Bl***y Banks Again

I READ TODAY THAT A BANK(BARCLAYS?) HAS HAD PROBLEMS(PPI MISSELLING?,METHINKS,£500MILLION FINE MIGHT BE IN ORDER.

Badboy wrote:I READ TODAY THAT A BANK(BARCLAYS?) HAS HAD PROBLEMS(PPI MISSELLING?,METHINKS,£500MILLION FINE MIGHT BE IN ORDER.

I havn't read anything about Barclays, but wouldn't be surprised Badboy all these Banks are being fined huge sums of money and RBS being sued by shareholders will maybe prompt others to do the same. There are several in America being sued. by Investment Companies, County councils etc. this scandal will be around for years.

Panda wrote:

Badboy wrote:I READ TODAY THAT A BANK(BARCLAYS?) HAS HAD PROBLEMS(PPI MISSELLING?,METHINKS,£500MILLION FINE MIGHT BE IN ORDER.

I havn't read anything about Barclays, but wouldn't be surprised Badboy all these Banks are being fined huge sums of money and RBS being sued by shareholders will maybe prompt others to do the same. There are several in America being sued. by Investment Companies, County councils etc. this scandal will be around for years.

THE SCANDALS MIGHT STILL BE GOING AFTER I AM DEAD.

Badboy wrote:

Panda wrote:

Badboy wrote:I READ TODAY THAT A BANK(BARCLAYS?) HAS HAD PROBLEMS(PPI MISSELLING?,METHINKS,£500MILLION FINE MIGHT BE IN ORDER.

I havn't read anything about Barclays, but wouldn't be surprised Badboy all these Banks are being fined huge sums of money and RBS being sued by shareholders will maybe prompt others to do the same. There are several in America being sued. by Investment Companies, County councils etc. this scandal will be around for years.

THE SCANDALS MIGHT STILL BE GOING AFTER I AM DEAD.

No , I don't think THAT LONG Badboy, I will go before you if anything.

By Mark Kleinman, City Editor

Barclays is calling for new powers to ban rogue bankers following the scandal-hit summer that saw it fined hundreds of millions of pounds for rigging key global interest rates.

I have obtained a leaked copy of Barclays' submission to the Parliamentary Commission on Banking Standards, which was set up by Prime Minister David Cameron amid rising public and political anger over the scale of industry malpractice.

In it, Barclays says the Commission should consider recommending a new Chartered Institute of Bankers which would "promote and develop professional standards across the industry, and to administer a new professional register which all staff who work within certain functions are required to sign".

Significantly, the bank also recommends that individuals who fail to adhere to the standards prescribed by the new body would be struck off and barred from working in the industry.

The call from Barclays comes as it works to resolve the future of a number of employees who were implicated in the Libor-rigging scandal.

The current approval regime involves the Financial Services Authority licensing senior employees within regulated financial institutions, whereas the Barclays suggestion would "strengthen and broaden" the existing system, the bank said.

According to the bank's submission, a Chartered Institute for Bankers would offer "certainty and confidence to customers that they are being served by qualified and trustworthy professionals who are bound by a code of conduct and are individually 'licensed'".

The new body would be independent of the banking industry but be funded by the major banks.

"It should operate a Register of Approved Bankers and Roles, which is reinforced by a disciplinary process. If a professional is found ... to have failed to meet the Rules and Standards, they should be subject to appropriate disciplinary procedures, which should include being removed from the list and therefore prevented from undertaking such a role in the future at any UK bank.

"The register should be made available to the public in a similar manner to other professions."

Acknowledging the deep public mistrust of the banking sector triggered by a wave of mis-selling scandals, Barclays' submission goes on to say: "(A chartered institute) would provide an enhanced process and means for the FCA (Financial Conduct Authority), working with the institute, to identify and discipline staff who fail to live up to the high standards customers expect.

"The combined efforts of the FCA and the register could ensure that staff guilty of serious malpractice could not continue to operate in the UK."

Barclays also calls for an overhaul of the professional qualifications which serve the banking industry and for new qualifications and "standards for ethics, behaviour and leadership".

Antony Jenkins, the new chief executive of Barclays, has said that restoring trust in the bank will be a priority of his tenure.

"Barclays hopes that an enhanced sense of professional pride in the ethical, professional and fiduciary responsibilities inherent in banking will be achieved. The (new) body could also help drive the 'right kinds of innovation' commensurate with the public interest," the bank's submission concludes.

The Parliamentary Commission which is being led by Andrew Tyrie, the MP who chairs the Treasury Select Committee, is expected to report its findings by the end of the year.

Barclays' contribution to the consultation process comes as the City regulator warns the bank that cultural and governance reforms are essential in the wake of the Libor scandal.

As Sky News revealed on Thursday, Lord Turner, the FSA chairman, has told Sir David Walker, the new Barclays chairman, that Mr Jenkins' appointment should not be interpreted as a signal that the regulator will not continue to press for major changes at the bank.

Barclays declined to comment on its submission

Investors Expect Libor to be Replaced Within Five Years


By Joshua Gallu - Sep 7, 2012 1:00 AM GMT+0100

A key interest rate for more than $500 trillion of securities worldwide will be replaced by a benchmark subject to greater government control, according to a plurality of global investors.

Forty-four percent of those responding to a quarterly Bloomberg Global Poll said the London interbank offered rate, known as Libor, will be supplanted by a more regulated model within five years. Thirty-four percent predicted the rate will continue to be set by banks in the current fashion, while 22 percent said they didn’t know.





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Investors See Government Benchmark Supplanting Libor by 2017




Chris Ratcliffe/Bloomberg

The logo for the British Bankers Association (BBA), is seen outside Pinners Hall, the location of their offices in Old Broad Street, London.

The logo for the British Bankers Association (BBA), is seen outside Pinners Hall, the location of their offices in Old Broad Street, London. Photographer: Chris Ratcliffe/Bloomberg

Attachment: Poll Results


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U.S. Treasury Secretary Timothy Geithner




Andrew Harrer/Bloomberg

According to U.S. Treasury Secretary Timothy Geithner, private, unregulated organizations such as the BBA shouldn’t be responsible for rates such as Libor.

According to U.S. Treasury Secretary Timothy Geithner, private, unregulated organizations such as the BBA shouldn’t be responsible for rates such as Libor. Photographer: Andrew Harrer/Bloomberg

Confidence in Libor has waned as authorities investigate whether financial firms rigged the rate to profit on derivatives positions and hide how difficult it was for them to borrow money during credit-market turmoil in 2008.

Barclays Plc (BARC), the U.K.’s second-largest bank by assets, agreed to pay $460 million in June for its role in fixing the rate, prompting lawmakers, regulators and investors to question the veracity of a benchmark that is pegged to securities ranging from home mortgages to credit cards.

