Reuters: CHRONOLOGY-The credit crunch of 2007/2008 (1 Aug 2008)

CHRONOLOGY-The credit crunch of 2007/2008


LONDON, Aug 1 (Reuters) - Credit market turmoil has hammered the global banking system, forced asset writedowns of more than a third of a trillion dollars to date, squeezed lending everywhere and initiated a sharp slowing of the world economy.

Reuters News is producing a package of stories analysing the impact of the credit crunch on consumers, policymakers and investors around the world.

For a factbox on bank asset writedowns, see [ID:nL064344]

To see the stories in the package on your Reuters screen, click on [ID:nL0143646]

To view the stories, accompanying pictures and graphics via the Web, double click on the following link:

here

Below is a timeline of events.

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* Q4, 2006 - U.S. housing market slows after two years of rising official interest rates. Delinquency rates on U.S. subprime mortgages rise, leading to wave of bankruptcies at subprime lenders. Interest rate premia on Collateralised Debt Obligations, repackaged bonds and loans which included subprime mortgage debt, jump sharply in December 2006 and January 2007.

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* Feb 8, 2007 - HSBC says more funds will have to be set aside to cover bad debts in U.S. subprime lending portfolios. California's New Century Financial Corp -- the third largest U.S. subprime lender -- said it expected Q4 2006 loss. Spreads on non-investment grade tranches of home equity CDOs widen more than 200 basis points in two days that follow.

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* June 6 - European Central Bank raises key interest rates by a quarter point to 4.0 percent.

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* June 20 - Two hedge funds managed by U.S. investment bank Bear Stearns announce losses after making bad bets on securities backed by subprime loans. They sell $4 billion of assets to cover investor redemptions and expected margin calls. Merrill Lynch sells off assets seized from the funds.

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* July 5 - Bank of England raises key interest rates by a quarter percentage point to 5.75 percent.

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* July 10 - Credit ratings firm Standard & Poor's said it may cut ratings on some $12 billion of subprime debt. U.S. firms Home Depot (HD.N: Quote, Profile, Research, Stock Buzz) and D.R. Horton (DHI.N: Quote, Profile, Research, Stock Buzz) issue warnings about housing market. Credit spreads soar by full percentage point in 6 weeks from record low of 188 basis points hit on June 1.

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* July 17 - Bear Stearns says two hedge funds with subprime exposure have very little value; credit spreads soar. Two days later, S&P slashes ratings on some top-rated mortgage bonds by eight notches.

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* July 30 - German bank IKB IKB.DE cuts earnings targets for 2007/08, citing losses linked to U.S. subprime. Credit spreads balloon to record highs above 500 basis points.

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* Aug 7 - U.S. Federal Reserve leaves interest rates at 5.25 percent, saying economic growth remains moderate despite tighter credit conditions and that inflation remains its main concern.

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* Aug 9 - European Central Bank adds 94.8 billion euros of one-day funds to money markets as interbank lending seizes up amid concern about banks subprime exposure and surging overnight borrowing rates. ECB move comes after French bank BNP Paribas froze $2.2 billion worth of funds, citing subprime problems. Fed and Bank of Canada also add liquidity to their banking systems. Germany's Bundesbank organises meeting to rescue IKB. German regulators say they are looking into $17.5 billion funding vehicle of German state bank SachsenLB, raising concerns about bank conduits and bank-sponsored structured investment vehicles heavily dependent on short-term finance.

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* Aug 17 - Fed surprises markets by cutting discount rate for direct loans to banks by half a percentage point to 5.75 percent, citing downside risks to growth from tightening credit. SachsenLB said German savings banks provide credit facility of 17.3 billion euros to secure liquidity of its Ormond Quay conduit.

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* Aug 21 - Britain's Barclays Bank (BARC.L: Quote, Profile, Research, Stock Buzz) borrows 314 million pounds from Bank of England's standing lending facility, the first use of that penalty rate facility since credit crisis began. Barclays taps central bank for emergency funds of some 1.6 billion pounds for a second time on Aug. 30, citing a technical hitch in UK clearing system.

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* Sept 6 - ECB leaves interest rates at 4.0 percent, widely seen as postponement of rate rise it had signalled in August.

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* Sept 13 - British mortgage lender Northern Rock NRK.L seeks emergency financial support from the BoE, according to TV news reports. Report and its confirmation spark a run on bank's deposits by worried savers in days that follow.

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* Sept 17 - British finance minister Alistair Darling says UK government will guarantee all deposits at Northern Rock.

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* Sept 18 - U.S. Fed cuts its key Federal funds target rate and discount rate by half a percentage point to 4.75 percent and 5.25 percent respectively, saying the cuts were a pre-emptive move to neutralise the impact of the financial market turmoil.

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* Sept 24/25 - International Monetary Fund says sustained tightening of credit will slow the world economy.

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* Sept 27 - ECB announces it lent out 3.9 billion euros ($5.5 billion) at its penalty rate of 5 percent on Sept 26 but it declined to say which bank or banks needed the funds.

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* Oct 1 - Swiss bank UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) said it would write down $3.4 billion of assets and record its first quarterly loss in nine years. Citigroup (C.N: Quote, Profile, Research, Stock Buzz) said it expected third-quarter net income to fall by about 60 percent.

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* Oct 15 - Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), Citigroup (C.N: Quote, Profile, Research, Stock Buzz) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) float plans to set up a fund aimed at pooling assets from stressed SIVs and preventing a fire sale of these assets undermining credit markets further. After months of discussion the plan never gets off the ground.

Separately, Citigroup announces $6.5 billion of losses and writedowns on subprime-related debt and leveraged loans in Q3, registering its largest quarterly profit decline in three years.

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* Oct 24 - Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) announces $8.4 billion of losses and writedowns in CDOs, subprime and leveraged loans in Q3 -- leading to biggest quarterly loss in the firm's history and the exit of Chief Executive Stan O'Neal on Oct. 30.

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* Oct 31 - Fed cuts key Fed funds target and discount rates by quarter percentage point each to 4.5 percent and 5.0 percent respectively, saying economy to slow as housing weakens further.

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* Nov 4 - Citigroup announces further $8-11 billion of writedowns. Charles Prince resigns as Chief Executive.

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* Nov 5 - Fitch says it may cut the AAA credit ratings of bond insurers, raising concern such action could trigger a wave of downgrades of some of the $2.5 trillion of bonds they insure.

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