Bl***y Banks Again

ROYAL BANK OF SCOTLAND IS TO FEATURE ON WATCHDOG?

BANKS HAVE BEEN INVOLVED IN FINANCING FIRMS THAT SCAM SCHOOLS OUT OF MILLIONS OF PUBLIC MONEY,SO A PANORAMA PROGRAMME REVEALS.

Gordon Brown's deregulation of our banking system certainly opened a few doors for them to make a packet... It makes you wonder just which bank his money was invested in...

Martin Wheatley of the FSA is to oversee the regulation of LIBOR to clean up the system . He says LIBOR is broken but not beyond repair . One of the proposals is for more Banks to give borrowing costs a few months in advance.

Britain's reputation has been tarnished by this scandal , yet no one is accepting responsibility when Bernard King knew as far back as 2008 that there was collusion .

There will be 3 big reforms.

British Banks will no longer fix rates of interest.

If Banks refuse to accept the new conditions they could lose their Licences.

Regulators around the World will decide the penalty for the Banks guilty of manipulating the rate .

Fitch has said Britain may lose its AAA rating if its economy does not improve.

Several U.K. Banks have loaned money to various European Banks

Wheatley’s Review Draws the Right Conclusions About Libor


By the Editors Sep 28, 2012 12:02 AM GMT+0100


The U.K. finally has a plan to overhaul the London interbank offered rate, the deeply flawed benchmark that has, for more than two decades, set the payments made worldwide on mortgages, corporate loans and derivatives.

Given the constraints, and with some important caveats, they’ve done a respectable job.

Martin Wheatley, the U.K.’s chief financial regulator, faced a quandary in early July when he started a review of Libor amid overwhelming evidence of manipulation. He had to tread carefully, lest changes render null and void the more than $300 trillion in contracts tied to the benchmark. At the same time, he had to do something to restore trust in one of the world’s most important financial indicators.

Created in the 1980s, the Libor system could hardly have been better designed for corruption. The calculation of the benchmark, which is supposed to provide an objective picture ofinterest rates across 10 currencies and 15 time periods, relies on self-reported estimates from banks that have huge incentives to game the system. The same banks control the British Bankers’Association, the trade group that owns and purports to police Libor. The entire process exists completely outside the purview of regulators. Not surprisingly, misbehavior ensued. Global investigators are only now beginning to understand the extent of the mischief.

Wheatley’s Reforms


Wheatley’s reforms, all of which we have advocated, go about as far as they can without changing the definition of Libor. The highlights:

1) The BBA will be removed from the picture, and U.K. authorities will hold an open competition to find a new administrator. (Disclosure: Bloomberg LP, the parent ofBloomberg News, is a competitor of Thomson Reuters Corp., which conducts Libor surveys on behalf of the BBA. Bloomberg has proposed its own alternative to Libor.)

2) Bankers involved in setting Libor will be subjected to regulatory oversight, and manipulation will become a criminal offense.

3) The number of Libor maturities and currencies will be pared down to those in which borrowing actually occurs, a move intended to take some of the guesswork out of banks’ interest-rate estimates.

Unfortunately, Wheatley stopped short of one measure that would have greatly improved transparency: requiring banks to report actual borrowing transactions, against which the public could check the veracity of the estimates that banks submit. Instead, he has recommended that even the publication of individual banks’ estimates be put on a three-month delay -- as opposed to being posted immediately. The change is intended to mitigate the stigma banks might suffer if they report rising borrowing costs during times of crisis.

As a result, it will actually become more difficult for outsiders to assess Libor’s reliability in real time. If banks are reporting honestly, it’s hard to understand why they would object to the publication of the relevant information from actual transactions. This could be done with a three-month delay, as a quid pro quo for postponing the publication of the banks’ Libor submissions.

Ultimately, the market will be better off moving away from Libor and other survey-based benchmarks to ones that rely on observable transactions. Criminal prosecutions of those responsible for undermining Libor could also go a long waytoward changing a culture that encouraged manipulation.

That said, following through on Wheatley’s recommendations should be enough to keep Libor going until a viable replacement emerges. Given that the benchmark’s flaws have been visible for years, the changes have been far too long in coming.

Read more opinion online from Bloomberg View. Subscribe to receive a daily e-mail highlighting new View editorials, columns and op-ed articles.

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2. 
   