“The Libor scandal should not be something to be hidden under the carpet because it affects the correct functioning of financial markets and the economy as a whole,” said Mario Cribari, head of asset management at Veco Invest SA in Lugano,Switzerland, and a participant in the poll. Governments are trying to intervene “to calm public anger,” he said.

The quarterly poll of 847 investors, analysts and traders who are Bloomberg subscribers was conducted Sept. 4.

Ongoing Probe


Libor is derived from a survey of banks conducted each day on behalf of the British Bankers’ Association in London. Lenders are asked how much it would cost them to borrow from each other for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs. After a set number of quotes are excluded, those remaining are averaged and published for each currency by the BBA before noon.

Investigators have focused on instances of traders coordinating submissions in order to earn profits on derivatives tied to the rates for dollars, euros and yen. The probe, which is ongoing, has ensnared banks including UBS AG (UBSN), Citigroup Inc. (C),Royal Bank of Scotland PLC, Deutsche Bank AG, and HSBC PLC (HSBA), according to company filings.

Meanwhile, regulators including the U.K.’s Financial Services Authority have started broader reviews of how the rate is determined and regulated. The European Commission said Sept. 5 it is also seeking views on possible rules, including forcing banks to provide real transaction data rather than estimates and increasing the number of lenders involved in setting the rate.

‘Watered Down’


The proportion of poll respondents predicting that Libor would be replaced was consistent across the U.S., Europe andAsia.

“There will be the traditional U.K. process of an inquiry that makes few meaningful recommendations, which will then be further watered down to the point that any changes will be both minimal and satisfactory to nobody,” said Oliver Attwater, a London-based North America equity analyst for British Airways Pensions Investment Management Ltd.

The BBA, which represents more than 200 banks and lobbies policy makers and regulators on behalf of the industry, has been faulted for failing to fix Libor in 2008 when the Bank for International Settlements first raised concerns that the benchmark was being manipulated.

Geithner Testimony


According to U.S. Treasury Secretary Timothy Geithner, private, unregulated organizations such as the BBA shouldn’t be responsible for rates such as Libor.

“We have to take a careful look at other parts of the financial system where the markets rely heavily on private organizations composed of private firms like the BBA that have some quasi-regulatory or self-regulatory role,” Geithner told the Senate Banking Committee in Washington in a July hearing to discuss the Barclays settlement. “As you’ve seen in this case, we’ve got to be careful to make sure the system is not relying on associations of private firms that leave us vulnerable to the kind of things we’ve seen.”

In a Wall Street Journal editorial Aug. 2, Dan Doctoroff, chief executive officer of Bloomberg LP, the parent of Bloomberg News, proposed an alternative to Libor dubbed the Bloomberg Interbank offered Rate, or Blibor, and offered to manage it as a service to global financial markets.

In answering a separate question about the securities markets, global investors expressed skepticism about the growth of high-frequency trading that uses computer algorithms to buy and sell stocks in fractions of a second. Fifty-five percent said the practice, which now accounts for more than half of equity trading volume, is having a mainly negative impact.

Regulatory Focus


Regulators have sharpened their focus on algorithmic and high-frequency trading since May 6, 2010, when a computer program employed by one firm sparked a 20-minute plunge in stock prices, temporarily erasing $862 billion of market value. The issue emerged again last month when a software malfunction atKnight Capital Group Inc. (KCG) cost the company $440 million and left it looking for a financial infusion.

Thirty-seven percent of survey respondents said high-frequency and algorithmic trading is mostly bad because it makes markets more volatile, and 18 percent said it was negative because computer problems could hurt investors.

“In today’s market, emotions appear to drive investor decisions more than fundamental rationale,” said Jon Morris, a portfolio manager at Palladium LLC in Norfolk, Virginia.“Trading by algorithms and with high frequency clearly is skewed away from fundamentals. When algorithms are right for the wrong reason, it only increases investors’ abandonment of sound judgment.”

Traders More Positive


Proponents of high-frequency trading say it makes markets more liquid, lowering transaction costs for investors. Thirty-six percent of respondents said that the practice was mainly positive. While 30 percent of U.S.-based respondents said high-frequency trading was mostly good, 42 percent of participants in Asia viewed it positively.

Across professions, 40 percent of traders and market makers surveyed said high-frequency trading is good, compared with only 31 percent of portfolio managers and asset liability managers who shared the view.

By Tom Schoenberg and David Voreacos - Sep 11, 2012 5:16 PM GMT+0100

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Bradley C. Bower/Bloomberg
Bradley Birkenfeld, a former UBS AG banker, during an interview at Schuylkill County Federal Correctional Institution in Minersville, Pennsylvania.
Bradley Birkenfeld, the former UBS AG (UBSN) banker who went to prison after telling the Internal Revenue Service how the bank helped thousands of Americans evade taxes, secured a whistle-blower award of $104 million, the largest individual federal payout in U.S. history.






4:44
Sept. 4 (Bloomberg) -- Claude-Alain Margelisch, chief executive officer of the Swiss Bankers Association, talks with Bloomberg's Elena Logutenkova in Zurich about the offshore tax-evasion probe of Swiss banks by the U.S. and the outlook for Switzerland's economy. (Source: Bloomberg)



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UBS Whistle-Blower Birkenfeld Secures $104 Million IRS Award




Bradley C. Bower/Bloomberg

Bradley Birkenfeld, 47, worked at Zurich-based UBS AG, the largest Swiss bank, for five years. He sought a reward from the IRS of as much as 30 percent of any taxes the agency recovered as a result of his whistle-blowing activities.

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Birkenfeld told authorities how UBS bankers came to the U.S. to woo rich Americans, managed $20 billion of their assets and helped them cheat the IRS. He pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct to the Justice Department, U.S. Senate, IRS and Securities and Exchange Commission. He left prison on Aug. 1.

“The IRS sent 104 million messages to whistle-blowers around the world -- that there is now a safe and secure way to report tax fraud,” Birkenfeld’s attorney Stephen M. Kohn said today at a news conference in Washington. He is seeking a presidential pardon for Birkenfeld, who is under home confinement.

Birkenfeld’s disclosures preceded UBS’s decision to pay $780 million to avoid prosecution, admit it fostered tax evasion from 2000 to 2007 and turn over data on 250 Swiss accounts. UBS later agreed to provide information on another 4,450 accounts. Since then, at least 33,000 Americans have voluntarily disclosed offshore accounts to the IRS, generating more than $5 billion.

Swiss Banks


The UBS case led to an erosion of the use of Swiss bank secrecy by wealthy Americans to cheat the IRS. At least 11 banks are under criminal investigation in the U.S. Two dozen offshore bankers, lawyers and advisers, as well as 50 American taxpayers, have been charged with crimes.

“Today the IRS sent a message to every American taxpayer who still has an illegal offshore account,” Kohn said. “Turn yourself in while there is still an amnesty program. Turn yourself in before your banker does.”

The IRS confirmed the award in a statement, saying: “The whistle-blower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law.”

