Negative signs from the U.S. real estate market on Aug. 27 is not comforting news for domestic banks but also their overseas brethern. Sales by U.S. homeowners slipped to an annual rate of 5.75 million in July, down 0.2% from the revised 5.76 million pace in June. The number of homes for sale jumped 5.1%, the group said, meaning there is now a 9.6-month supply of homes for sale, up from 9.1-months in the June reading.
The sobering numbers compounds an already troublesome situation overseas especially in Europe. Landesbank Sachsen Girozentrale was sold to a larger rival, Landesbank Baden-Württemberg on Aug. 26. The deal calls for Landesbank Baden-Württemberg, to pay an initial €250 million, or $342 million, for Sachsen LB, the 51% government owned portion of Landesbank Sachsen. Landesbank Sachsen secured an emergency funding of €17.3 billion ($23.6 billion) line of credit from a group of regional savings banks on Aug. 17 but the bleeding continued, necissating the deal. Landesbank Sachsen turned to sell itself primarily because it found it difficult to get short-term financing because of its exposure to the declining U.S. mortgage-backed security sector.
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Tags: m&a, sub prime
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