1. 
   RBS traders boasted of Libor 'cartel'
   

Senior traders at Royal Bank of Scotland boasted about operating a “cartel” that made “amazing” amounts of money by rigging interest rates, it has been disclosed.








RBS trader Tan Chi Min: "It’s a cartel now in London." Photo: Getty Images





By Steven Swinford, and Harry Wilson

11:00PM BST 26 Sep 2012




Internal messages revealed in court documents apparently show how traders claimed they could manipulate Libor, which is used to set borrowing costs for millions of businesses, consumers and investors.


The messages, some sent just months before the taxpayer was forced to bail out RBS at a cost of more than £40bn, suggest the practice was condoned and encouraged by senior executives at the bank, and have now dragged the taxpayer-backed lender to the heart of the Libor scandal.


MPs have warned that the scale of RBS’s involvement in the scandal means it could face an even bigger fine than Barclays, which paid a record £290m in July after admitting attempting to manipulate Libor. The bank could also be hit with billions of pounds in damages claims.


Tan Chi Min, a former senior trader at RBS’s global banking and markets division in Singapore, has alleged that managers “condoned collusion” between staff to maximise profits by rigging Libor.


Mr Tan, who worked for RBS from August 2006 to November 2011, was eventually sacked for gross misconduct, but claims the bank made him a “scapegoat” for malpractice condoned by managers.



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A 231-page affidavit filed by Mr Tan at the Singapore High Court, obtained by Bloomberg, includes alleged transcripts of instant messages from RBS traders and executives.

On August 19, 2007, Mr Tan sent a trader based at Deutsche Bank a message. “It’s just amazing how Libor-fixing can make you that much money or lose it if opposite,” he wrote. “It is a cartel now in London.”

A day later Mr Tan sent a message to Scott Nygaard, global head of RBS’s London treasury markets. “We want high fix in 3s [a reference to three-month interbank lending],” Mr Tan wrote. “Neil is the one setting the yen Libor in London now and for this week and the next.” Mr Nygaard replied: “Go Neil, hahahahaha.”

On August 21, 2007, Jerzi Mohideen, another senior banker working for RBS in Singapore, wrote: “What’s the call on Libor?”

Neil Danziger, a trader who has since been sacked by RBS, allegedly sent a message asking: “Where would you like it, Libor that is?”

Another trader wrote: “Mixed feelings, but mostly I’d like it lower so the world starts to make a little sense.” Mr Danziger replied: “OK, I will move the curve down 1 basis point, maybe more if I can.”

Mr Danziger declined to comment.

On April 2, 2008, Mr Tan said: “Nice Libor, our six-month fixing moved the entire fixing, hahahah.”

The Serious Fraud Office is considering whether to bring criminal proceedings against individuals found to be involved, while regulators in the UK and US are also conducting investigations. This week, Stephen Hester, chief executive of RBS, who joined the bank in October 2008 following its bail-out, said he expected the fines and legal claims related to scandals such as Libor to cost the bank “a lot of money”.

A spokesman for RBS said: “Our investigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing. RBS and its employees continue to cooperate fully with regulators.”

Mr Nybaarg and Mr Mohideen, who are both still employed by RBS, declined to comment.

RBS is among several of the world’s biggest banks being investigated over their role in fixing the rate, known as Libor. The issue has prompted renewed calls for an overhaul of the banks.

Martin Wheatley, head of financial conduct at the Financial Services Authority, will on Friday publish his proposals on ways to reform Libor to prevent it from being manipulated. Mr Wheatley is expected to recommend that responsibility for Libor is taken away from the British Bankers’ Association, which has seen its role in the oversight of the rate heavily criticised.

John Mann, a Labour MP on the Treasury Select Committee, said: “The situation at RBS was even worse than Barclays. This is potentially significant criminal activity and there needs to be a full police investigation.”

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1. 
   Libor: the facts
   

The interbank lending rate at the heart of the banking scandal was until recently relatively unknown outside the City. But Libor has been thrust into the spotlight since the rate rigging at Barclays came to light. Here are some facts about Libor and its history.








Barclays was fined £290m by US and UK authorities in June for attempting to manipulate Libor Photo: PA





7:00AM BST 28 Sep 2012

Comment




• The London Interbank Offered Rate (Libor) is a benchmark that governs the rates at which banks are prepared to lend to each other in the wholesale money markets.


• Banks use Libor as a basis of swap rates - the borrowing rate between financial institutions.


• Recently called the most important figure in finance, Libor is used as a reference price for well over $300 trillion worth of loans and transactions around the world, including corporate loans and fixed-deal mortgages for homeowners.


• Libor is set on a daily basis by panels of banks - a process overseen by the British Bankers' Association (BBA) and calculated by Thomson Reuters. Each bank submits the rates at which it believes it could borrow, every day. The top and bottom quartile are thrown out, while the rest are averaged.


• Libor has been overseen by the BBA since 1980s, with the benchmark rate first calculated in 1986.

warned: repent or go to jail




Britain's top financial policeman promises criminal prosecutions in every 'dark corner of the City'






James Moore


Monday 01 October 2012



































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Martin Wheatley, the head of the new Financial Conduct Authority, warns there is “a big wake-up call coming”
Reuters









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  Burnt in effigy, Wheatley has the steel to shake City
  
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Britain's new chief financial policeman has issued a stark message to the City of London: "We have barely got started."


In an exclusive interview with The Independent, Martin Wheatley, the head of the new Financial Conduct Authority, warned that people who believe watchdogs are already too tough have "a big wake-up call coming".

Accusing bankers of avoiding responsibility for misconduct by hiding behind committee management, he raised the prospect of US-style prosecutions of senior executives: "In the future we want individuals held to account."

The FCA, which will replace the Financial Services Authority, will have the power to launch raids on City offices and bring criminal prosecutions. Mr Wheatley, pictured, who last week recommended that bankers who attempt to manipulate Libor face criminal prosecution, pledged to investigate and expose potential abuses in other sectors of the financial-services industry.

That could include the gold and silver markets, oil, foreign exchange and even agricultural commodities. "We will shine a light into a number of dark corners and we will have to take action depending on what we find," Mr Wheatley said.

The regulator also accused banks of mistreating their customers to an extent that would be unimaginable in other consumer businesses.

"The truth is that if our supermarkets in this country, if John Lewis, operated in a way that banks do, they wouldn't have any customers," he said. "If companies were operating in a way that was thinking about the long-term interests of their customers then you wouldn't need a heavy-handed financial regulation."

Mr Wheatley published his report into Libor interest rates on Friday which called for sweeping changes to the way they are calculated in the wake of attempts by traders at Barclays and other banks to fix them.

He said the roots of this and a string of other financial scandals came from "a deep, dark period" between 2005 and 2008.

"That was a horror period in terms of the way people were abused in their financial services. A lot of the things we are dealing with today – Libor, payment-protection insurance, interest-rates swaps – all of them go back to that period."

He attacked a mindset among banks that held that "you had to sell, you had to be earning by whatever means necessary" and pledged to force them to change their behaviour if they won't act themselves.

In addition to forcing changes to the way bankers are paid, Mr Wheatley also detailed how leaders will be held to account if banks fail in future.

This follows widespread public fury about the fact that no senior bankers have been prosecuted over the financial crisis and only two of the top bankers from the failed banks HBOS and Royal Bank of Scotland (RBS) were banned by the regulator: Johnny Cameron, from RBS, and Peter Cummings, from HBOS, who was also recently fined £500,000.

"If there are failures in the future we want individuals held to account," Mr Wheatley said, admitting that fining companies didn't work. "Ultimately the shareholders pay and it gets written off."

He will change this by forcing banks to assign personal responsibility for various functions to individual bankers.

Mr Wheatley said one of the chief reasons regulators have been prevented from acting in the past is because decisions are often taken by committee in banks, making it hard to assign blame.

"Society wants us not just to be ticking boxes, asking if people have been following the rules, but to be looking at outcomes and at what's going wrong and then taking action. That's what I've been brought in to do and that's what I will do."

He added: "Part of the industry appears to feel that it can abuse customer relationships time and time again without taking any impact from it."

Mr Wheatley gained a reputation as a hardliner in Hong Kong which has followed him to London and can be seen in last Friday's report into how to reform Libor interest rates, in which he had some hard words for the banking industry.

Why No One Has Gone to Jail Yet Over Libor


By Jonathan WeilSep 26, 2012 5:20 PM GMT+0100


A friend of mine who would prefer not to be named sent me a note a couple of months ago, when the Libor scandal at Barclays was hitting a crescendo, that captured the prevailing mood perfectly.