Birkenfeld’s brother, Douglas, attended the news conference. He wouldn’t say how his brother might use the money.

Next Highest


The previous highest individual award went to Cheryl D. Eckard, a former quality assurance manager for GlaxoSmithKline Plc, who was fired after pushing the company to fix manufacturing flaws at a Puerto Rican plant. She sued under the False Claims Act, which lets citizens sue on behalf of the government and share in any recovery.

“It’s an enormous reward for incredibly significant information,” said Erika Kelton, a whistle-blower attorney at Phillips & Cohen LLP in Washington. “The government acknowledged that without him or someone in his position, offshore evasion at UBS would still likely be going on.”

In prison interviews with Bloomberg News in June 2010, Birkenfeld said he should be viewed as a hero, not a criminal.

“I delivered and documented this entire scandal, the largest in U.S. history,” Birkenfeld said. “I’m the most famous whistle-blower in the history of the world. It’s a question of doing the right thing, and that’s what I did.”

Regattas, Golf


A neurosurgeon’s son from Brookline, Massachusetts, Birkenfeld, 47, spent 15 year in Swiss banking, including five at Zurich-based UBS, the country’s largest bank. Birkenfeld was one of as many as 60 UBS bankers who crisscrossed the U.S. trolling for rich clients, even though they lacked required SEC licenses, he later told U.S. Senate investigators. They visited art shows, yachting regattas and golf and tennis tournaments, he said.

UBS trained bankers to avoid detection by regulators, urging them to carry encrypted laptop computers and falsely state on travel forms that they were entering the country for pleasure, not business, he said. The bank admitted it helped clients circumvent U.S. securities restrictions by referring them to outside advisers who set up sham companies in tax havens such as the British Virgin Islands, Hong Kong and Panama.

Igor Olenicoff


He worked at Barclays Plc before joining UBS in 2001. He persuaded his largest client, billionaire real estate developer Igor Olenicoff, to move his assets to UBS from Barclays. Birkenfeld said he sent memos to his superiors about bank compliance flaws before he resigned in October 2005.

Five months later, he wrote to Peter Kurer, then UBS’s general counsel, to say top management “actively encouraged” practices “forbidden” by the bank, according to the letter. The bank later reached a severance agreement with Birkenfeld over a disputed bonus, he said.

By 2007, he told his story to U.S. investigators. Prosecutors decided to charge him with a crime because he initially refused to describe his own role in the fraud and didn’t reveal his work with Olenicoff. The billionaire pleaded guilty in December 2007 to filing a false tax return. He got two years of probation and paid $52 million in back taxes and penalties.

Birkenfeld Indicted


In early 2008, prosecutors secured an indictment of Birkenfeld from a federal grand jury in Fort Lauderdale, Florida. He was arrested in April 2008 at Boston’s Logan International Airport as he flew from Geneva for a high school reunion and meetings with Senate investigators and the SEC.

He pleaded guilty in June 2008, saying UBS made $200 million a year handling $20 billion in undeclared assets. He said he took customer checks to deposit in European banks and bought diamonds for a client, bringing them to the U.S. in a toothpaste tube. He was sentenced in August 2008.

The IRS whistle-blower program -- revised by Congress in 2006 to boost tax revenue by giving incentives to tipsters -- stalled for five years. The program made its first award in 2011, after more than 1,300 tipsters came forward. Just three awards had been paid through June.

Program Criticized


The slow pace drew criticism from the Government Accountability Office and U.S. Senator Charles Grassley, an Iowa Republican who pushed for the law. He noted last year that the U.S. Justice Department has collected more than $27 billion under the False Claims Act.

Grassley praised the Birkenfeld award today.

“This case provides evidence about how the whistle-blower program can be effective because the IRS is saying its work against this kind of tax fraud would not have been possible without the whistle-blower,” the senator said.

While “an award of $104 million is obviously a great deal of money,” Grassley said, “billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistleblower information.”

The program hasn’t met expectations, IRS officials said in interviews earlier this year.

“It’s fair to say the whistle-blower program isn’t where we would like it yet,” said Steven T. Miller, IRS deputy commissioner for services and enforcement, who oversees the program’s office. “And I think it’s fair to say we are working hard on it.”

Kelton said the past few years discouraged tax whistle- blowers.

“This is a powerful statement that things are moving and whistle-blowers are welcome are they’re open for business,” Kelton said.

First the U.S. has investigated those Banks involved in the LIBOR scandal, now they are chasing after Tax dodgers....what is Britain doing , NOTHING!!!!! Cameron is gutless , but then , what can you expect from a PM who spends £30,000 on modernising the Downing Street Bathroom.

I READ AN ARTICLE TODAY OR YESTERDAY IN GUARDIAN CONCERNING BARCLAYS ROLE IN LIBOR SCANDAL.

Ed Conway

Economics Editor

More from Ed | Follow Ed on Twitter


It's arguably the most important unelected job in Britain, and on Friday it will, for the first time, be advertised.

The role of Bank of England Governor will become available when Sir Mervyn King steps down next July. Historically, the succession has been decided privately by the Prime Minister and Chancellor, but this time around, in the face of much criticism about the opacity of the Bank's workings, they will seek candidates publicly.

The text of the ad, which will go up in The Economist on Friday, is rather predictable. So for the benefit of those considering applying for the job and unversed in the subtlety of Whitehall-ese, I've taken the liberty of annotating it with what each element really means.

Annotations are in italics:

The position of Governor of the Bank of England will fall vacant when Sir Mervyn King retires in June 2013. Good riddance. The Governor leads the Bank of England, and plays an important role in setting monetary and regulatory policy, chairing the Monetary Policy Committee, the Financial Policy Committee and (from next year) the board of the Prudential Regulation Authority. In other words if you get this job you'll be the most powerful person in the financial system. The Governor represents the Bank in important international fora, such as the G7, G20, the European Systemic Risk Board and the Bank of International Settlements in Basel but if you're smart you'll choose to ignore these waffle-shops and get on with the real task: saving our dismal economy. The Governor is an executive member of the Bank’s Court of Directors who you will probably spend most of your term attempting to ignore as well.

The Governor will work closely with the Chancellor of the Exchequer and HM Treasury, which is responsible for setting the framework under which the Bank operates so if you don't behave we'll simply change your role. So don't misbehave. And whatever you do don't undermine us in public. Got that?

The new Governor will lead the Bank through major reforms to the regulatory system, including the transfer of new responsibilities that will see the Bank take the lead in safeguarding the stability of the UK financial system. Yes, as previously mentioned, you will be mega-powerful – probably the most powerful single person in Britain's economy in decades - and unlike our Chancellor, you'll probably still be in place in five years' time.

