13 September 2007
Northern Rock asks for and is granted emergency financial support from the Bank of England as thousands of worried savers withdraw their money and the bank's shares plummet. Irish savers are assured their savings are protected.
16 March 2008
JP Morgan Chase agrees to pay the rock-bottom price of $236m to buy Wall Street investment bank Bear Stearns, whose mortgage portfolio was worth an estimated $33bn at the end of February this year. Without a buyer it would have had to declare bankruptcy.
The collapse of US quasi-government housing agencies Fannie Mae and Freddie Mac is barely averted by an announcement from Federal Reserve chairman Ben Bernanke and US treasury secretary Henry Paulson that the government would bail out the two agencies. Together Fannie and Freddie are liable for about half the total mortgage debt in the US.
Investment bank Lehman Brothers becomes the biggest victim of the credit crunch so far when it files for bankruptcy protection and hurtled towards liquidation after failing to find a buyer.
Lehman, once the fourth-biggest US securities firm, lost 94% of its market value this year, succumbing to the subprime mortgage crisis it helped create.
Meanwhile the US government threw an $85bn lifeline to American International Group (AIG), the world's largest insurer, after collapsing share prices left it on the brink of bankruptcy. Trouble in AIG's financial products division was at the heart of the problem, playing the counterparty in a large number of swap and hedge transactions. It forced a major downgrade in AIG's debt rating, requiring the company to post $15bn in additional collateral, which prompted the rescue.
Lloyds TSB confirms it is paying £12.2bn to take over HBOS in a move intended to create one of the strongest banks in Britain, but with thousands of job losses and branch closures. HBOS, which owns Halifax and Bank of Scotland, is Britain's biggest mortgage lender and has suffered a dramatic fall in shares. Under the terms of the agreement, HBOS investors will get 0.83 Lloyds shares for every HBOS share they own.
In Dublin, speculation in financial circles centres on Anglo Irish Bank as the most likely suitor for Irish Nationwide, which has been on the market since last year. Anglo had expressed serious interest in the possibility of acquiring the building society. A takeover would protect their major exposures, where both gave tens of millions in loans to developers.
The Brian Cowen-led government rushes to increase the statutory limit for deposit protection schemes from €20,000 to €100,000 in an effort to dampen growing fears of a run on banks and building societies. The cover applies to 100% of an individual's deposit and leaves Irish savers better protected than savers in most other European countries.
The government says it will guarantee all deposits, bonds and debts in the country's six biggest banks and building societies for two years to maintain financial stability.
Included are AIB, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide and the Educational Building Society. It's the biggest potential exposure ever to confront Irish taxpayers. The government says the taxpayers' interests will be protected.
Compiled by Lyndsay McGregor