Did I find it ironic, he asked, that bankers can harm millions of ordinary citizens, destroy entire communities, force taxpayers to foot huge bills to save their companies -- and almost nobody goes to jail? But when it's discovered that bankers were cheating other bankers? Oh well, now someone has to go to jail. He certainly had a point.



About Jonathan Weil


Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best in the Business awards from the Society of American Business Editors and Writers in 2009 and 2010.
More about Jonathan Weil
And maybe someone will. As a Bloomberg View editorial noted this week, the Libor scandal should give U.S. prosecutors a chance to put some bankers at too-big-to-fail financial institutions in jail for something. If prosecutors want to, that is. We're still waiting to see if or when anyone at the Justice Department will follow through with arrests or indictments.

As for the U.K., here's a possible explanation for why regulators there have been so slow to pinch anyone for Libor-related manipulations. Check out the latest Bloomberg News stories detailing some of the juicy electronic messages exchanged among traders at Royal Bank of Scotland Group Plc, the bailed-out ward of the state that's 81 percent owned by the British government.

The transcripts were included in a 231-page affidavit filed by Tan Chi Min, a former RBS trader who is suing the bank for wrongful dismissal in a Singapore court. A sample: "Nice Libor," Tan wrote in an April 2008 instant message to colleagues. "Our six-month fixing moved the entire fixing, hahaha." Another one from an August 2007 conversation with traders at other banks, including Deutsche Bank: "It's just amazing how Libor fixing can make you that much money or lose if opposite," Tan wrote. "It's a cartel now in London."

Tan has said in his lawsuit that the bank condoned rates manipulation and sought scapegoats in an internal probe. RBS asked the Singapore High Court to seal the papers temporarily, until at least one of the probes of the bank by U.S. or U.K. government agencies is completed. Thank goodness for the openness and transparency of the court system in Singapore, of all places, so the world can get a peek inside Britain's third-biggest lender.

Libor-scandal aficionados may recall it was the U.S. Commodity Futures Trading Commission that has been the driving force on the Libor investigations. Were it not for the persistence of the scrappy, underfunded CFTC, there probably would have been no fines at Barclays Plc, Britain's second-biggest lender, which paid about $470 million to U.S. and British authorities in June for rigging the London interbank offered rate. U.K. authorities, particularly the Financial Services Authority, seemed to be slow-footed.

RBS is one of at least a dozen banks being investigated over allegations that they colluded to manipulate Libor so they could profit from bets on interest-rate derivatives. It's understandable why the British government might not be keen about investigating itself, or competitors that engaged in the same offenses.

As Christopher Cox said in December 2008 during one of his final speeches as chairman of the U.S. Securities and Exchange Commission: "When the government becomes both referee and player, the game changes rather dramatically for every other participant. Rules that might be rigorously applied to private-sector competitors will not necessarily be applied in the same way to the sovereign who makes the rules."

I READ YESTERDAY THAT FINANCIAL INSTITUTIONS INCLUDING RBS ARE TO SACK MORE STAFF.

Badboy wrote:I READ YESTERDAY THAT FINANCIAL INSTITUTIONS INCLUDING RBS ARE TO SACK MORE STAFF.

They have to Badboy because of the huge fines they have to pay. Also, RBS has just sold Direct Line Insurance which is one of the reasons.

Exclusive: Banks Fire Warning Over Fines


Bank bosses have warned the FSA that escalating fines could threaten the stability of the UK's banking system.


4:20pm UK, Tuesday 02 October 2012

Banks have already paid more than £8bn in compensation over the PPI scandal

• By Mark Kleinman, City Editor
  

The bosses of Britain’s biggest lenders have warned regulators that mounting fines linked to a string of industry scandals pose a wider risk to the stability of the banking system.

At a meeting with officials from the Financial Services Authority (FSA) last week, bank chief executives said that escalating redress and penalties for mis-selling and other malpractice could jeopardise both their lending capacity and their ability to rebuild capital in line with regulators' demands.

The warning comes in the wake of a rising compensation bill triggered by the mis-selling of payment protection insurance (PPI) and interest rate swaps, which have so far cost the major banks more than £8bn.

A person familiar with the talks said the bankers highlighted the unpredictability of recent conduct-related fines both in the UK and US.

"This is not about special pleading. Banks which have mis-sold products to consumers should provide appropriate redress," said one person close to the talks. "But there is a wider point about lending and the stability of the banks if so much capital is leaking out in the form of fines as well as compensation for which there is sometimes no justification."