The successful candidate must demonstrate that they can successfully lead, influence and manage the change in the Bank's responsibilities, inspiring confidence and credibility both within the Bank and throughout financial markets after all, in this world of quantitative easing, you're sitting on the biggest pile of money this central bank has ever created, and the main thing preventing investors from panicking at the prospect of hyperinflation is your credibility.

The successful candidate will have experience of working in, or with, a central bank or similar institution although not for so long that your primary loyalty is economists rather than politicians; or will have worked at the most senior level in a major bank or other financial institution - but frankly investment bankers are pretty much a no-no. And if you're from Barclays, just leave it, yeah? He or she will demonstrate strong leadership, management and policy skills but preferably without dominating the entire institution like the last incumbent; will have an advanced understanding of financial markets and good economic knowledge though, and apologies if we're repeating ourselves, we're really keen to get someone who doesn't criticise us in public. He or she will be a strong communicator, because you'll be derided in the media, slammed by parliamentary committees and, if you were ever to hand out a medal at a sporting event, booed in public, have good interpersonal skills and will be a person of undisputed integrity and standing if there is such a thing in the financial world any more. Erm, anyone?

The closing date for all applications is 8:30 am on 8 October 2012

By Mark Kleinman, City Editor

One of the former executives who led HBOS to the brink of collapse in 2008 is to be hit with a massive fine and a lifetime ban from the industry, I can exclusively reveal.

Peter Cummings, the head of corporate lending at HBOS until its rescue by Lloyds TSB, is to be fined £500,000 by the Financial Services Authority (FSA) following a long-running investigation into his stewardship of the bank's vast balance sheet.

I am told that the City regulator plans to disclose the details of its probe tomorrow morning, although it is conceivable that a statement will be made this evening.

Mr Cummings was well-known in the City for leading the aggressive growth of HBOS' corporate lending activities, counting Sir Philip Green, the Top Shop billionaire, and Mike Ashley, the Sports Direct tycoon, among his most important clients.

He also presided over HBOS' acquisition of shareholdings in prominent businesses such as McCarthy & Stone, the retirement home-builder, and David Lloyd Leisure, the health and fitness club operator.

Since HBOS' rescue by Lloyds, the enlarged group's share price has tumbled, leaving taxpayers nursing a multi-billion pound paper loss.

In a statement in March, the FSA confirmed that it had been conducting an enforcement investigation into HBOS, saying that the bank "was guilty of very serious misconduct, which contributed to the circumstances that led to the UK government having to inject taxpayer funding into HBOS."

The lender, now part of Lloyds Banking Group - which is 41% owned by British taxpayers - escaped a fine from the regulator because (in the FSA’s words) "public funds have already been called on to address the consequences of Bank of Scotland’s misconduct, levying a penalty on the enlarged Group means the taxpayer would effectively pay twice for the same actions committed by the firm."

In the same statement, the FSA detailed a litany of failings at HBOS between 2006 and the early part of 2008.

"Between January 2006 and March 2008, Bank of Scotland's Corporate Division pursued an aggressive growth strategy that focused on high-risk, sub-investment grade lending."

Over the period, the division’s transactions increased in size, complexity and risk.

Its portfolio was high risk with highly concentrated exposures to property and to significant large borrowers.

This strategy was highly vulnerable to a downturn in the economic cycle, yet the Corporate Division continued with the strategy even as markets began to worsen in 2007.

Rather than re-evaluating its business as conditions worsened, the division set out to increase its market share as other lenders started to pull out of the market.

In addition, its internal culture was focused on revenue rather than assessing the level of risk in transactions.

Bank of Scotland did not have systems and controls that were appropriate to the high level of risks that its Corporate Division was taking on.

And there were serious deficiencies in Bank of Scotland's control framework which provided insufficient challenge to the Corporate Division’s strategy; the framework for managing credit risk across the portfolio; the distribution framework which did not operate effectively in reducing the risks in the portfolio; and the process for identifying and managing transactions that showed signs of stress.

From April 2008, as it became apparent that high value transactions were demonstrating signs of stress, it should have been apparent to Bank of Scotland that a more prudent approach was needed to mitigate risk, yet it was slow to move such transactions to its High Risk area within its Corporate Division.

There was a significant risk that this would have an impact on the firm’s capital requirements.

It also meant the full extent of the stress within the corporate portfolio was not visible to the Group’s Board or auditors.

In addition, while the firm’s auditors agreed that the overall level of the firm’s provisioning was acceptable, in relation to the Corporate Division provisions were consistently made at the optimistic rather than prudent end of the acceptable range, despite warnings from the divisional risk function and Bank of Scotland’s auditors."

The fine for Mr Cummings is the latest in a string of punishments meted out by the City regulator in recent times.

The FSA was itself criticised strongly, not only for its lax supervision of Britain’s biggest banks, but also for failing to anticipate the public and political appetite for a full report on the reasons for their collapse.

Last December, the FSA produced such a report on the failure of RBS, but said it would not begin a corresponding piece of work on HBOS’ collapse until enforcement proceedings had been completed.

Assuming no other former HBOS executives will be subject to such actions, the fine for Mr Cummings is likely to mean that work will begin shortly.

The regulator is expected to face further questions about whether Mr Cummings has been made a scapegoat for HBOS’ failure at a time when the FSA chairman Lord Turner is mounting a vigorous public campaign to become the next Governor of the Bank of England.

Andy Hornby, the ex-HBOS chief executive, and Lord Stevenson, its former chairman, were at the helm at the time the bank had to be bailed out.

There is no suggestion that any of Mr Cummings’ actions or lending decision were unauthorised.

The FSA supervised the rapid expansion of HBOS’ balance sheet during the economic boom years but, by its own admission, did nothing to curtail it.

There is also likely to be scepticism about the FSA’s decision to hand Mr Cummings a lifetime ban from the banking sector because he has already retired.

The regulator was similarly criticised at RBS for pronouncing no sanction against Fred Goodwin, the bank’s former chief executive, but instead pursuing Johnny Cameron, who ran its investment banking arm but was widely felt to have been unjustly singled-out.

The FSA declined to comment on Wednesday, while Mr Cummings could not be reached for comment.

Exclusive: HSBC UK Bank Boss Poised To Quit


As the shakeup of the banking sector continues, the head of HSBC's UK retail and commercial business is poised to depart.


9:05am UK, Thursday 13 September 2012

Joe Garner entered the business sector after gaining an MA in geography

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By Mark Kleinman, City Editor

The head of HSBC's UK retail and commercial business is to quit, marking the latest change at the helm of Britain's biggest branch networks.

I understand that Joe Garner, who was appointed to his current role in December 2010, will step down shortly.

Mr Garner, who also sits on the City regulator's practitioner panel, is understood to have decided to take some time out of the banking industry.

He will be replaced by Antonio Simoes, the high-flying head of retail banking and wealth management in Europe at HSBC. The move has been approved by the Financial Services Authority, insiders say.

The change in management comes at a time of unprecedented reform in Britain's banking sector, with the ring-fencing of retail and investment banking operations high on the Government's agenda.

