[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 15 August 2007, 23:06 GMT 00:06 UK
Top US lender 'risks bankruptcy'
A house for sale in Illinois
The housing slump and rate rises have been big problems for lenders
Shares in Countrywide Financial, the biggest US mortgage lender, fell 13% on Wednesday on fears that it could face bankruptcy if conditions deteriorate.

Merrill Lynch advised its clients to sell shares in the lender.

Its analyst Kenneth Bruce wrote: "If liquidations occur in a weak market, then it is possible for Countrywide to go bankrupt."

Countrywide suffered growing defaults as rising interest rates made it harder for people to pay their mortgages.

Its shares fell $3.17 to $21.29, which was its biggest fall in a single day since the crash of 1987 - the shares have fallen 50% so far this year.

The warning from Merrill Lynch came a day after Countrywide announced that foreclosures and mortgage delinquencies had risen in July to their highest levels since early 2002.

There was much speculation in the market that Countrywide had been having difficulties selling short- term debt, which would make it difficult or unacceptably expensive for the lender to run its day-to-day operations.


SEE ALSO
Rising defaults hit top US lender
24 Jul 07 |  Business
Wall St hit by home payment fears
13 Mar 07 |  Business
US probes sub-prime mortgage firm
13 Mar 07 |  Business
Mortgage slide hits Countrywide
26 Jul 05 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific