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Bl***y Banks Again

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RBS returns to profit

Post  Panda on Fri 3 May - 9:05

RBS Returns To Profit In Latest Quarter

The 82% taxpayer-owned bank sees shoots of recovery as it
overcomes bad debt woes and compensation for mis-selling of products.

9:02am UK,
Friday 03 May 2013

It is the first quarterly profit report from RBS for 18

  • The Royal Bank of Scotland has returned to profit with its latest
    quarterly results, reporting a group operating gain of £826m.

    RBS said its profit after tax for the January-March period compared with a
    net loss of £1.545bn in the first quarter of 2012.

    It is the first profit report from the bank, which received Britain's biggest
    ever bailout following the financial crash, for 18 months.

    The profit was above forecasts. The bank is currently 82% owned by the
    British taxpayer.

    Sky News City Editor Mark Kleinman revealed last night that the
    bank's chairman would announce later today the start of privatisation.

    Kleinman said: "Sir Philip Hampton will say that George Osborne, the
    Chancellor, will be able to press the button on a multi-billion pound share sale
    by the middle of next year."

    The bank's balance sheet was helped by not needing to make a further
    provision for payment protection insurance (PPI) mis-selling.
    RBS CEO Stephen Hester has focused the bank on
    core priorities
    RBS chief executive Stephen Hester has overseen the shedding of billions in
    assets and is focusing on core lending to British households and small

    "We expect to substantially complete the bank's restructuring phase during
    2014. We are seeing the start of a pick-up in loan demand and have a strong
    surplus of funds ready and available to support economic recovery," he said.

    However, Mr Hester still has major hurdles to overcome.

    Britain's financial regulator said in March that UK banks must raise £25bn of
    extra capital by the end of the year to absorb any future losses on loans.

    Although the regulator has not yet given specific guidance to individual
    banks, analysts expect the biggest shortfall to be at RBS.

    RBS said its capital position had improved during the period and its core
    tier one ratio - a bank's main benchmark of health - had risen by 50 basis
    points to 10.8%.

    It expects to have a core capital ratio of 9% at the end of 2013 on the basis
    of full implementation of tougher Basel III capital rules.

    The City regulator wants major lenders to achieve a core-tier one ratio of at
    least 7%.
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Re: Bl***y Banks Again

Post  Badboy on Fri 3 May - 18:27


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Re: Bl***y Banks Again

Post  Panda on Fri 3 May - 20:06

Didn't they sell Branches a while ago ? I think they still are paying off fines for the Libor crisis and PPI mis-selling.

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A History of the Libor Crisis.......long, but worth a read,

Post  Panda on Sun 5 May - 17:31

Libor Lies Revealed in Rigging of $300 Trillion Benchmark

By Liam Vaughan & Gavin Finch - Jan 28, 2013 9:54 PM GM

The benchmark rate for more than $300 trillion of contracts was based on honesty. New evidence in banking's biggest scandal shows traders took it as a license to cheat. Graphic: Bloomberg MarketsEvery morning, from his desk by the bathroom at the far end of Royal Bank of Scotland Group Plc’s trading floor overlooking London’s Liverpool Street station, Paul White punched a series of numbers into his computer.

Enlarge image
Diamond Testifies in Libor Probe

Paul Thomas/Bloomberg
Former Barclays CEO Robert Diamond gave evidence to the Treasury Select Committee in London on July 10, 2012. Diamond stepped down from his position after regulators fined the bank 290 million pounds for attempting to rig the benchmark interest rate.
Former Barclays CEO Robert Diamond gave evidence to the Treasury Select Committee in London on July 10, 2012. Diamond stepped down from his position after regulators fined the bank 290 million pounds for attempting to rig the benchmark interest rate. Photographer: Paul Thomas/Bloomberg

Enlarge image
How Libor Was Rigged

Enlarge image
Gensler Began CFTC Investigation of Libor Manipulation

Peter Foley/Bloomberg
Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, started an investigation after listening to a tape of a conversation between traders and rate setters at Barclays.
Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, started an investigation after listening to a tape of a conversation between traders and rate setters at Barclays. Photographer: Peter Foley/Bloomberg

Enlarge image
London Lawyer Takes on Libor Banks

Harry Borden/ Bloomberg Markets
Stephen Rosen, an attorney at Collyer Bristow in London, represents a real estate company, three nursing homes and more than a dozen other firms that bought Libor-linked interest-rate swaps from banks.
Stephen Rosen, an attorney at Collyer Bristow in London, represents a real estate company, three nursing homes and more than a dozen other firms that bought Libor-linked interest-rate swaps from banks. Photographer: Harry Borden/ Bloomberg Markets

Enlarge image
Libor Score Card

White, who had joined RBS in 1984, was one of the employees responsible for the firm’s submissions for the London interbank offered rate, or Libor, the global benchmark for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps. Behind him sat Neil Danziger, a derivatives trader who had worked at the bank since 2002.
On the morning of March 27, 2008, Tan Chi Min, Danziger’s boss in Tokyo, told him to make sure the next day’s submission in yen would increase, Bloomberg Markets magazine will report in its March issue. “We need to bump it way up high, highest among all if possible,” Tan, who was known by colleagues as Jimmy, wrote in an instant message to Danziger, according to a transcript made public by a Singapore court and reported on by Bloomberg before being sealed by a judge at RBS’s request.

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Danziger typically would have swiveled in his chair, tapped White on the shoulder and relayed the request to him, people who worked on the trading floor say. Instead, as White was away that day, Danziger input the rate himself. There were no rules at RBS and other banks prohibiting derivatives traders, who stood to benefit from where Libor was set, from submitting the rate -- a flaw exploited by some traders to boost their bonuses.

The next morning, RBS said it would have to pay 0.97 percent to borrow in yen for three months, up from 0.94 percent the previous day. The Edinburgh-based bank was the only one of 16 surveyed to raise its submission that day, inflating that day’s rate by one-fifth of a basis point, or 0.002 percent. On a $50 billion portfolio of interest-rate swaps, RBS could have gained as much as $250,000.
Events like those that took place on RBS’s trading floor, across the road from Bishopsgate police station and Dirty Dicks, a 267-year-old pub, are at the heart of what is emerging as the biggest and longest-running scandal in banking history. Even in an era of financial deception -- of firms peddling bad mortgages, hedge-fund managers trading on inside information and banks laundering money for drug cartels and terrorists -- the manipulation of Libor stands out for its breadth and audacity.
Details are only now revealing just how far-reaching the scam was.
“Pretty much anything you could do to increase the revenue of your organization appeared legitimate,” says Martin Taylor, chief executive officer of London-based Barclays Plc from 1994 to 1998. “Here was the market doing something blatantly dishonest. I never imagined that people in the financial markets were saints, but you expect some moral standards.”
Where Libor is set each day affects what families pay on their mortgages, the interest on savings accounts and returns on corporate bonds. Now, banks are facing a reckoning, as prosecutors make arrests, regulators impose fines and lawyers around the world file lawsuits claiming the manipulation pushed homeowners into poverty and deprived brokerage firms of profits.
For years, traders at Deutsche Bank AG, UBS AG, Barclays, RBS and other banks colluded with colleagues responsible for setting the benchmark and their counterparts at other firms to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators. UBS traders went as far as offering bribes to brokers to persuade others to make favorable submissions on their behalf, regulatory filings show.
Members of the close-knit group of traders knew each other from working at the same firms or going on trips organized by interdealer brokers, which line up buyers and sellers of securities, to French ski resort Chamonix and the Monaco Grand Prix. The manipulation flourished for years, even after bank supervisors were made aware of the system’s flaws.
“We will never know the amounts of money involved, but it has to be the biggest financial fraud of all time,” says Adrian Blundell-Wignall, a special adviser to the secretary-general of the Organization for Economic Cooperation and Development in Paris. “Libor is the basis for calculating practically every derivative known to man.”
More than five years after alarms first sounded, regulators and prosecutors are closing in. UBS was fined a record $1.5 billion by U.S., U.K. and Swiss regulators in December for rigging global interest rates. Tom Hayes, 33, a former yen trader at the Zurich-based bank, was charged by the U.S. Justice Department on Dec. 20 with wire fraud and price fixing for colluding with brokers, contacts at other firms and his colleagues to manipulate Libor. Hayes hadn’t entered a plea as of mid-January, and his lawyers at Fulcrum Chambers in London declined to comment.
Barclays paid a 290 million pound ($464 million) fine in June to settle with regulators, and three top executives, including CEO Robert Diamond, departed. Other banks, including RBS, were negotiating settlements in early 2013, according to people with knowledge of the talks. RBS may pay as much as £500 million to settle allegations that traders tried to rig interest rates, two people with knowledge of the matter say. UBS and Barclays admitted wrongdoing as part of their settlement agreements. Spokesmen for the two banks, and for RBS, declined to comment.
The industry faces regulatory penalties of at least $8.7 billion, according to Morgan Stanley analysts. The European Union is leading a probe that could see banks fined as much as 10 percent of their annual revenue. Meanwhile, Libor is being overhauled after the U.K. government ordered a review in September into the way the benchmark is set.
The scandal demonstrates the failure of London’s two-decade experiment with light-touch supervision, which helped make the British capital the biggest securities-trading hub in the world. In his 10 years as chancellor of the Exchequer, from 1997 to 2007, Gordon Brown championed this approach, hailing a “golden age” for the City of London in a June 2007 speech. Brown, who later served as prime minister for three years, declined to comment.
Regulators have known since at least August 2007 that some banks were using artificially low Libor submissions to appear healthier than they were. That month, a Barclays employee in London e-mailed the Federal Reserve Bank of New York, questioning the numbers that other banks were inputting, according to transcripts published by the New York Fed. Nine months later, Tim Bond, then head of asset allocation at Barclays’s investment bank, publicly described Libor as “divorced from reality,” saying in a Bloomberg Television interview that firms were routinely misstating their borrowing costs to avoid the perception they were facing stress.
The New York Fed and the Bank of England say they didn’t act because they had no responsibility for oversight of Libor. That fell to the British Bankers’ Association, the industry lobbying group that created the rate in 1986 and largely ignored recommendations from central bankers after 2008 to change the way it was computed. Regulators also were preoccupied with the biggest financial crisis since the Great Depression, and forcing banks to be honest about their Libor submissions might have revealed they were paying penalty rates to borrow, which in turn would have further damaged public confidence.
Libor is calculated daily through a survey of banks asking how much it costs them to borrow in 10 currencies for periods ranging from overnight to one year. The top and bottom quartiles of quotes are excluded, and those left are averaged and made public before noon in London.
Because it’s based on estimates rather than actual trade data, the process relies on the honesty of participants. Instead of being truthful, derivatives traders sought to influence their own and other firms’ Libor submissions, with their managers sometimes condoning the practice, according to documents and transcripts of instant messages obtained by Bloomberg.
Occasionally, that meant offering financial inducements. “I need you to keep it as low as possible,” a UBS banker identified as Trader A wrote to an interdealer broker on Sept. 18, 2008, referring to six-month yen Libor, according to transcripts released on Dec. 19 by the U.K.’s Financial Services Authority.
“If you do that … I’ll pay you, you know, $50,000, $100,000 … whatever you want … I’m a man of my word.”
Some former regulators say they were surprised to learn about the scale of the cheating. “Through all of my experience, what I never contemplated was that there were bankers who would purposely misrepresent facts to banking authorities,” says Alan Greenspan, chairman of the U.S. Federal Reserve from 1987 to 2006. “You were honorbound to report accurately, and it never entered my mind that, aside from a fringe element, it would be otherwise. I was wrong.”
Sheila Bair, who served as acting chairman of the U.S. Commodity Futures Trading Commission in the 1990s and as chairman of the Federal Deposit Insurance Corp. from 2006 to 2011, says the scope of the scandal points to the flaws of light-touch regulation on both sides of the Atlantic. “When a bank can benefit financially from doing the wrong thing, it generally will,” Bair says. “The extent of the Libor manipulation was eye-popping.”
Libor debuted the same year that British Prime Minister Margaret Thatcher’s so-called Big Bang program of financial deregulation fueled a boom in London’s bond and syndicated-loan markets. The rate was designed as a simple benchmark that banks and borrowers could use to price loans.
In 1997, the Chicago Mercantile Exchange adopted the rate for pricing Eurodollar futures contracts, solidifying Libor’s position in the swaps market, which by June 2012 had a notional value of $639 trillion, according to the Bank for International Settlements. Swaps are contracts that allow borrowers to exchange a variable interest cost for a fixed one, protecting them against fluctuations in interest rates.
The CME decision created a temptation for swaps traders to game Libor, particularly in the days before international money market dates, when three-month Eurodollar futures settle. The value of positions was affected by where dollar Libor was set on the third Wednesdays of March, June, September and December. The manipulation of Libor was discussed openly at banks.
“We have an unbelievably large set on Monday,” one Barclays swaps trader in New York e-mailed the firm’s rate setter in London on March 10, 2006. “We need a really low three-month fix. It could potentially cost a fortune.” The rate setter complied with the request, according to the FSA, which published the e-mail following its investigation of the bank’s role in manipulating Libor.
The 2007 credit crunch increased the opportunity to cheat. With banks hoarding cash and not lending to one another, there was little trading in money markets, making it difficult for rate setters to assess borrowing costs accurately. Instead, traders say they resorted to seeking input from brokers, colleagues and acquaintances at other firms, many of whom stood to benefit from helping to push the rate in a particular direction.
On Aug. 20, 2007 -- days after BNP Paribas SA halted withdrawals from three of its funds, which marked the start of the credit crisis -- Paul Walker, RBS’s London-based head of money-markets trading, telephoned Scott Nygaard in Tokyo, where he was head of short-term markets for Asia. Walker, the person responsible for U.S.-dollar Libor submissions, wanted to talk about how banks were using the benchmark to benefit their trading positions.
“People are setting to where it suits their book,” Walker said, according to a transcript of the call obtained by Bloomberg. “Libor is what you say it is.”
"Yeah, yeah,” replied Nygaard, an American who had joined RBS in 2006 after six years at Deutsche Bank in Japan.
Walker and Nygaard, who’s now global head of treasury markets based in London and a member of the Bank of England’s money-markets liaison group, both declined to comment. It didn’t take a conspiracy involving large numbers of traders at different firms to move the rate. By nudging their submissions up or down, traders at a single bank could influence where Libor was fixed. Even inputting a rate too high to be included could push up the final figure by sending a previously excluded entry back into the pack.
“If you have a system like Libor, where highly subjective quotes are built into the process, you have a lot of opportunity for manipulation,” says Andrew Verstein, a lecturer at Yale Law School in New Haven, Connecticut, and co-author of a paper on Libor rigging published in the Winter 2013 issue of the Yale Journal on Regulation. “You don’t need a cartel to make Libor manipulation work for you.”
Rate setters at JPMorgan Chase & Co., Rabobank Groep, Barclays, Deutsche Bank, RBS and UBS were given no training or guidelines for making submissions, according to former employees who asked not to be identified because investigations are continuing. At RBS and Frankfurt-based Deutsche Bank, derivatives traders on occasion made their firm’s submissions, they say. Spokesmen for all of the banks declined to comment. Anshu Jain, co-CEO of Deutsche Bank and head of its investment bank at the time, told investors at a panel discussion in Germany on Jan. 21 that rigging Libor “sickens me the most of all the scandals.”
As the credit crisis intensified in the fourth quarter of 2007, Libor was a closely scrutinized gauge of the health of financial firms. After years of relative stability, the benchmark became more volatile. The average spread between the highest and lowest submissions to the three-month dollar rate widened to about 8 basis points in the three months ended on Oct. 30, 2007, from about 1 basis point in the previous three months, data compiled by Bloomberg show.
The volatility drew the attention of some bankers. On Aug. 28, 2007, Fabiola Ravazzolo, an economist on the financial-stability team at the New York Fed, received an e-mail from a member of Barclays’s money-markets desk in London accusing the firm’s competitors of making artificially low Libor submissions, according to transcripts published by the regulator that didn’t identify the sender. Barclays that day had submitted the highest rate to three-month dollar Libor, while the lowest was posted by London-based Lloyds TSB Group Plc, suggesting Barclays was having more difficulty obtaining funding than Lloyds, a bank later bailed out by the U.K. government and now known as Lloyds Banking Group Plc.
“Today’s U.S.-dollar Libors have come out, and they look too low to me,” the e-mail from the Barclays employee said. “Draw your own conclusions about why people are going for unrealistically low Libors.”
Lloyds, in an e-mailed statement, declined to comment on what it called “speculation by traders at other banks.” It wasn’t until the following year, prompted by a March 2008 report by the Bank for International Settlements and an April article in the Wall Street Journal suggesting banks were low-balling their submissions, that the New York Fed and the Bank of England asked the BBA to review the rate-setting process.
In June 2008, New York Fed President Timothy F. Geithner sent a memo to Bank of England Governor Mervyn King and his deputy, Paul Tucker, putting forward a list of recommendations for improving Libor, including increasing the number of banks that submit rates, basing the rate on an average of randomly selected submissions and cutting maturities in which little or no trading took place.
Aside from creating a committee to review questionable submissions and promising to increase the number of contributors to dollar Libor, the BBA didn’t implement Geithner’s suggestions. Angela Knight, then the group’s CEO, said in a December 2008 statement that Libor could be trusted as “a reliable benchmark.”
Privately, regulators were skeptical. As the BBA was drafting its proposals, King wrote to colleagues including Tucker on May 31, 2008, describing the group’s response as “wholly inadequate,” according to documents released by the Bank of England in July. Rather than press the BBA to change the way Libor was set, the Bank of England, the FSA and the New York Fed demanded that any references to their institutions be removed from the BBA review, the e-mails show.
A spokesman for the Bank of England says Britain’s central bank “had no supervisory responsibilities” for Libor at the time. The New York Fed also “lacked direct authority over Libor” and didn’t want to be seen endorsing a private association’s plan, according to Jack Gutt, a spokesman. The New York Fed continued to press for reform through 2008, he says.
Liam Parker, an FSA spokesman, referred to earlier comments Adair Turner, chairman of that agency, made to British lawmakers in July that the regulator was in contact with the CFTC in Washington at a “very early stage” in an investigation the U.S. agency began in 2008. The BBA said in an e-mail that it’s working with regulators “to ensure the provision of a reliable benchmark which has the confidence and support of all users.”
By failing to act, regulators allowed rate rigging to continue over the next two years. At RBS, the abuse was most pronounced from 2008 until late 2010, according to people close to the bank’s internal probe. At Barclays, manipulation continued until the second half of 2009. Japan’s Financial Services Agency banned Citigroup Inc. from trading derivatives linked to Libor and Tibor, the Tokyo interbank offered rate, for two weeks in January as punishment for wrongdoing that started in December 2009.
Former Barclays Chief Operating Officer Jerry Del Missier went further, saying that the Bank of England encouraged the lender to suppress Libor submissions. In October 2008, days before RBS and Lloyds sought bailouts, the central bank asked Barclays to lower its quotes because they were stoking concern about the bank’s stability, Del Missier told a panel of British lawmakers on July 16. Tucker, the Bank of England deputy director, told the panel he never gave such instructions.
“It’s not adequate for the authorities to say, ‘We didn’t have responsibility,’” says Paul Myners, a Labour Party member in Parliament’s House of Lords and a U.K. Treasury minister from 2008 to 2010. “It was a huge oversight by the regulators not to realize that Libor and other benchmarks were of such critical importance that they should fall within the regulatory ambit.”
In the end, it was a U.S. regulator without any banking oversight that took action. Vincent McGonagle, a top enforcement official at the CFTC in Washington, initiated a probe into Libor after reading the April 2008 Wall Street Journal story. The agency sent letters to several banks that year requesting information, according to a person with knowledge of the investigation. The commission decided it had the authority to act because Libor affects the price of futures contracts that trade on the CME.
Banks opened their own investigations after the CFTC inquiries. Barclays appointed Rich Ricci, then co-head of its investment bank, to oversee an inquiry. As his team sifted through thousands of pages of e-mails and transcripts of instant messages and phone conversations, it uncovered evidence that traders were manipulating the rate both up and down for profit, according to two people with knowledge of the probe.
The CFTC came to the same conclusion in late 2009 or early 2010, according to the person with knowledge of the commission’s inquiry. It happened when Gary Gensler, chairman for less than a year, stood in the foyer of his ninth-floor Washington office as Stephen Obie, acting head of enforcement at the time, played a Barclays tape of a conversation between traders and rate setters, the person said. “We had to vigorously pursue this,” Gensler says. “Sometimes practice in a market gets confused and over the line, but nonetheless it may still be illegal.”
The investigations revealed how widespread the manipulation was. At UBS, traders made about 2,000 written requests for movements in rates from late 2006 to late 2009. The majority were sent by Hayes, the Tokyo-based trader who led a “massive effort” to rig yen Libor, the CFTC said in a settlement with the bank in December. Hayes also bribed brokers to disseminate his requests to other panel banks and, on occasion, persuaded them to lie about where Libor should fix that day, the Department of Justice said. Hayes, who traded “enormous volumes” in yen swaps, made about $260 million in revenue for UBS during the three years he worked there, the CFTC said.
At Barclays, derivatives traders made 257 requests for U.S.-dollar Libor, yen Libor and euro interbank offered rate, or Euribor, submissions from January 2005 to June 2009, according to the settlement between the bank and regulators. The requests for U.S.-dollar Libor were granted about 70 percent of the time.
Manipulating Libor was a common practice in an unregulated market big enough to span the world though small enough for most participants to know one another personally, investigators found. Traders who worked 12-hour days without a lunch break were entertained by brokers soliciting business, according to three people familiar with the outings.
In March 2007, five months before the onset of the credit crisis, a dozen traders from Lehman Brothers Holdings Inc., Deutsche Bank, JPMorgan and other firms traveled to Chamonix, according to people with knowledge of the outing. The group, traders of yen-based derivatives, spent a day skiing before gathering over mulled wine at a restaurant. They flew back late on Sunday, in time for a 6 a.m. start the next day.
The trip was organized by London-based ICAP Plc, the world’s biggest interdealer broker. Brokers such as ICAP and RP Martin Holdings Ltd., also in London, were sounding boards for those trying to set rates, especially after money markets dried up, traders interviewed by Bloomberg say.
ICAP said in May that it had received requests from government agencies probing banks’ Libor submissions and is cooperating fully. The firm said it had suspended one employee and placed three others on paid leave pending the outcome of the investigation. Two RP Martin brokers were arrested in London on Dec. 11 as part of an inquiry into Libor rigging. Brigitte Trafford, an ICAP spokeswoman, declined to comment, as did RP Martin spokesman Jeremy Carey.
RBS in 2011 dismissed Tan, Danziger and White, the rate setter, following the bank’s probe into yen Libor known as Project Zen. Tan sued the bank for wrongful dismissal in Singapore in 2011, and the case is still before the court. Andy Hamilton, who traded derivatives tied to the Swiss franc, also was fired for trying to influence Libor. The bank has suspended at least three others, including Jezri Mohideen, head of rates trading for Europe and the Asia-Pacific region, according to a person with knowledge of the probe. White, Tan, Danziger and Hamilton declined to comment. Mohideen said in a statement issued by his lawyer that he never sought “to exert pressure on anyone to submit inaccurate rates.”
Deutsche Bank has dismissed two individuals, including Christian Bittar, head of money-markets derivatives trading, three people familiar with the bank’s internal investigation said. Barclays has disciplined 13 employees and dismissed five, Ricci, now head of corporate and investment banking, told British lawmakers on Nov. 28. At least 45 employees, including managers, knew of the “pervasive” practices at UBS, the FSA said. More than 25 left the Swiss bank following an internal probe, a person with knowledge of the investigation said in November.
The Barclays settlement prompted the U.K. government to order an inquiry into Libor. The report, published in September, recommended stripping the BBA of its oversight role, handing it to the Bank of England and introducing criminal sanctions for traders seeking to rig the rate. “Governance of Libor has completely failed,” FSA Managing Director Martin Wheatley, who led the review, said when he released the report. “This problem has been exacerbated by a lack of regulation and a comprehensive mechanism to punish those who manipulate the system.”
The ubiquity of contracts pegged to Libor leaves banks vulnerable to lawsuits. Barclays was ordered by a British judge in November to release the names of individuals involved in rigging rates after Guardian Care Homes Ltd., a Wolverhampton, England–based owner of about 30 homes for the elderly, sued for £38 million over interest-rate swaps that lost it money.
In Alabama, mortgage holders have filed a class action in federal court alleging that 12 banks colluded to push Libor higher on the dates when repayments are set. The plaintiffs include Annie Bell Adams, a pensioner whose home was repossessed, and Dennis Fobes, a 59-year-old salesman of janitorial supplies whose house in Mobile is now worth less than his mortgage. He says he refinanced in 2006 with a $360,000 adjustable-rate mortgage linked to six-month dollar Libor. “It’s just another example of how the banks have manipulated everything in their power,” Fobes says. “I will fight them to the day I die to save my home.”
The city of Baltimore and Charles Schwab Corp., the largest independent brokerage by client assets, have filed suits claiming banks colluded to keep Libor artificially low, depriving them of fair returns. At least 30 such cases are pending in federal court in New York.
In London, lawyers at Collyer Bristow LLP, a 252-year-old firm, are working on a plan that would force banks to reimburse customers for any payments made under contracts pegged to Libor. Stephen Rosen, who runs the firm, says clients who entered into interest-rate swaps with banks may be entitled to cancel those contracts because manipulation was so entrenched -- at a cost of hundreds of billions of dollars.
“It’s possible on legal grounds to set aside the swap contract entirely, which could mean you can recover all the payments you’ve made under the swap,” says Rosen, who wears thick-rimmed glasses and speaks in clipped, precise tones, sitting in his office in a Georgian townhouse in the legal district of Gray’s Inn. “The bank, when they entered into the swap, made an implied representation that Libor would not be unfairly manipulated.”
Rosen says his clients include a publicly traded real estate company, three nursing homes and at least 12 more firms that bought Libor-linked interest-rate swaps from banks. He declines to identify them by name, citing confidentiality rules. “The client will argue, ‘Had you told me the truth -- that you were fraudulently manipulating this rate -- I would never have entered the contract with you,’” he says. “We are calling this the nuclear option.”
To contact the reporters on this story: Liam Vaughan in London at lvaughan6@bloomberg.net and Gavin Finch in London at gfinch@bloomberg.net.
With assistance from Silla Brush in Washington, Andrea Tan in Singapore and Francine Lacqua, Lindsay Fortado and Jesse Westbrook in London.
To contract the editor responsible for this story: Robert Friedman at rfriedman5@bloomberg.net.

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Re: Bl***y Banks Again

Post  Panda on Tue 7 May - 15:30

HSBC profits near double to $8.43bn in 'calmer waters'

HSBC has reported its best quarterly performance in several years as
Britain’s largest bank saw its pre-tax profits nearly double to $8.4bn.

HSBC customers were frustrated
to find they could not use their cards Photo:

By Harry Wilson, Banking

1:08PM BST 07 May 2013


Pre-tax profits rose 95pc year-on-year to $8.43bn, as impairment charges
halved and cost fell to $9.3bn, down about $1bn compared to the same period in
2012. Revenue rose 14pc to $18.4bn.

The rise in profits was helped by a fall in bad debt charges across HSBC’s
global business, as well as the results of a cost reduction programme that has
led to more than 30,000 jobs cut.

Losses from bad debts dropped 51pc to $1.2bn in the quarter as the bank
reduced costs and sold off businesses to recover from the financial crisis. The
bank has sold 52 businesses in the last two years.

Stuart Gulliver, chief executive of HSBC, said the bank had “moved into
calmer waters”, but warned there were “still challenges ahead” as he pointed to
further cost cuts that are likely to see thousands more staff lose their jobs.
At the time of the full-year results, Mr Gulliver said the bank had exceeded its
annual cost savings target of $3.5bn.

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He said: "We have had a good start to the year, with growth in reported and
underlying profit before tax. These results demonstrate our progress in
implementing the strategy we set out in May 2011.

"While continuing
uncertainty in the global economy has created a relatively muted environment for
revenue growth, we have increased revenue in key areas including residential
mortgages and Commercial Banking in both our home markets of Hong Kong and the
UK, and in our Financing and Equity Capital Markets business."

About half of HSBC’s profits came from its global banking and markets
business, which reported a pre-tax profit for the quarter of $3.59bn, up about
$500m year-on-year and a close to threefold increase on the final three months
of last year.

The profits were ahead of market forecasts of $8.04bn and shares in the bank
rose 2.6pc this morning to 733p, valuing the bank at £136bn.

On a macro-economic level, Mr Gulliver said he expected the mainland Chinese
economy to accelerate after a slower than expected start to the year; the US to
continue to outperform its peers but at a slower pace of growth than in the
past; the eurozone to contract; emerging markets to grow at around 5pc and
global growth to be around 2pc for 2013.

HSBC reported a fall in pre-tax profits for 2012 to $20.6bn after the bank
was hit by record fines and the mis-selling claims but remained upbeat as it
raised its dividend. The fall was largely due to a $5.2bn charge against changes
in the value of the bank's own debt, as well a $1.9bn fine related to a US
money-laundering investigation, and $1.4bn of provisions for the mis-selling of
payment protection insurance and interest rate swaps.

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Re: Bl***y Banks Again

Post  Panda on Wed 8 May - 8:26

Exodus Gathers Pace At RBS Investment Arm

Fresh wave of departures from state-backed lender reflects
political pressure to refocus on domestic UK market.

10:25pm UK,
Tuesday 07 May 2013

RBS chief Stephen Hester is under pressure from George
Osborne to lend

  • By Mark Kleinman, City Editor

    The exodus of senior executives at Royal Bank of Scotland's (RBS)
    investment banking arm is poised to accelerate as pressure mounts on the
    state-backed lender to strengthen its capital base and refocus on its home UK

    I understand that John McCormick, the chairman and chief executive of RBS's
    markets and international banking division in Asia, is expected to step down
    from the role.

    His future has not yet been finally determined, and he may remain with the
    bank in another position, but insiders said he was almost certain to vacate his
    current Hong Kong-based job.

    RBS's board, chaired by Sir Philip Hampton, will discuss the revised strategy
    of its investment bank next week.

    Sources said on Wednesday that the outcome was likely to involve further
    swingeing job cuts in addition to the thousands of jobs which have already
    disappeared since RBS's rescue by British taxpayers in 2008.

    If he does leave the bank, Mr McCormick would be the most senior executive to
    depart the M&IB business since the exit of John Hourican, the division's
    overall chief executive, earlier this year.

    Mr Hourican fell on his sword as part of RBS's £390m settlement for rigging
    the interbank borrowing rate Libor, despite the fact that he had had no
    knowledge of or involvement in any wrongdoing.

    Mr McCormick has worked for RBS for more than a decade, holding roles which
    included managing the integration of the Asian operations of RBS and ABN Amro,
    the Dutch lender that was acquired in 2007 in an ill-fated deal that led to the
    British bank's near-collapse.

    His departure would be symbolic in underlining the huge international
    retrenchment of RBS, which expanded under Fred Goodwin, the former chief
    executive, to the point where it acquired a stake in the giant state-owned Bank
    of China.

    In recent weeks, a number of other senior M&IB personnel, including
    William Fall, who ran RBS's financial institutions group, and Sian Hurrell, its
    European head of sales, have also left the bank.

    George Osborne, the Chancellor, has been applying relentless pressure on
    Stephen Hester, RBS chief executive, to shrink the investment bank and plough
    more capital into the UK economy.

    Mr Hester said at the weekend in an interview with The Sunday Times that RBS
    had £20bn of existing balance sheet capacity available to lend to British
    businesses but that demand for capital was anaemic.

    Last Friday, RBS announced that it had returned to the black in the first
    quarter of 2013, but disappointed the City over the weak performance of its
    investment bank.

    Like other British banks, RBS is also being ordered to strengthen its capital
    position, a target it intends to meet partly through the sale of assets such as
    its US retail arm, Citizens.

    An RBS spokeswoman declined to comment specifically on Mr McCormick but said:
    "The group is going through a strategic review of its Markets business and the
    consequences of that may have implications for senior staff just as it could for
    employees in general as signalled on Friday.

    "As always, strategic changes can give opportunities for individuals to
    assess their career options. Similarly these changes also allow the bank to
    assess the level of leadership needed."

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Re: Bl***y Banks Again

Post  Panda on Thu 9 May - 11:36

Free banking at risk as EU wants us to bank anywhere in Europe

European proposals that would allow Britons to switch to a bank account in
another country could hasten the demise of free banking, experts have warned.

'Would you really want to bank
in Greece or Italy?' one banking expert

By Richard Evans

6:15PM BST 08 May 2013


Draft EU laws published today say that customers must be able to compare the
cost of bank accounts across the EU on a
like-for-like basis. But this would require many banks to change their business
models, which vary widely across the continent, analysts say.

British banks might decide to fall into line with the widespread practice of
charging for services, such as cash machine withdrawals, that are currently free
in order to avoid being undercut on other services.

The draft directive, which could become law in three years, says banks must
provide consumers with a "fee information document" listing the most common
services provided and the fees charged for each of them, drafted "using
standardised terminology and standard formats, to facilitate comparison between
the offers" of different banks.

"The problem is that pricing models vary from country to country," said
Gareth Lodge of Celent, a consultancy. "In France, for example, you pay to have
the account, then you get a number of free ATM withdrawals, you pay to have your
credit card but pay a lower rate of interest.

"So any price comparison will between apples and pears unless this proposal
leads to a harmonisation of banks' business models throughout Europe. This could
hasten the demise of free banking in Britain."

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He added that, while the UK had an established system for switching bank
accounts, many countries did not and would face large costs to establish one.

Mr Lodge also questioned the demand for cross-border account switching.
"Would you really want to bank in Greece or Italy?" he asked.

Ralph Silva of SRN, a research company, said: "The problem with comparable
and transparent banking charges is that each European country has a radically
different infrastructure. Some countries emphasise different products and have
built scale around those products, so they are able to offer lower prices on
those products. The price comparison will not be fair."

He added: "The overall cost of adding a new customer to a banking system is
not trivial. If customers start bouncing back and forth, costs for the bank are
going to go up."

The European Commission said consumers "often pay above the odds" for the
services they receive from their bank and "struggle to have clarity on the
various fees charged".

Michel Barnier, the European commissioner for the internal market, said: "By
making it easier to compare fees and change bank accounts, we hope to see better
offers from banks and lower costs."

Other recent proposals from the EU have also threatened free banking.
Customers could be charged for using credit or
debit cards
if European plans to limit or scrap the fees that
retailers pay on card transactions go ahead. The move could also cause the bring
about the demise of cashback on credit cards.

The UK Cards Association, which represents the debit and credit card
industry, said the European Commission's plans would hurt British consumers for
little or no corresponding benefit.

"The British are used to, and like, free banking," said Richard Koch, a
senior executive at the Cards Association. "The commission's model would impact
on the card issuers' ability to continue that."

The commission is expected to issue a White Paper next month with decisions
about capping the fees.

Under this week's proposals, every country would have to have at least on
bank offering "basic" bank accounts to all citizens, regardless of their
financial circumstances. Each state would also be required to have at least one
independent comparison website for banking charges.

Mr Silva said: "It makes sense to make access to a bank account a right in
Europe. It's impossible to live as a lawful citizen without access to a bank
account or electronic payment method yet banks in many European countries have
the right to refuse a bank account to a citizen."

But Mr Lodge said: "While I support financial inclusion, forcing banks to
accept customers regardless of profitability or risk moves the banks from a
business to a social tool."


Which?, the consumer group, suggests the following steps to ensure that
switching to a new bank goes smoothly.

• Let your new bank know whether you want your balance on your old bank
account to be transferred across and your old account closed or not.

• Agree a switching date with your new bank. Think about the best date in the
month for your direct debits and standing orders to be transferred and agree
this with your new bank.

• It's a good idea to keep some money in both accounts during the switching
process. Some banks do, however, offer a special overdraft facility while the
transfer is taking place.

• Check that your direct debit and standing order details have been
transferred correctly

• Tell your employer or pension provider that you're switching bank accounts

• If anything goes wrong with the switch and you incur bank charges as a
result of a mistake or unavoidable delay by either bank during the switch, you
will be reimbursed.

Would move to a bank in another EU country? Email us at money@telegraph.co.uk

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Re: Bl***y Banks Again

Post  Panda on Fri 10 May - 9:33

  1. Home»

  1. Finance»

  1. News by Sector»

  1. Banks and Finance

Co-op Bank could need taxpayer support, says Moody's

The Co-op could require taxpayer support for its banking arm after the
business had its credit rating downgraded by Moody’s, which warned the mutual
faced losses that it might not be able to afford.

The Co-op is reckoned by some
estimates to be facing a capital hole in its banking arm of about £1bn, raising
fears the mutual may struggle to meet the PRA’s new capital
requirements Photo:

By Harry Wilson

11:42PM BST 09 May 2013


The ratings agency warned that Co-op Bank might need “external support” as a
result of new writedowns on bad debts linked to commercial real estate and
belated costs linked to its acquisition of the Britannia Building Society in

The downgrade of Co-op Bank comes weeks after it pulled out of a deal to
acquire 632 branches from Lloyds Banking Group that analysts thought could
bolster the business.

In a note published on Thursday night, Moody’s said it believed the lender
could need help from the authorities to fill any capital hole in its balance
sheet, warning it saw “moderate potential for systemic support likely to be
forthcoming from the UK authorities”.

Moody’s calculates that the Co-op Bank’s “problem loan ratio” had increased
by the end of last year to 10.9pc from 8.1pc 12 months earlier as it was hit by
a deterioration in its commercial real estate portfolio.

The Prudential Regulation Authority (PRA), Britain’s banking regulator, is
expected this month to order several lenders to raise new capital. The PRA’s
actions follow a call by the Bank of England’s Financial Policy Committee for
banks to raise more than £20bn in new capital.

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    for Lloyds
    24 Apr 2013

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    09 May 2013

The Co-op is reckoned by some estimates to be facing a capital hole in its
banking arm of about £1bn, raising fears the mutual may struggle to meet the
PRA’s new capital requirements.

In a statement on Thursday night, the Co-op Banking Group said: “We are
disappointed by the ratings downgrade announced by Moody’s. We have a strong
funding profile and high levels of liquidity, which are significantly above the
regulatory requirements.

“We do acknowledge, like the rest of our banking sector peers, the need to
strengthen our capital position in light of the broader economic downturn and
the pending introduction of enhanced regulatory requirements, and we have a
clear plan to drive this forward throughout the coming months.

"In March, we announced the sale of our life business to Royal London and
also our intention to sell our general insurance business. In addition to these
measures we plan to significantly simplify our business, which will greatly
improve our operational effectiveness and also enhance our capital position in
the process.

“Our banking business is already characterised by excellent levels of
customer service and advocacy, as recently highlighted in reports by YouGov and
uSwitch. Our primary current account base in recent years has enjoyed
significant growth.

"The actions we will now take to strengthen our balance sheet and simplify
our business model around a core relationship banking offer, will create a
compelling co-operative banking business which is truly distinctive within the
banking sector.”

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New Co-op chief to launch strategic review

Post  Panda on Sun 12 May - 8:03

  1. Home»

  1. Finance»

  1. News by Sector»

  1. Banks and Finance

New Co-op chief to launch strategic review

The new chief executive of the Co-operative Group is to undertake a
strategic review of its businesses in the wake of the downgrade of its bank’s
debt status to “junk”.

Moody's said the bank's capital
levels were too low and had been made worse by 'substantial

By James Quinn

10:00PM BST 11 May 2013

1 Comment

Euan Sutherland, who officially takes over from the outgoing Peter Marks at
the mutual’s annual meeting this Saturday, is to evaluate each of the group’s
main businesses to establish which it wants to hold on to and which might be
sold to generate further capital.

The results of the review could be presented as soon as August, when the
Co-op is due to publish its half-year results.

High on the agenda of the review will be the financial health of the bank,
which on Thursday night saw its debt downgraded by Moody’s from A3 to
Ba3 on capital concerns.

The agency warned that the Co-op Bank — which last month pulled out of a
£750m deal to buy 632 branches from Lloyds Banking Group — might need “external

The news led to the resignation of bank chief executive Barry Tootell, and
saw its subordinated debt fall by 26pc as bondholders feared they may be “bailed
in” to absorb future losses.

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Before Thursday night’s news, the Co-op had already attempted to bolster its
capital shortfall, which industry sources estimated stands between £1bn and

It has signed a deal with Royal London to sell its life insurance arm for
£219m, and has already appointed Deutsche Bank to run the £600m-plus sale of its
general insurance arm, for which there are understood to be in excess of 10
interested bidders.

Mr Sutherland’s review is likely to focus on the sustainability of the bank,
which has 342 branches, and whether it is possible for it to be sold or wound
down in some way.

Co-op management remains in discussions with the Prudential Regulatory
Authority about the nature of its capital requirements.

In addition Mr Sutherland, the former chief operating officer of Kingfisher,
will look at the other parts of the mutual’s business, including its sprawling
retail arm and its funeral business, to assess whether any other parts might be
disposed of to bolster the group’s financing structure.

He is understood, however, to feel that the supermarket business is at the
heart of the mutual’s operations

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Re: Bl***y Banks Again

Post  Panda on Tue 14 May - 12:35

The Libor scandal

Year of the lawyer

Banks face another punishing year of fines and lawsuits

Jan 5th 2013 |From the print edition

THE lights still burn late into the night at the offices of the “magic circle” of London’s biggest law firms, but they are now on in different bits of the building. The legions of transaction lawyers who worked late before the crisis drawing up merger contracts are home to tuck the children into bed. Yet even as a dearth of dealmaking has slowed one part of the legal business, there is booming demand for litigation and regulatory lawyers who are preparing banks for another year of fines and lawsuits.
The main legal risk facing big international banks relates to a widening scandal over attempts to rig benchmark interest rates, including the London Interbank Offered Rate, or LIBOR. The most recent LIBOR-related fine was levied on December 19th, when British, Swiss and American authorities imposed penalties of SFr1.4 billion ($1.5 billion) on UBS, a Swiss bank. In its legal settlement with regulators UBS admitted to “widespread and routine” attempts to manipulate LIBOR rates. Its fine came six months after an earlier settlement and admission by Barclays that its traders, too, had tried to rig LIBOR.

In this section

  • Edifice complex
  • Hope springs eternal
  • Year of the lawyer
  • Banking on the ummah
  • Huddling for comfort
  • Fitter yet fragile
  • Stoneless rivers

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The UBS case marked an escalation of the risk faced by big banks in two respects. The first was in the size of its fine, which was three times larger than that paid by Barclays, and far larger than many expected given that UBS (like Barclays) had co-operated with investigators. Moody’s, a ratings agency, noted the fine was “credit negative not only for UBS, but for all banks with sizeable capital-markets activities.”
The fine was so large partly because of the pervasive violations at UBS: investigators found more than 2,000 documented attempts to manipulate rates. But it also confirms that the authorities in America and Britain are ready to impose far harsher penalties than they used to. The Royal Bank of Scotland, which hopes to reach an agreement with regulators within the next two months, is thought likely to pay a fine of at least $500m. It will not be the last. More than 20 banks in total are understood to be under investigation or co-operating with various regulatory authorities.
A second reason the UBS settlement upped the ante for banks is that it exposes them to greater risk from LIBOR-related civil lawsuits that are currently making their way through New York courts. Lawyers involved in the main class-action lawsuit against banks—brought by, among others, the City of Baltimore, Charles Schwab and holders of mortgages linked to LIBOR—say the disclosures in the UBS case point to wider efforts to manipulate rates than previously thought, including allegations of banks making improper payments to some interdealer brokers. (For their part, banks argue that even the recent revelations contain no evidence of a concerted conspiracy to fiddle LIBOR.)
The LIBOR scandal is not the only thing keeping the lawyers busy. One measure of the litigation risk facing banks can be found in the latest quarterly report of JPMorgan Chase, a large American bank with an unusually open policy of disclosing its litigation risks. It reckons that the range of “reasonably possible losses” it faces from litigation runs from zero to as high as $6 billion. Among the cases it is contesting are relatively recent ones, such as those brought over the losses incurred by its trading arm in London in 2012, as well as others dating back years, including one relating to Enron.
Its ongoing litigation expenses are also hair-raising—$3.8 billion during the first nine months of 2012, compared with $4.3 billion in the same period of 2011. Making comparisons with other banks is difficult, as few quantify their potential exposure in the way that JPMorgan Chase does. But most large international lenders face a similar raft of lawsuits and investigations.
One bank boss says he now spends about half of his time dealing with regulatory and legal issues, rather than meeting clients or running the business. Worse, the costs of pursuing the banks for wrongdoing are difficult to contain: uncertainty over legal risks may make it harder for them to attract capital, which would affect their capacity to lend. Only the late-night lawyers will be happy with that.

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Re: Bl***y Banks Again

Post  Panda on Tue 21 May - 7:39

Redemption awaits Britain’s battered banks

Our revolutionary new model would transform their image – and their
customers’ finances

Banks urgently need to broker a
new deal which shows that today’s global giants still use their expertise to
help save their customers money Photo:

By Gillian Guy

7:55PM BST 20 May 2013


Every 10 years or so, in every industry, an idea comes along that changes it
all. This takes the form of a simple but profound insight: we thought our
business was one thing, but it is something else entirely. Take the iPhone.
Telecoms businesses thought they were making phones. Then Apple decided to make
a hand-held device for which third-party developers could make programs (now
called apps), and which could also make calls. A simple but game-changing shift
in thinking.

At Citizens Advice, we are convinced that the banking industry is teetering
on the edge of a brilliant idea; it just needs a good, firm shove.

With all eyes focused on banks’ risky investment arms, their retail
responsibilities have been woefully neglected. British retail banking makes up
just 21 per cent of profit at Barclays. But providing bank accounts is an
essential public service and a business model that desperately needs updating.

For more than a decade, the conventional wisdom has been that the only way to
make money in retail banking is through interest on loans and debt, excessive
overdraft charges, or up-selling additional products: mortgages, insurance,
payment protection insurance. This is a formula that is neither good for
customers nor banks, which are footing a £14 billion bill for mis-sold PPI after
a super-complaint made by Citizens Advice.

Banks urgently need to broker a new deal which shows that, like the bank
managers of decades past, today’s global giants still use their expertise to
help save their customers money in every way possible.

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    19 May 2013

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    19 May 2013

New regulations making it easier for customers to switch banks come in this
year. People unhappy with the service they’ve received will be able to leave in
search of a better offer without fear of direct debits going astray or being
stuck without easy access to their money. This will force banks to sharpen their
competitive game and to focus their efforts on giving customers more of what
they want. What’s more, newcomers like Tesco Bank and Virgin Money will add some
much-needed dynamism to the industry.

But the first chief executive to realise that the future of banking is in
helping people use money effectively – and the profound practical implications
of this – will transform the profitability of their business, the lives of
millions of consumers and the competitiveness of our economy.

Your bank has access to an incredible amount of information about you: where
you live, what you buy and where, what bills you pay, how old you are. It knows
who your energy supplier is and how much your last 15 bills were. And it knows
comparable information about millions of other people, too. So what does it do
with this information? Almost nothing. It has been too scared to ask you for
permission to use the data, even to help you.

But it is in the value of this information that modern banking’s breakthrough
lies: offer customers accounts that do everything a utility switching site does
– and more. Make money out of saving customers money.

Start with energy bills. Banks should use the data they have to tell
customers when they are paying more than other people. Find them the cheapest
tariff. Offer them a choice: stay where you are, or click this button and we’ll
switch you automatically. (We’ll also take a small cut from the money you save,
if that’s OK.) This is effortless saving for consumers and would subject energy
companies to competition that they have yet to feel.

Banks could do the same with travel costs, flagging up where frequent
journeys would be cheaper with a season ticket, or your television or broadband
contract, alerting you when cheap offers come up. For a little extra
information, such as the number of people in your household, the type of car you
have or where you tend to shop, banks could go even further to find better ways
for you to spend and save – a kind of data cash-back.

With the support of suppliers, mobile phone bills and petrol prices could
also be thrown into the mix. Companies with competitive rates should be happy to
hand over that data and customers would draw conclusions from those that decided
not to.

To encourage positive behaviour and increase their deposits, banks could
nudge customers into building “savings from savings” by putting the money gained
from switching energy or broadband suppliers into a separate account with a good
interest rate.

Supermarket banks have already signalled a move in this direction. Customer
loyalty cards provide a colossal amount of data and Sainsbury’s has announced it
is to use the personal information it collects through the Nectar Card scheme to
tailor its banking services: corporate gain driven by customer saving.

This idea is simple but fundamental: banks stop making money from encouraging
customers to spend theirs on things they might not need, and start profiting
from helping them to save money on the things they really do. It sounds obvious.
It could be the future of banking. The race is on.

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Re: Bl***y Banks Again

Post  Panda on Tue 21 May - 15:12

Jersey: Treasure island caught in the searchlight

21 May 2013El País Madrid


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The Seymour Tower, Jersey
Richard Manin
The EU has taken the fight against tax havens seriously, as shown by the May 22 leader summit to discuss tax evasion. But the clean-up should start at home, where territories such as the British Channel Island of Jersey prosper under the shelter of traditional political ambiguity. Excerpts.

Luis Doncel The authorities of this quasi-independent territory are caught up in a controversy that has nothing to do with the past. They know that their economic system – based on very low or non-existent taxes – is arousing suspicions among governments and, above all, the citizens of other countries, who are wary of making ever-more sacrifices while others get a free pass.
“We’re not a casino, but a centre that collects investments to be injected somewhere else. That’s just what Europe needs. We’re part of the solution, not the problem", says the island's treasury minister, Philip Ozouf. "This government has always complied with and will continue to comply with international standards," Chief Minister Ian Gorst insisted this week.
Confronted with the arguments of the Government of Jersey and the financial lobby, the activists of the Tax Justice Network organisation rank the tiny island – which has less than 100,000 inhabitants but bank deposits exceeding €140bn – as the world’s seventh biggest tax haven on its list of “secrecy jurisdictions”.
"Despite Jersey not formally having bank secrecy like Switzerland or the Bahamas, secrecy is achieved in other ways: through funds, offshore companies and, since 2009, foundations", assures the NGO, which promotes transparency in international finance.
"The OECD does not include us on its list of tax havens," repeat the Jersey authorities, failing to convince critics. "On that list there are just two tiny islands in the Pacific: Nauru and Niue,” replies Mike Lewis, counselor to the Action Aid Organisation. “If this criterion were valid, there would be no tax havens in the world.”
“All the tax havens say the same thing,” adds writer and journalist Nicholas Shaxson. “They only pull out the OECD listings to try to show how clean they are."
But the Jersey’s problems are not growing solely under the weight of non-governmental organisations or mobilised citizens. Governments also appear determined to tackle the outflow of money that is escaping their tax inspectors.
"The message is simple. If you hide the money, we’ll be going after you", British Chancellor George Osborne said last week after London tracked down 100 big tax evaders in a joint effort with the US and Australia carried out in Singapore and the British Virgin Islands, the Cayman Islands, and the Cook Islands. This renewed momentum behind tax collection has encouraged Jersey to accept the exchange of banking information automatically with London and Washington.
Organisations including the Tax Justice Network are demanding that this measure be extended to all the countries of the EU, in order to start to have it taken seriously. Jersey’s response is that it will take that step when the 27 member states commit themselves to it as well.
Geoff Cook, CEO of Jersey Finance, representing the interests of a sector that accounts for 40 per cent of the economy, admits to some reservations about this new regulatory wave. "We do want to be good neighbours and to go along with what other governments decide. But there’s a risk that if the perception that Europeans are going to give out all the information on our customers spreads, our customers will choose to move their money to other territories. The exchange of information is fine if we all do it.”
Minister Ozouf is amicable with the journalist who has come to his country. But one question falters his smile. The British government itself estimates that an agreement to automatically exchange information with the three Crown dependencies would bring around one billion pounds (€1.185bn) into the public coffers. Is that not an admission from London that the island is, de facto, a tax haven? “That isn’t our figure and we don’t recognise it” responds the minister. “Even assuming that it were true, though, this amount is equivalent to what Jersey, Guernsey and Man would pay in in total over the next five years.”
Despite its new role as the older brother who obliges the little ones to follow the rules, the UK has until now taken a position so vague that its former colonies, overseas territories and Crown dependencies have been able to do as they please. London controls one of every five tax havens in the world, and many critics believe that it could have done a great deal more.
Nicholas Shaxson, in his bestselling Treasure Islands – which has become the Bible of the movement against tax havens – defines Jersey as a combination of "futuristic offshore financing and a medieval political system".
If the political structure of Jersey is very particular, its tax system is no less. The legislators dislike complications, much preferring round numbers instead: zero per cent tax for non-financial companies, 10 per cent for financial entities, and a straight 20 per cent on income, regardless of income level.
The stakes are high. Organisations like the Tax Justice Network have set out a three-fold objective: identifying which specific individuals, companies, funds or foundations are leaving their money in tax havens; agreeing on the exchange of information between all governments; and bringing in developing countries to help them benefit from these improvements.
Some steps have already been taken. The US, the UK and Australia have reached an agreement to scrutinise the funds of companies in half the tax havens of the world. At this week's summit, European leaders will try to design a common framework to combat tax evasion. If the giants of politics act decisively, little fish like Jersey will be forced to respond. But no one can guarantee that this will not turn out to be yet another missed opportunity.

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Re: Bl***y Banks Again

Post  Panda on Mon 27 May - 11:58

Co-op bank crisis claims two more directors

Two more senior Co-operative Group directors have been shown the door in the
wake of the disastrous performance of the mutual’s banking division.

Problems at the Co-operative
have led to a number of senior departures at the supermarkets-to-funerals
mutual Photo:

By Harry Wilson, and Philip

7:00PM BST 26 May 2013


Steve Humes, finance director of the supermarkets-to-funerals group, is to
step down following the series of disasters that forced the mutual to deny it
needed a taxpayer bail-out and have left it with a potential £1bn-£1.5bn capital
hole. Jim Slack, chief information officer at Co-op Bank, has recently left, it
can be revealed.

The changes are believed to part of a comprehensive review by Euan
Sutherland, the group’s new chief executive. He will update the Co-op’s
20-strong board on Friday about the bank’s capital problems, which have forced
it to stop lending to new business customers, and pledge to have a solution in
place by June.

Investment bank UBS and lawyers Allen & Overy are working on the
strategic review, which could result in the sale of a part of the core business
– such as the funerals service.

Mr Humes and Mr Slack are the latest senior directors to leave the group amid
concerns about problems in Co-op Bank. Brian Tootell, the bank’s boss, quit
after Moody’s slashed the division’s credit rating to “junk” earlier this month
and suggested it might need state support. In February, James Mack, his finance
director, left to join another financial services company.

Mr Sutherland, who only took the helm earlier this month, is believed to be
close to making a string of senior appointments already, including replacements
for Mr Humes and Mr Slack.

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    25 May 2013

Mr Humes, who will step down shortly, has been group finance director since
2011, having previously held the same role in the food division. He joined the
Co-op in 2000. Mr Slack, chief information officer of the Co-op Bank, left the
business last month for “personal reasons”.

Mr Slack was a key member of the team responsible for the disastrous computer
system upgrade for the banking operation that cost the mutual more than £200m.
The new IT platform, known as Finacle, was meant to combine the computer systems
of the Co-op Bank and Britannia Building Society following the Co-op’s 2009
acquisition of the rival mutual.

The Co-op spent £250m on Finacle but has since had to write off the cost due
to problems with the system, adding to the capital shortfall that led Moody’s
downgrade. Co-op Bank’s spending on the system was counted as capital
expenditure and was therefore not taken through its profit and loss account.

However, taking these costs into account means the business would not have
made a profit since 2009.

For instance, in 2010 the bank reported a pre-tax profit of £48.9m, but once
the cost of its annual IT expenditure is factored in the business made a loss of
£20.1m. Similarly in 2011 a £54.2m profit becomes a £16.9m loss once the cost
spending on the computer system is deducted from the bank’s earnings.

The dramatic change to the bank’s profits shows the huge amounts the Co-op
Bank was spending on the system.

Co-op Bank had until April been in the process of buying 632 branches from
Lloyds Banking Group, which would have come complete with a brand new IT
platform to which the lender could have transferred its entire business.

However, the acquisition of the so-called 'Project Verde’ business collapsed
last month around the same time Mr Slack left the bank. Responsibility for Co-op
Bank’s IT systems has now passed to Andy Haywood, a former senior IT manager at
HBOS and the head of IT at the Co-op. Mr Haywood worked for Boots before joining
Co-op in January 2012.

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Re: Bl***y Banks Again

Post  Panda on Mon 27 May - 17:07

Off shore leaks: Liechtenstein and Portugal hit by the scandal

27 May 2013
Presseurop Volksblatt, Expresso

Volksblatt, 27 May 2013
"Offshore Leaks: Liechtenstein apparently implicated in shady business," runs the headline in Volksblatt. The Liechtenstein daily says that "at least 120 people or businesses domiciled in the principality could be implicated in tax havens".
Liechtenstein thought it had escaped from the "shock wave" caused by the publication of an international investigative report on tax havens but, according to the paper, it is now feeling the shake-up. On May 27, Volksblatt picked up a story published a day earlier by two Swiss Sunday papers Sonntagszeitung and Le Matin Dimanche
The Principality is almost as present as France in the Offshore Leaks report, despite its clean money policy adopted in March 2009. Trustees in Vaduz and Schaan had clients that were implicated in huge fraud and corruption scandals.
SonntagsZeitung estimates that 30bn Swiss Francs (€24bn) in non-declared revenue is sitting in the principality's safe deposit boxes. A figure that the head of the Liechtenstein government, Adrian Hasler, has declined to discuss.
The scandal has also rippled out to Portugal. This weekend, Portuguese daily Expresso revealed that at least 22 people and 12 offshore companies with links to Portugal were mentioned in the report, but of these, only four people with addresses in Portugal are Portuguese citizens, and none of them is a public figure. The newspaper adds that —
the earthquake caused by Offshore Leaks had an immediate consequence, in as much as it put tax avoidance and evasion on the top of the agenda for the leaders of the 27. But this is an area in which European decisions are taken unanimously and some countries have diametrically opposed interests. As a result, practical measures have failed to keep pace with the indignation prompted by the disappearance of billions of euros in a Europe where the lack of liquidity in public coffers has been cited as a justification for austerity policies. There seems to be an end in sight to banking secrecy, but the process will be slow and those who benefit [from a lack of transparency] will do everything they can to prolong it.

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Re: Bl***y Banks Again

Post  Badboy on Wed 29 May - 13:43


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Re: Bl***y Banks Again

Post  Panda on Wed 29 May - 16:09


I'm not surprised Badboy, more to come because of the mounting PPI claims , yet not one Bank has been censured or had it's licence taken away.

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Re: Bl***y Banks Again

Post  Panda on Thu 30 May - 22:09

Banking Secrecy: Swiss propose US tax truce

30 May 2013
Presseurop Financial Times, Neue Zürcher Zeitung, Le Temps

Financial Times, 30 May 2013
“Another nail in the coffin of tax secrecy,” headlines the Financial Times in its editorial following news that the Swiss Federal Council (government) proposed a new law on May 29 to allow banks to cooperate with the US to trace tax cheats. The bill aims to end to a long running battle between US tax authorities and Bern, which has already seen the closure of Wegelin, Switzerland’s oldest bank, after it admitted helping Americans avoid tax.
Existing Swiss laws forbid banks from providing data about clients. The new law would provide a one-year window in which banks would be allowed to provide tax investigators with internal documents. While this could avoid the pursuit of criminal charges against individuals, banks are still likely to be fined billions of dollars for aiding tax evasion. For the FT
As far as it goes, the law is a good one. It helps remove the legal and reputational uncertainty that is hampering Swiss banks’ business in the US market, and it lets the US exact punishment and admission of guilt from those who have helped Americans cheat on their taxes.
However, the economic daily points out that –
The law will suspend normal confidentiality rules for one year only. But the old and cosy world where too few questions were asked should not be allowed to survive.
Before the bill can become law, it must still be passed by the Swiss parliament. And there the "Lex USA," as it is dubbed in Switzerland, "is meeting strong resistance," reports Swiss daily Neue Züricher Zeitung, which warns on its front page that the "tax deal with the United States may be doomed to failure".
For the moment there is no majority in Parliament to support the Federal Council's action. The three main parliamentary groups reject the "Lex USA".
Geneva-based daily, Le Temps, for its part warns that –
the opacity that cloaks the peace agreement as well as the uncertainty over whether banks will be able to exercise their free will about entering or not the American past settlement programme does little to contribute to the legal and economic security desired by all sides.

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Re: Bl***y Banks Again

Post  Panda on Fri 31 May - 6:08

Banks Haggle As CPP Bid Deadline Looms

Delays to an insurance mis-selling compensation scheme come
as the company's founder faces the deadline for a takeover offer.

11:12pm UK,
Thursday 30 May 2013

CPP is a major credit card insurer

By Mark Kleinman, City Editor

Britain's biggest banks are continuing to haggle over the terms
of an insurance mis-selling compensation scheme that has threatened the future
of CPP, one of the country's biggest providers of identity theft cover.

Sky News understands that some of CPP's biggest business partners, which
include the major names in high street banking, are stalling on the details of a
plan to pay out as much as £1bn to CPP customers over the next year.

The scheme of arrangement, which will see CPP writing to all
potentially-affected customers who took out one of its credit card or identity
theft policies, was due to have been agreed by the end of May.

Insiders said on Thursday that the big banks were disputing some of the
proposed details with the Financial Conduct Authority, the City regulator, and
that it may not now be operational until next year.

They said the prospect of a resolution had been further complicated by a
proposed bid for CPP from Hamish Ogston, the company's founder.

He has been set a deadline of May 31 to formalise a putative 1p-a-share bid,
which would value CPP at just £1.7m.

Sources said that on Thursday, the likeliest outcome was that Mr Ogston would
seek a further extension to that deadline from the Takeover Panel, the City body
which regulates mergers and acquisitions.

They cautioned, however, that the outcome could yet change ahead of Friday's

Mr Ogston is also thought to be keen to amend some of the details of the CPP
redress scheme if he proceeds with his bid.

Under the proposals, affected customers would have just over a year to claim
for policies which they believe they were mis-sold.

"The Scheme is expected to feature a deadline for customers to submit a
claim, following which all of those customers who are within the scope of the
Scheme and who have not submitted a claim will be prevented from bringing a
claim," documents issued by CPP said recently.

"The deadline is expected to fall seven months after the Scheme becomes
effective, with an additional six month period being allowed thereafter for
customers to bring a claim where they can show that they were subject to
exceptional circumstances."

The mis-selling at CPP has cost the company £10.5m in fines and forced the
company to sell its US arm as it sought to appease its lenders.

Although it recently obtained a six-month reprieve, CPP is now axing more
than 100 jobs and its long-term future remains in the balance

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Re: Bl***y Banks Again

Post  Badboy on Fri 31 May - 19:53


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Re: Bl***y Banks Again

Post  Panda on Fri 31 May - 19:56


Well I hope they are Badboy, the taxpayer might get some of it's money back.

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Re: Bl***y Banks Again

Post  Badboy on Tue 4 Jun - 23:59


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Re: Bl***y Banks Again

Post  Panda on Wed 5 Jun - 6:39


Well if they stopped paying Bonuses that would save millions.

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Re: Bl***y Banks Again

Post  Panda on Sun 9 Jun - 14:08

Illustration by Aisha Franz

New Regulations Are Strangling Community Banks

By Camden R. Fine May 7, 2013 11:00 PM GMT+0100

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The wave of new banking regulations that Congress created to deter and punish Wall Street’s misdeeds is landing with much greater impact on the U.S.’s almost 7,000 community banks than on the too-big-to-fail lenders.

Community banks didn’t cause the financial crisis; they played by the rules. Because of their time-tested business model, one based on customer relationships rather than transaction volumes, community banks aren’t a threat to the financial system. Yet they are being forced to pay a penalty in regulatory costs -- to comply with rules aimed at preventing the bad behavior on Wall Street from happening again.

Community banks are also disproportionately affected by the new rules. Right now, banks with less than $10 billion in assets control only 20 percent of total U.S. banking assets. Washington lawmakers and regulators are holding back community banks from devoting their full attention and resources to making more loans and fueling a more robust economic recovery.

The effect of these regulations is that Congress has added insult to injury for community banks while rewarding the real villains. The megabanks are benefiting from what Bloomberg View calculated is an $83 billion annual taxpayer subsidy, the value of implicit guarantees by the U.S. Treasury. Bloomberg View was correct to characterize the too-big-to-fail subsidy as “a major driver of the largest banks’ profits.”

Credit Quality

Perversely, Federal Deposit Insurance Corp. data show that large banks have both the lowest credit quality and the lowest cost of funds in the industry. Community banks rank the highest in both categories even though they have had to compete for years against the megabanks’ access to cheaper money in pricing loans. In addition, community banks must compete against the big lenders’ lower comparative costs in handling regulatory paperwork.

This is morally wrong -- and bad economic policy. Community banks should be putting their capital to work in the small towns, rural communities and middle-class urban enclaves they know well. Instead, they are focusing too many of their precious human resources on onerous paperwork and time-consuming compliance measures.

Community banks are the source of almost 60 percent of all small-business loans of less than $1 million, as well as mortgage and consumer loans tailored to the needs of their local communities. Large banking organizations with more than $50 billion in assets hold almost 40 percent of outstanding small loans to businesses, according to the Federal Reserve, but loans to small businesses aren’t a significant portion of large-bank lending. Small-business loans represent less than 5 percent of the large banks’ total domestic lending.

Five Steps

Lawmakers should rethink the regulations aimed at the megabanks. Here are five steps Congress can take now to rebalance the regulatory burden and give Main Street businesses greater access to loans:

-Exempt small banks from certain mortgage rules. Provide “qualified mortgage” safe-harbor status for all home loans originated and held in portfolio by community banks, including balloon mortgages and interest-only loans, and exempt these banks from mandatory requirements to maintain cumbersome escrow accounts for the same class of loans.

-Cut red tape in small-business lending. Waive the new requirement to report information on every new small-business loan application. It falls disproportionately on community banks that lack the back-office expertise and other resources to comply.

-Require cost-benefit analyses by regulators. Prevent regulators from proposing new rules before they have determined that costs won’t exceed benefits. This step must recognize the disproportionately higher cost of compliance on small banks, and ensure new rules are consistent with existing regulations, written in plain English and easy to interpret. More broadly, new rules should reduce the threat to society of future crises, and the resulting economic damage from a recession and high unemployment.

-Waive certain audit rules. Increase to $350 million from $75 million the market-capitalization threshold requiring outside auditing of internal controls. Bank examiners continually monitor these systems at smaller banks. Waiving the audit requirement for small, publicly traded local banks would reduce their expenses substantially without creating more risk for investors, taxpayers or the deposit-insurance system.

-Eliminate the annual requirement on no-change privacy notices. Mailing annual notices on privacy policies serves little purpose when no changes have been made. Keep the notification requirement for those years when changes are made.

None of these changes would alter the already significant regulatory tools that provide appropriate oversight of community banks. But it would be a failure of logic and lawmaking if the new wave of banking regulations that are meant to stop Wall Street excesses instead resulted in cutting off one of Main Street’s economic lifelines.

(Camden R. Fine is president and chief executive officer of the Independent Community Bankers of America. The opinions expressed are his own

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Re: Bl***y Banks Again

Post  Panda on Tue 11 Jun - 20:56

James Crosby asked to have his title stripped
EmailFormer HBOS Chief Executive James Crosby has been formally stripped of his knighthood.

Mr Crosby made the request to have his title removed himself following a scathing parliamentary report into the bank's collapse.

The official announcement that the honour had been withdrawn from Mr Crosby was reported in the London Gazette.

The London Gazette, the official journal of record, said: "Letters Patent dated 11 June 2013 have passed the Great Seal of the Realm cancelling and annulling the Knighthood conferred upon James Robert Crosby on the 6 December 2006 as a Knight Bachelor."

Mr Crosby asked to have the honour removed after the Parliamentary Commission on Banking Standards claimed he was the "architect of the strategy that set the course for disaster" in his handling of the bank.

Following the commission's report in April Mr Crosby announced he would give up 30% of his £580,000-a-year pension.

He also stood down from roles with catering firm Compass Group and private equity firm Bridgepoint.

He was given a knighthood after leaving HBOS in 2006, but following the report said he believed "it is right that I should now ask the appropriate authorities to take the necessary steps for its removal".

Responding to the report in April he said it made for "very chastening reading".

He said: "Although I stood down as CEO of HBOS in 2006, some three years before it was taken over by Lloyds, I have never sought to disassociate myself from what has happened."

He added: "I am deeply sorry for what happened at HBOS."

For a knighthood to be withdrawn, the Honours Forfeiture Committee has to make a recommendation to the Prime Minister, who then passes it on to the Queen for a decision.

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Re: Bl***y Banks Again

Post  Panda on Thu 13 Jun - 7:03

said: “The board wants to put in place a fresh face for privatisation. It’s an entirely logical thing for the board to want to do.”
“I want to do what’s right for RBS,” he continued. The outgoing chief executive said the privatisation “would have been for me an end” adding that “if you’re looking for a window to have someone for whom it’s a beginning this is as good a window as you’re going to get.”

“Am I completely comfortable with the rationale? Yes, I am,” he continued. He went on to say he was “co-operating amicably” and would “stick around” as long as the bank needed him.

Sir Philip said that RBS needs “to have a CEO with a big period in front of them rather than a big period behind of them” to lead the privatisation of the Government’s stake.

He explained that given the Treasury’s desire to privatise its stake by the end of next year, any new chief executive would need to be in place by January 2014 to give them at least six months in the job before starting the sales process.

As a result, he said now was the right time to announce the search for a successor to Mr Hester, who will stay in position until the end of the year, to ensure a smooth handover, unless a successor is found sooner.

Mr Hester could receive as much as £5.8m on his exit, including £1.6m in lieu of notice, equivalent to 12 months' pay and benefits. He will also be eligible for unvested options through his long-term incentive plan, which could be worth more than £4m based on the bank’s current share price. He will not be eligible for a bonus for 2013.

Shares in RBS closed at 325.6p on Wednesday ahead of the statement, which came after London markets had closed. However the bank’s American depositary receipts were 2.8pc lower in the US on Wednesday night.

On a personal front, the outgoing chief executive, said his job was not “complete” and that as a result he had “some human regrets”. He went on to call his rebuilding of the state-backed bank a “qualified victory.”

The search for a successor at RBS will begin straight away, led by Sir Philip. Internal candidates to replace Mr Hester include Bruce van Saun, the group finance director, and Nathan Bostock, who is due to replace Mr van Saun as finance director. External contenders could include Richard Meddings, Standard Chartered’s finance director.

Sir Philip said that Mr Hester’s successor would be paid on a “commercial basis” and that the more the bank moves “back into the private sector, I hope the less political or even media scrutiny that we will get.”

In a written statement, the Chancellor, George Osborne, said “now is the time to move on from the rescue phase to focus on RBS being a UK bank that provides greater support to the British economy.”

Mr Osborne is due to deliver his annual Mansion House on June 19, at which he is expected to fire the starting pistol on the privatisation process for both RBS and Lloyds Banking Group.

Mr Hester has cut thousands of jobs at the bank as part of his restructuring and is on Thursday due to announce a further 2,000 will go from its investment banking arm

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