HSBC, along with the other big high street banks, has been caught up in a number of mis-selling scandals, including those involving payment protection insurance and interest rate swaps.

Mr Garner, who spent his early career at Procter & Gamble, the consumer goods-maker, has also worked for Dixons, the retail group.

Depending upon the timing of an appointment, his blend of experience could make him a candidate to become chief executive of the Co-operative Group, which is poised to acquire hundreds of branches from the state-backed Lloyds Banking Group.

Mr Garner has been among a growing number of senior bankers who have endorsed changes to Britain's 'free banking' model, saying: "The only truly fair way of charging for banking will be transaction-based pricing."

HSBC, which briefed staff this morning about the management changes, declined to comment.

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• HSBC Slammed By US As 'Pervasively Polluted'
  

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Another one bites the dust.......HSBC yet to fined by the Fed.

Exploding To $88 Billion Or More

The Huffington Post | By Mark Gongloff

Get updates from Mark Gongloff




Posted: 08/27/2012 11:46 am Updated: 08/27/2012 12:01 pm











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In this Feb. 26, 2009, file photo the logo for the Royal Bank of Scotland is seen as people enter their headquarters in London. The bank may be the next to settle charges of manipulating Libor.

Funny thing about the Libor scandal: Even when there doesn't seem to be a lot going on, the cost to banks just keeps on rising.

The latest estimates are found in a Wall Street Journal piece published Monday on all the lawyers piling up like brains-hungry zombies to file lawsuits against banks accused of manipulating Libor. The plaintiffs include small banks, like Berkshire Bank of New York, that claim they missed out on some sweet lending cash because rates were manipulated too low. They include state and local governments and other municipalities that say they lost money on interest-rate swaps because of Libor rigging. They include hedge funds and other investors who claim they were duped in trades with Libor manipulators.

The high-end estimate of the potential cost to the 16 banks being investigated in the Libor probe has risen to $176 billion, the WSJ writes, citing a July report by Australian firm Macquarie Research. Actually, the report (via zerohedge) suggested the banks might end up paying $88 billion in fines and settlements as a result of $176 billion in investor losses, but who's counting? Other estimates are a lot lower, including a Keefe, Bruyette & Woods estimate of $35 billion last month and a Morgan Stanley estimate of less than $8 billion.

I am no expert on the law, or anything else, but I will take the over on this bet. And it will probably take much higher numbers to get the attention of the banks, which have $35 billion rattling around in that drawer in the kitchen full of dead batteries and rubber bands.

Some of these estimates of legal liabilities are entirely separate from the regulatory fines, which will almost certainly also total in the billions -- though for individual banks, they will be the equivalent of slaps on the wrist. The next big event in the scandal could be a settlement by the Royal Bank of Scotland. That bank's involvement in messing around with Libor could be even bigger than that of Barclays, one British member of Parliament said last week.

Barclays kicked off the Libor scandal proper by agreeing to pay $450 million to settle charges it was stone-cold manipulating Libor higher and lower, day and night, for years. It's wild to think that another bank might have been screwing Libor harder than Barclays, but there's an ex-RBS trader suing the bank for wrongful termination, who claims it was bank policy that "anyone can change Libor," apparently inspired by the old Radiohead song "Anyone Can Play Guitar."

And that's not to mention Citigroup, which according to one report was the biggest Libor manipulator of all during the financial crisis.

Moody's has a negative outlook for the U.K. Banking Industries balance of risks.

There is a huge amount of uncertainty over how U.K. Banking will evolve.

One American analyst says Banks around the World have lost their integrity and become Political . If the recession around the World leads to depression, many banks will fail because they do not have enough liquidity.

BARCLAYS BANKS SAYS THEY WANT TO BE ETHICAL BANK.

Money-Laundering Inquiry Is Said to Aim at U.S. Banks


By JESSICA SILVER-GREENBERG and BEN PROTESS


Published: September 14, 2012

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Federal and state authorities are investigating a handful of major American banks for failing to monitor cash transactions in and out of their branches, a lapse that may have enabled drug dealers and terrorists to launder tainted money, according to officials who spoke on the condition of anonymity.




These officials say they are beginning one of the most aggressive crackdowns on money-laundering in decades, intended to send a signal to the nation’s biggest banks that weak compliance is unacceptable.

Regulators, led by the Office of the Comptroller of the Currency, are close to taking action against JPMorgan Chase for insufficient safeguards, the officials said. The agency is also scrutinizing several other Wall Street giants, including Bank of America.

The comptroller’s office could issue a cease-and-desist order to JPMorgan in coming months, an action that would force the bank to plug any gaps in oversight, according to several people knowledgeable about the matter. But the agency, which oversees the nation’s biggest banks, has not yet completed its case. JPMorgan is in the spotlight partly because federal authorities accused the bank last year of transferring money in violation of United States sanctions against Cuba and Iran.

In addition to the comptroller, prosecutors from the Justice Department and the Manhattan district attorney’s office are investigating several financial institutions in the United States, according to law enforcement officials.

The surge in investigations, compliance experts say, is coming now because authorities were previously inundated with problems stemming from the 2008 financial turmoil. “These issues may have been put on hold during the financial crisis, and now regulators can go back to focus on money-laundering and other compliance problems,” said Alma M. Angotti, a director at Navigant, a consulting firm that advises banks on complying with anti-money-laundering rules.

Until now, investigators have primarily focused on financial transactions at European banks, most recently Standard Chartered. The authorities accused several foreign banks of flouting American law by transferring billions of dollars on behalf of sanctioned nations.

As the investigation shifts to American shores, the Justice Department and the Manhattan district attorney’s office are moving beyond those violations to focus on money-laundering, in which criminals around the globe try to hide illicit funds in United States bank accounts. If these new cases follow the pattern of previous ones, prosecutors could follow up on regulatory actions with their own complaints.

Despite shortcomings, banks spend millions of dollars a year to guard against money-laundering. Compliance experts argue that violations are typically unintentional and often harmless because they aren’t always exploited by criminals.

Still, prosecutors and regulators have spotted gulfs in the way financial institutions oversee suspicious cash transfers, according to the federal and state officials. Under the Bank Secrecy Act, financial institutions like banks and check-cashers must report any cash transaction of more than $10,000 and bring any dubious activity to the attention of regulators. The federal law also requires banks to have complex controls in place to detect any criminal activity.

The comptroller’s office, JPMorgan and Bank of America declined to comment.

The investigations are gaining momentum as concern is growing in Washington that illicit money is coursing through the American financial system.

Back in July the Senate Permanent Subcommittee on Investigations accused HSBC of exposing “the U.S. financial system to money-laundering and terrorist financing risks” between 2001 and 2010. The British bank, which is also under investigation by federal and state prosecutors, is suspected of funneling cash for Saudi Arabian banks with ties to terrorists, according to federal authorities with direct knowledge of the investigations. HSBC officials have pointed out that they had strengthened controls to prevent money-laundering and replaced employees tainted by the allegations. Standard Chartered maintains that “99.9 percent” of the transactions under scrutiny complied with that rule and involved legitimate Iranian banks and corporations.

