Bear Stearns on brink of break-up

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3558485.ece

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Bear Stearns stands on the brink of collapse or break-up this weekend. The bank’s woes come as Wall Street braces itself for another week of pain.

Some of America’s biggest financial institutions are set to announce first-quarter figures showing fresh losses and write-downs of billions of dollars.

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Richard Bove, a banking analyst at the Punk Ziegel investment bank, said he thought a buyout was likely to fail, as it did with Britain’s Northern Rock. “I don’t think the Fed will approve a purchase,” he said. “Customers are leaving in droves, so what would they be buying?”

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Huge loans for private-equity deals, coupled with a loss on its holding in the Chinese bank ICBC, are behind the write-downs. Goldman is also expected to unveil a 60% drop in earnings.

Lehman Brothers, which secured a new $2 billion credit line on Friday, is expected to reveal write-downs of more than $1 billion. Morgan Stanley, meanwhile, is poised to reveal a further $500m in write-downs.

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Article talks about expected Fed rate cut and other related events.