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Five societies downgraded by Fitch

Fitch has downgraded Chelsea, West Bromwich, Yorkshire, Principality and Newcastle building societies.

The move follows a downgrade of the same societies by Moody’s last month, along with Britannia, Coventry, Norwich & Peterborough and Skipton.

Fitch financial institutions team senior director Matthew Taylor says: “Fitch’s concerns are concentrated on higher-risk lending by societies, which includes specialised mortgages, purchased loans and commercial mortgages.

“The weakening economic environment has increased the credit risk of the societies as unemployment has risen and continues to rise and house prices have fallen.”

Fitch warns that the books of the downgraded societies will take a long time to deleverage and as a result it expects bigger loan impairment charges to erode earnings, making the societies more vulnerable to further deter- ioration in loan quality.


Going long on property

Following a number of years of strong performance, the UK commercial property market collapsed in the second half of 2007 and capital values continued to reduce sharply throughout 2008.

Personal quality

One of the most keenly asked questions in the pensions sector is a step closer to being answered.

Tef treatment

Last week, I started to look at investments that may represent valid alternatives to investing through pensions for those disenchanted and affected by the removal of higher-rate tax relief on pension contributions.

Value remains within European equities

By Rob Burnett, Neptune European Opportunities Fund

In recent months, investors have become more pessimistic about both the European and the US economic outlook and yet stockmarkets have pushed on to new highs. Some would argue that this is a worrying divergence. We would take the opposite view. This appears to be classic bull market behaviour. A wall of worry has been rebuilt, and stockmarket resilience should be taken as a sign of strength. The market is discounting an improving economic outlook ahead, particularly in the south of Europe.


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