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Which Magazine is starting a campaign to demand that Banks should be for its Customers , not Bankers .

They are reluctant to lend to prospective House Buyers , but not other Banks.

I SAW A LINK ON MSN SAYING BANKS SHOULD BE MORE ETHICAL,DIDN'T CLICK ON LINK.

Badboy wrote:I SAW A LINK ON MSN SAYING BANKS SHOULD BE MORE ETHICAL,DIDN'T CLICK ON LINK.

I can't ever remember a time when big banks have been seen to be mismanaged anf corrupt. They should be renamed

"Gambles" not Banks .

This is unbelievable!!! American Banks, which introduced all the "gambling"....derivatives, short selling, hedge funds etc is experiencing an upturn in House Buying but has a shortage of Bank Staff experienced in arranging Mortgages.

Don’t Let Libor Bankers Police Themselves



Illustration by Bloomberg View

By the Editors Sep 10, 2012 11:30 PM GMT+0100

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Sooner or later, the global inquiry into the rigging of Libor will have to deal with a sticky issue: what to do with the British Bankers’ Association, the trade group that was supposed to guarantee the integrity of one of the world’s most important financial benchmarks.

Founded in 1919, the BBA exists primarily to lobby for the interests of its member banks. In the 1980s, it took on the added responsibility of overseeing the London interbank offered rate, which is supposed to provide an objective measure of banks’ borrowing costs. Calculated every workday morning, Libor is used to determine payments on at least $300 trillion in mortgages, corporate loans and derivative contracts worldwide.

If the BBA had set out to design a system that its members could manipulate, it couldn’t have done a much better job. Instead of using the interest rates from actual transactions, the association relies on banks to report their borrowing costs. The chairmen of the committees that are supposed to oversee Libor, investigate misbehavior and impose sanctions are all from contributing institutions. Absurdly, the BBA won’t say whether the committees have ever taken any enforcement actions, and keeps secret the names of all the committee members. That amounts to letting the banks act as police, judge and jury in a Star Chamber.

Libor Flaws


We now know that bankers exploited Libor’s flaws as early as the 1990s. They manipulated their numbers to improve traders’profits and to hide their financial troubles. All the while, the BBA demonstrated its utter inability -- or unwillingness -- to stop it. There is even evidence suggesting the BBA was complicit.

Consider, for example, a conversation between a senior Barclays Plc manager and a BBA representative cited in the bank’s settlement with the U.S. Commodity Futures Trading Commission. In April 2008, when a Wall Street Journal article questioned the integrity of Libor, the manager “informed BBA in a telephone call that it had not been reporting accurately, although he noted that Barclays was not the worst offender of the panel bank members. ‘We’re clean, but we’re dirty-clean, rather than clean-clean.’ The BBA representative responded, ‘no one’s clean-clean.’”

The BBA’s response has been a case study in self-regulation gone wrong. Throughout the period of manipulation, the BBA consistently claimed that Libor was reliable. Only in November 2008, after about seven months of deliberation, did the BBA makeminor changes in the Libor process. Judging by the CFTC order, which says the manipulation continued through at least mid-2009, the BBA’s changes had little effect.

Surreal Report


In a surreal 2010 annual report, when the investigation of Libor was well under way, the BBA said that Libor “has attracted widespread acclaim and its strengths lie in the fact that it is simple, transparent and market-led.”

Given the BBA’s history and inherent conflicts, it’s hard to imagine how it could be found fit and proper to manage Libor. This is a big problem, because the association owns the Libor trademark. Hundreds of trillions of dollars in financial contracts cite BBA Libor. Even if the market moves to a different benchmark, as Bloomberg View has advocated, those legacy contracts will be around for decades.

What to do? One option is to bring the currently unregulated Libor process under the purview of U.K. financial authorities. Regulators could sit on the Libor oversight committees and set enforceable rules for contributing banks. They could also mandate more transparency by requiring contributors to publish information on actual borrowing transactions, against which a bank’s Libor quotes could be checked.

Ideally, the BBA should be removed from the picture. U.K. regulators persuaded Barclays Chief Executive Officer Robert Diamond to step down; they should put similar pressure on the BBA to sell Libor. An organization such as a financial exchange or financial information company would have an incentive to guarantee the benchmark’s accuracy. (Disclosure: Bloomberg LP, the parent of Bloomberg News, has proposed its own alternative to Libor, and is a competitor of Thomson Reuters Corp., which conducts Libor surveys on behalf of the BBA.)

U.K. authorities have the power to make Libor better. They should use it.

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Banks 'Reject 42% Of Small Firm Loan Requests'


A lack of bank funding and weak consumer demand sees entrepreneurs' confidence plummet, according to a new survey.


9:24am UK, Monday 17 September 2012

Small businesses confidence levels since the start of 2010

Confidence (Voice of Small Business Index points)

201020112012

-30

-20

-10

0

10

20

FusionCharts

Source: Federation of Small Businesses

Graph: Entrepreneurs' Confidence Wavers
Enlarge

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  Banks rejected more than 40% of loan applications from small businesses, leading to a fall in business confidence this summer, a survey has found.
  
  The number of credit refusals increased to 42.4% - up from 40.6% in the previous quarter - according to research by the Federation of Small Businesses (FSB).
  
  More than 60% of small firms also said that finance is unaffordable - a figure that has increased each quarter this year.
  
  This lack of funding and weak consumer demand hit entrepreneurs' confidence, which fell in 10 of the FSB's 12 UK regions.
  
  Its Voice of Small Business Index recorded a significant fall in business confidence of 5.8 points in the last three months, despite more than half of the 2,600 businesses surveyed saying they wanted to expand over the next year.
  
  John Walker, FSB national chairman, described banks' unwillingness to lend as "frustrating".
  
  He said: "It isn't surprising that confidence fell back into negative territory as the recession entered its third quarter as growth flat-lines.
  
  "The message is clear though - businesses want to grow and invest but they need a helping hand to do so."
  
  Business confidence in the UK remains stronger than in the fourth quarter of last year, when the escalation of the eurozone debt crisis pushed Britain back into recession, the FSB said.
  
  It also welcomed Business Secretary Vince Cable's proposals for a state-backed business bank to help small businesses access funding, but warned that it must be well thought through if it is going to benefit the economy in the long-term.
  
• Related Stories
  
• Cable Plans Business Bank To Help Small Firms
  
• Business Bank Plan 'Is A Puff'
  
• Ed Conway: The System Means Banks Will Always Win
  

This is a true story from Rip off Britain this morning:-

A Woman, I would say late fifties inherited £25,000 from her mother 11 yrs ago but since she and her husband didn't need the money , put it on Deposit with Abbey National Building Society . The Book shows the £25,000 minus £583 debit a few months later. Now her Husband has retired, her Daughter is expecting a Baby so they decided to withdraw some money.