Standard Chartered recently paid $340m to New York's main financial regulator to settle allegations that it failed to control payments involving Iranian entities. It is still in negotiations with several other authorities about an overall settlement.

HSBC set aside $700m in its half-year results as a provision for potential fines related to failings in its Mexican operations, but warned at the time that the eventual payout could be significantly higher.

A number of UK banks are also facing penalties for attempting to manipulate the Libor interest rate which could outstrip the £290m levied on Barclays in June.

Last week's meeting was attended by Lord Turner and Andrew Bailey, respectively the chairman and managing director of the FSA; Ana Botin, Stuart Gulliver, Stephen Hester and Antonio Horta-Osorio, the chief executives of Santander UK, HSBC, Royal Bank of Scotland (RBS) and Lloyds Banking Group; and Chris Lucas and Richard Meddings, finance directors of Barclays and Standard Chartered.

Insiders said that the FSA acknowledged the concerns about the stability of the banking system and the dangers of heavy fines being applied unilaterally by individual US regulators.

Sir Mervyn King, the Bank of England Governor, said after Standard Chartered's fine that cross-border regulatory co-operation was essential.

Senior bankers point out that the comparatively large fines issued by US authorities lead to a transfer of significant sums of money from the UK across the Atlantic.

The FSA meeting also focused on the ongoing tension between bankers and regulators over UK lending, according to those present.

Banks have expressed concern that the new Funding for Lending scheme conflicts with efforts to ensure their capital levels are compliant with new global rules by the end of 2013 because of the way the Bank of England programme is structured.

"There was a clear message that banks can run down liquidity buffers during fallow periods as per official guidance and that banks shouldn’t blame FSA liquidity rules for poor lending growth," a source close to the FSA said.

None of the institutions represented at the meeting would comment

25% OF PPI CLAIMS ARE FRAUDALENT SO IT WAS SAID.

Badboy wrote:25% OF PPI CLAIMS ARE FRAUDALENT SO IT WAS SAID.

I'm not surprised Badboy . It was so easy to make a claim , I was getting phone calls from Firms asking if I had had any Bank Loans and paid Insurance.

Panda wrote:

Badboy wrote:25% OF PPI CLAIMS ARE FRAUDALENT SO IT WAS SAID.

I'm not surprised Badboy . It was so easy to make a claim , I was getting phone calls from Firms asking if I had had any Bank Loans and paid Insurance.

I GET PHONE CALLS EVERY FEW WEEKS,EVEN THOUGH I DON'T THINK I QUALIFY,HAD CREDIT CARDS PAST AND PRESENT.



SEPARETLY I HEARD ON WATCHDOD BANKS ARE CLOSING ONE BANK BRANCH EVERY TWO DAYS.

RBS has discovered one of the Traders in its Singapore Branch is apparently guilty of insider trading.

A legal Expert reporting on the Banking crisis says staff in the Investment Departments received too many bonuses and were overpaid for a job they were paid to do.

RBS Said to Suspend Trader Over Interest Rate Rigging


By Gavin Finch, Andrea Tan and Liam Vaughan - Oct 5, 2012 2:00 AM GMT+0100

• 
  

Royal Bank of Scotland Group Plc (RBS)suspended a trader for trying to rig the Singapore dollar swap offer rate, indicating employees may have sought to manipulate more than just Libor, two people briefed on the matter said.

Senior trader Chong Wen Kuang was put on leave earlier this year for trying to rig the interest rate to benefit his trading position, said the people who asked not to be identified because the bank is probing his actions. He is the first RBS employee to be suspended or fired for attempting to rig a benchmark other than the London interbank offered rate, one of the people said.





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RBS Said to Suspend Trader as Rate-Rigging Spreads Beyond Libor




Simon Dawson/Bloomberg

The logo of Royal Bank of Scotland Group Plc.

The logo of Royal Bank of Scotland Group Plc. Photographer: Simon Dawson/Bloomberg



Enlarge image

RBS Said to Suspend Trader as Rate-Rigging Spreads Beyond Libor




Munshi Ahmed/Bloomberg

Pedestrians pass the south tower at One Raffles Quay, which houses the offices of the Royal Bank of Scotland Group Plc (RBS), in Singapore. The Monetary Authority of Singapore, the country’s central bank, said in July it will examine how banks are setting “key market interest rate benchmarks” amid similar reviews by regulators in Europe and the U.S.

