very safe to say that others will have to follow ( not only in the UK ) Citi in this kind of tightening.....I suggest to read this Total UK personal debt statistic February 2008 from Credit Action to understand the magnitude of the mess especially in UK .

Sicher kein Zufall das ausgerechnet Citigroup den ersten Schritt machen muß und gleichzeitig das größte US Pfandleihaus & einer der größen "Kredithaie" in den UK Markt eintritt..... Es sieht so aus als wenn die mal wieder genau zum Top eine riskante Investition getätigt hätten.... In diesem Fall bin ich mir sicher das Citi mit diesem Schritt nicht lange alleine bleiben wird. Andere Anbieter ( auch länderübergreifend ) werden sich dieser Art der Kreditverknappung anschließen müssen.... Um einen Überblick über das Ausmaß gerade in UK zu bekommen empfehle ich einen Blick auf diese Übersicht Total UK personal debt statistic February 2008 von Credit Action zu werfen.

This quote sume it up / Dieses Zitat spricht Bände

"We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status." Egg spokesman

Egg customer anger at credit move BBC
Angry customers of internet bank Egg have hit out at its decision to cancel their credit cards.

Egg says 161,000 cards belonging to people whose credit profiles have deteriorated since they signed up will stop working in 35 days' time.

But people who insist they have good records have been contacting the BBC to say they are on the list.

A spokesman for the bank said those affected were customers it no longer wanted to lend to "regardless of their current status".

Credit cards are being withdrawn from 7% of Egg's customers who it deems to pose an unacceptably "high risk".

This could include those who have missed repayments or exceeded their credit limit.

'Arbitrary action'
Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.

The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.

The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates. ....

Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn her credit card had been cancelled in what she described as an "unbelievable arbitrary action".

Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".

She added that she had contacted credit reference agency Experian who said she was marked as having an excellent credit rating, "thus totally negating Egg's claim that this measure is about credit risk".

'Stop spending'
A spokesman for Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."

He added: "The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup."

Der Spiegel London - Die Internetbank Egg greift durch. Die britische Citigroup -Tochter will rund sieben Prozent ihrer zwei Millionen Kunden die Kreditkarte sperren. Offenbar haben es Egg und Mutterkonzern Citi mit der Angst zu tun bekommen - sie fürchten, die Risikokunden könnten sich übernehmen und ihre Darlehen nicht zurückzahlen können. Offiziell heißt es: Das Kreditrisiko der "riskanten" Kunden sei zu hoch.

Egg teilte zwar mit, der Schritt habe nichts mit der weltweiten Kreditkrise zu tun. Es handele sich bloß um eine "Neubewertung der Risiken", nachdem Egg im vergangenen Jahr von der Citigroup gekauft worden war. Die Maßnahme zeigt aber, dass Banken weltweit konservativer bei der Darlehensvergabe werden und hart gegen Risikokunden durchgreifen.

Die Egg-Mutter Citi hatte sich bei riskanten Kreditgeschäften so sehr verhoben, dass an den Finanzmärkten sogar zeitweise Insolvenzgerüchte zirkulierten. Citi hat im Zuge der Kreditkrise mehr als 18 Milliarden Dollar abschreiben müssen und damit einen Verlust im vierten Quartal von rund zehn Milliarden Dollar verbucht. Mit der Wahrheit über das Ausmaß der Krise rückte Citi nur scheibchenweise heraus. Egg will die Karten innerhalb von 35 Tagen sperren, die Kunden wurden bereits angeschrieben.

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Blogger jmf said...


A Writeoff Recession and a Dollar Crisis

10:51 PM  
Blogger jmf said...


Did Greenspan push risky home loans?

10:59 PM  
Blogger jmf said...


Merrill vs Citi, Lehman & Credis Suisse

It takes guts to sacrifice $100bn of league table credit and a sack of financing fees in this anxious market, yet Merrill Lynch is right to have done so. The bank refused to lend the Brazilian mining group Vale money to fund a possible bid for Xstrata and as a result, has been fired as its lead adviser...

The more relevant question is: are Citi, Credit Suisse and Lehman Brothers – Vale’s other lending banks – doing the right thing by betting their balance sheets on one big deal at a time when the extent of unpriced risk for banks is still not known?

11:51 PM  
Blogger jmf said...

FT Alphaville
Moody’s warns on $75bn of Australian RMBS

Moody’s said it had taken the action after placing US bond insurer PMI Mortgage Insurance on watch for a possible downgrade following rising loan losses in the US.

As PMI has an Australian operation that guarantees residential mortgage-backed securities, some 325 tranches from 144 Australian issues were automatically put on watch, says Reuters.

11:53 PM  
Blogger jmf said...

FT Alphaville
Loan market reels after Harrah’s upset

12:04 AM  
Anonymous eh said...


Trotzdem, it looks like 'full steam ahead' for equities.

About those UK debt figures: es ist fast a debtor's prison without bars.

1:16 AM  
Blogger jmf said...

Moin Eh,

i have used the silly/desperate MSFT/YHOO bounce to exit my Techdax long position.

I´m having problems not to enter the short side too early. But with the market roaring hiring i cannot guarantee that i will stay strong.....

1:39 AM  
Blogger 2and20 said...

I hear you jmf! i've used this bounce to exit some bad longs, and have put on more shorts. was tempting to wait, but the fundamentals are so bad for so many companies especially in the US that it seems I can't lose, if I'm prepared to be patient.

i could definitely do with finding some good companies out there though, my short positions are overwhelming my few longs. (fwiw, short KO,HRL,VOD.L,GS,BBY,GIS,SPLS,FED,COF,LEN,DSL,GGP,VNO)

it almost seems TOO easy shorting some of these...

2:50 AM  
Blogger jmf said...

Moin 2and20,

just visited your blog.

I couldn´t handle this kind of "stress" :-)

"it almost seems TOO easy shorting some of these..."

That´s the part that always makes me nervous. But i´m with you that in the longer term most of these companies are headed for a slump.

I have reduced my stress level in hedging the possible shorts with more long exposure from sectors, markets, currencies etc where i think they will survive the next time in pretty good shape (relatively speaking....)

3:40 AM  
Blogger Ben Bittrolff said...

I've updated my post and charts: Fed CHANGES Really Scary Fed Charts

Removing TAF makes a significant difference.

$50 billion to be exact.

TAF operations are ongoing. So this discrepancy would just continue to grow.

LIBOR is also starting to misbehave, again. Nothing too serious yet (not like before Christmas) but you get my drift. Stress is creepying back into the system.

The (counter trend) rally in risky assets should just about be over, if I've interpreted this correctly.


5:39 AM  
Blogger jmf said...

Moin Ben,

your "bottom call" was spot on! Congrats. I hope you have profited accordingly.

I didn´t had the courage to play this in a significant manner. But with Gold surging along with the other asset classes .....

It´s indeed amazing how the sentiment has shifted since the Fed has put the pedal to the medal creating the illusion that they have the power to change anything.

Too bad that when the next leg won is coming there won´t be nothing left that they can throw at Mr. Market.....

5:56 AM  

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