Since the one withdrawal, Santander bought Abbey National and there was no record of her account in Santanders' Books.The Woman produced her Abbey Nat Book as evidence but Santander said there was no record of her account. In desperation she went to the Financial Ombudsman who said it was true, Santander had no liability because there is no evidence her account had been part of the deal , otherwise they would have sent her a new Book in the Name of Santander. Abbey National of course is no longer trading .

This Woman has lost £25,000,I do wonder why she didn't take her Book in every year to have the interest added but some people are not business minded .

What a choker.!!

Europe Banks Fail to Cut as Draghi Loans Defer Deleverage


By Anne-Sylvaine Chassany - Sep 18, 2012 12:01 AM GMT+0100

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European banks pledged last year to cut more than $1.2 trillion of assets to help them weather the sovereign-debt crisis. Since then they’ve grown only fatter.

Lenders in the euro area increased assets by 7 percent to 34.4 trillion euros ($45 trillion) in the year ended July 31, according to data compiled by the European Central Bank. BNP Paribas SA (BNP), Banco Santander (SAN) SA, and UniCredit (UCG) SpA, the biggest banks in France, Spain and Italy, all expanded their balance sheets in the 12 months through the end of June.





Enlarge image

Europe Banks Fail to Cut Assets as Draghi Loans Defer Deleverage




Balint Porneczi/Bloomberg

European banks said last year they would cut assets within two years by more than 950 billion euros, about 3 percent of the total, according to data compiled by Bloomberg.

European banks said last year they would cut assets within two years by more than 950 billion euros, about 3 percent of the total, according to data compiled by Bloomberg. Photographer: Balint Porneczi/Bloomberg

They have Mario Draghi to thank. The ECB president’s decision nine months ago to provide more than 1 trillion euros of three-year loans to banks eased the pressure to sell assets at depressed prices. The infusion, designed to encourage firms to lend, succeeded in averting a short-term credit crunch by reducing their reliance on markets for funding. It also may be making European lenders dependent on more central-bank aid.

“Deleveraging isn’t taking place, especially in Spain and Italy,” said Simon Maughan, a bank analyst at Olivetree Securities Ltd. in London. “The fact that we haven’t got on with it, or very slowly, suggests that when the time comes we’ll need another ECB injection to roll over the first one, just to keep the balance sheets of Italian banks in business.”

Reassuring Investors


European banks said last year they would cut assets within two years by more than 950 billion euros, about 3 percent of the total, according to data compiled by Bloomberg. By selling divisions and loans and reining in lending, the firms were seeking to reassure investors they would be able to reduce short-term funding needs and increase capital.

Total assets at financial institutions in 17 euro-zone countries stood at 32.2 trillion euros in July 2011, according to the ECB, more than triple the euro area’s gross domestic product last year.

Analysts predicted that European lenders would have to shrink more as regulators requested higher capital and investors, who became less convinced that governments would be able or willing to bail out their largest banks, demanded bigger returns for lending to those firms.

Alberto Gallo, a London-based analyst at Royal Bank of Scotland Group Plc, estimated last year that lenders would have to eliminate as much as 5 trillion euros of assets over five years. The International Monetary Fund predicted in an April report that banks would shrink by as much as $3.8 trillion and curb lending, moves that could cut euro-area GDP by 1.4 percent.

LTRO Lift


The ECB’s longer-term refinancing operation, or LTRO, changed the timetable. The Frankfurt-based central bank extended 489 billion euros of three-year loans to European banks in December in the first phase of the program. Two months later, it loaned 530 billion euros to 800 firms.

“Thanks to Draghi, the massive shrinkage that was looming six months ago across Europe isn’t happening -- at least not yet,” said Nikolaos Panigirtzoglou, an analyst at JPMorgan Chase & Co. in London. “That’s what the economy needed on the short term.”

Rather than shrinking, lending to households and companies in the euro area held steady this year, ECB data show. Total loans rose to 18.6 trillion euros as of July 31 from 18.5 trillion euros at the end of 2011. The figure masks a decline in countries worst-hit by the crisis, such as Spain and Greece. Lending in Spain fell 5 percent to 1.6 trillion euros in the year through July 31, according to Spanish central bank data.

“The supportive impact of the non-standard measures announced by the euro-system in December 2011 prevented abrupt and disorderly deleveraging, which could have had severe consequences for the economy,” the ECB said in its monthly report published Sept. 13. A central bank spokeswoman declined to comment further.

Sovereign Bonds


Banks across Europe bolstered capital instead of selling assets and curbing lending. They did it by retaining profit and swapping debt with other securities, such as subordinated debt, considered to have better loss-absorbing qualities, the EuropeanBanking Authority said in July.

Some lenders used the ECB’s loans to purchase sovereign bonds. Under current Basel Committee on Banking Supervision rules, banks don’t have to hold any capital against government debt because it’s considered risk-free.

Basel rules require banks to maintain varying amounts of capital against assets depending on their riskiness. They allow the largest firms to use their own models to calculate how much capital they need. By adjusting the criteria or swapping assets for ones considered less risky, lenders can reduce their risk-weighted assets, even as total assets increase.

Boosting Assets


The purchase of sovereign bonds boosted total assets at euro-zone banks by about 500 billion euros, according to JPMorgan’s Panigirtzoglou. An increase in volatility forced lenders to mark up the value of derivatives holdings by another 500 billion euros, as it became more expensive for investors to protect themselves from losses, he said. Excluding those two increases, assets have remained almost unchanged, he said.

By reinvesting LTRO funds in higher-yielding securities such as government bonds, banks can reap about 12 billion euros of profit a year, or 10 percent of the total, helping them meet higher capital requirements, Panigirtzoglou estimated.

The 38-company Bloomberg Europe Banks and Financial Services Index has climbed 17 percent this year, outpacing theEuro Stoxx 50 Index (SX5E), which has gained 12 percent.

Reducing Incentive


The ECB money has removed the incentive for banks to clean their balance sheets, according to Olivetree’s Maughan.

“Some banks, especially in Spain and Italy, are just taking in the money that they can get from the ECB, which should be a short-term measure in order to enable them to manage while they implement structural reforms,” Maughan said. “It successfully staved off a funding crisis, but its real aim of facilitating restructuring hasn’t even started.”

For lenders in southern European countries, the strategy may not be as risk-free as it looks. Yields on bonds sold by the governments of Spain and Portugal hit euro-area records this year on investor concern that they would require bailouts.

Yields on Spanish 10-year government bonds increased to 5.97 percent on Sept. 14 from about 4.2 percent two years ago, down from their 7.75 percent high on July 25. Similar Italian bonds rose to 5.11 percent from 3.93 percent in the same period.

Intesa Sanpaolo SpA (ISP), Italy’s second-largest bank, will continue to purchase Italian government bonds, Chief Executive Officer Enrico Tommaso Cucchiani, 62, said in an Sept. 7 interview at a conference in Cernobbio. The Milan-based bank boosted its holding of Italian government bonds to more than 80 billion euros in June from 64 billion euros a year earlier. Total assets rose by about 3 percent to 666 billion euros in the year ended June 30.

Steep Discounts


UniCredit increased assets by 4 percent to 955 billion euros in the same period. CEO Federico Ghizzoni attributed the rise in part to the ECB loans and reiterated the Milan-based bank’s desire to shrink.

“The issue of deleveraging is still considered one of the most important things that need to be achieved,” Ghizzoni, 56, said in an interview in Cernobbio. “But only talking in terms of shrinkage is a bit dangerous internally for the bank because it doesn’t encourage employees to do business. To be balanced you have to look where it makes sense to stay.”

Banks trying to sell assets are finding that buyers are demanding steep discounts for their worst assets, according to executives at private-equity and hedge funds acquiring the loans. They’re seeking discounts of as much as 50 percent to face value for underperforming loans, said Andrew Jenke, a director at KPMG LLP in London who advises on such transactions. Selling a loan at a discount to the value marked on the books requires the bank to crystallize a loss that erodes capital.

RBS, Lloyds


British and Irish lenders are selling the most because European Union regulators have forced them to divest divisions and loans in return for state aid.

RBS (RBS), which received a 45.5 billion-pound ($74 billion) rescue in 2008, cut assets to 1.4 trillion pounds at the end of June from 2.4 trillion pounds at the time of its bailout. The Edinburgh-based lender last week began selling a stake in its Direct Line insurance unit in an initial public offering after struggling to attract private-equity bidders.

Lloyds Banking Group Plc (LLOY), which got a 20.3 billion pound bailout, has trimmed about 66 billion pounds from its balance sheet since 2009, taking it to 961 billion pounds. Assets atHSBC Holdings Plc (HSBA), which didn’t seek a bailout, were $2.65 trillion in June compared with $2.69 trillion a year earlier.

Allied Irish Banks Plc (ALBK), Bank of Ireland Plc and Permanent TSB Group Holdings Plc have eliminated 42.6 billion euros of assets, more than half the 70 billion-euro target they have to meet by the end of 2013.

‘Intriguing’ Trend


Banks in other European countries have sought to sell performing loans, which carry higher prices, or some of their best assets to avoid taking too big a loss that would deplete capital. Some also have changed their mix of assets to reduce the amount of capital they need to hold.

BNP Paribas, Societe Generale SA (GLE) and Credit Agricole SA have cut back on dollar-denominated lending to aerospace and shipping companies, which carry a 100 percent risk-weighting under Basel rules, forcing banks to set aside capital equal to the money they lend.

The three French banks posted increases in total assets and decreases in risk-weighted assets. While derivatives explain some of the gain, the trend is “intriguing,” said Christophe Nijdam, an analyst at AlphaValue, a Paris-based research firm.

Risk-Weightings


BNP Paribas’s risk-weighted assets declined by about 6 percent in the six months through June 30, and Societe Generale’s dropped 2 percent. Credit Agricole’s risk-weighted assets fell 9 percent in the same period. Total assets at the three banks climbed during the six months.

“What should we believe, the RWAs, that are often based on internal models, or assets defined by international accounting standards?” Nijdam said. “A reduction of risk-weighted assets doesn’t reduce funding needs. Only a reduction in gross assets does. French banks are still way too big to fail.”

BNP Paribas said last month it achieved 90 percent of its planned 79 billion-euro cut in risk-weighted assets by the end of June. Credit Agricole said it completed 97 percent of a planned 35 billion-euro reduction in risk-weighted assets by the same date. Societe Generale trimmed risk-weighted assets at its investment-banking unit by 33 billion euros.

Still, the three banks boosted their total assets by 2.3 percent, 13 percent and 7.6 percent, respectively, in the 12 months through the end of June. French lenders overall increased their reliance on ECB funds to 124.5 billion euros as of Aug. 7, from 32.3 billion euros a year earlier, according to Nijdam, based on his analysis of French central bank data.

TCW Sale


Societe Generale sold its U.S. asset-management unit, TCW Group Inc., last month to private-equity firm Carlyle Group LP (CG)for less than the $880 million it paid in 2001, according to people familiar with the transaction. The Paris-based lender also is close to selling 800 million euros of mortgages to Axa SA’s real-estate unit at a discount of less than 10 percent of face value, people with knowledge of the deal said last month.

“The bulk has been done” in adjusting the balance sheet, Societe Generale CEO Frederic Oudea, 49, said in a Sept. 12 interview with Bloomberg Television. “I am happy with the structure of the liquidity today, and there’s plenty of liquidity in the market. We have started the disposal program, and we’re going to carry on that in the next few quarters.”

Spokesmen for Societe Generale, Credit Agricole and BNP Paribas declined to comment.

Deutsche Bank AG (DBK), Germany’s largest lender, plans to reduce risk-weighted assets by 135 billion euros in a process co-CEO Anshu Jain, 49, said last week would be “very rapid.” Total assets had swollen to 2.2 trillion euros in June from 1.85 trillion euros a year earlier.

Spanish Deleveraging


Spanish banks, which will receive as much as 100 billion euros from the EU to boost capital, also may accelerate deleveraging after the government opens a so-called bad bank to take on souring real-estate loans from rescued lenders.

Santander’s assets expanded by 5 percent to 1.29 trillion euros in the 12 months ended June 30 in part because lending inLatin America and the U.S. offset declines in Spain and Portugal. Risk-weighted assets fell 3.3 percent in the period, the company said. A spokesman for the bank declined to comment.

‘Weak Link’


Analysts estimate the pace of asset sales will increase as banks face the next round of Basel rules, which go into full effect by 2019. To comply, lenders will need to raise about 400 billion euros of core Tier 1 capital, the highest quality of capital mostly made up of common stock, the EBA said. Firms may still try to meet that requirement largely by retaining earnings, which would be possible if profits remain stable, according to Panigirtzoglou.

By providing money and removing the pressure on banks, Draghi has delayed necessary steps to shrink, Maughan said.

“The banks are the weak link in the economy,” he said.“They have to be compelled to sell assets. If you let them do it in their own timeframe, they will wait.”

That could lead to what RBS’s Gallo called the“Japanification” of the banking system, a prolonged period during which lenders are slow to clean up their balance sheets.

“We’ve gone from a risk of an accelerated deleveraging to the opposite,” he said. “It’s a better scenario for the economy, although it shouldn’t translate into complacency.”

BANKER JAILED FOR 2.5 MILLION FRAUD AT LLOYDS BANKS