Pedestrians pass the south tower at One Raffles Quay, which houses the offices of the Royal Bank of Scotland Group Plc (RBS), in Singapore. The Monetary Authority of Singapore, the country’s central bank, said in July it will examine how banks are setting “key market interest rate benchmarks” amid similar reviews by regulators in Europe and the U.S. Photographer: Munshi Ahmed/Bloomberg



RBS, Britain’s biggest government-owned bank, is one of at least a dozen firms being investigated over allegations they colluded to influence interest rates so they could profit from derivatives bets. RBS started its own probe into allegations of rate-rigging in the middle of 2010, according to one of the people. The Edinburgh-based lender fired four traders last year for rigging the yen and Swiss franc Libors, and suspended a further two, who have since been reinstated, the person said.

The Monetary Authority of Singapore, the country’s central bank, said in July it will examine how banks are setting “key market interest rate benchmarks” amid similar reviews by regulators in Europe and the U.S.

The Singapore dollar swap offer rate, one of two main benchmark interest rates in the city-state, refers to the average cost of borrowing Singapore dollars for a set period by borrowing U.S. dollars and exchanging them into the local currency. It is calculated by a daily poll overseen by the Association of Banks in Singapore, a lobby group.

Key Person


An e-mail sent to Chong’s RBS account was returned with a delivery-failure message. Calls to his office were answered by colleagues who declined to be identified and said he was away from the office. A receptionist at RBS in Singapore said there was no record for Chong in the bank’s global directory. He is still listed as a key person at RBS for Singapore government securities, according to the MAS’s directory.

Michael Strachan, a spokesman for RBS, declined to comment on Chong and referred to a previously released statement.

“Our investigations into submissions, communications and procedures relating to the setting of Libor and other interest rates are ongoing,” the bank said in the statement. “RBS and its employees continue to cooperate fully with regulators

Hester has had 2 years to clean up RBS and has proved a useless Chairman, no investigation to ensure the mess was cleaned up, that RBS would show a profit and he had to be shamed into foregoing his bonus last year. Now RBS is being heavily fined over the Libor scandal, share price keeps falling and now another hefty fine. The government owns 81% of RBS, sell everything and come out with some money before RBS is bankrupt I say,

LLOYDS AND SOME OTHER BANK(CO-OP?) HAVING COMPUTER GLITCHES AFFECTING CUSTOMER ACCOUNTS.

Badboy wrote:LLOYDS AND SOME OTHER BANK(CO-OP?) HAVING COMPUTER GLITCHES AFFECTING CUSTOMER ACCOUNTS.

I read that yesterday Badboy but it was just an apology from Lloyds no reason given. U.K. Banks, apart from ruining the

reputation for British Honesty, are also becoming inefficient.

Osborne Confronts Small World of BOE for Choice of Governor


By Svenja O’Donnell - Oct 7, 2012 5:18 AM GMT+0100



George Osborne is about to find out just how many people think they are clever enough to be governor of the Bank of England.

The chancellor of the exchequer will discover tomorrow the full list of applicants to replace Mervyn King at the helm of the U.K. central bank managing monetary policy and banking regulation for a single eight-year term. Candidates have until 8.30 a.m. to express their interest to the Treasury in London.





Enlarge image

U.K. Chancellor of the Exchequer George Osborne




Simon Dawson/Bloomberg

George Osborne, U.K. chancellor of the exchequer.

George Osborne, U.K. chancellor of the exchequer. Photographer: Simon Dawson/Bloomberg



Enlarge image

The Bank of England




Simon Dawson/Bloomberg

The Bank of England's headquarters in London.

The Bank of England's headquarters in London. Photographer: Simon Dawson/Bloomberg

Bank of England Deputy Governor Paul Tucker, Financial Services Authority Chairman Adair Turner, Independent Commission on Banking Chairman John Vickers and former U.K. civil service chief Gus O’Donnell are among favorites to succeed King when he steps down in June after a decade in the job.

“It’s going to be a difficult choice to make,” said Grant Lewis, head of research at Daiwa Capital Markets Europe and a former Treasury official. “Every one of the main candidates is adequately qualified. In these circles, it’s a small world. The panel and the candidates know each other. It makes the task of interviewing them harder.”

Candidates are asked to send a resume, a cover letter and a questionnaire disclosing prior political activity and potential conflicts of interest. A panel of officials will draw up a shortlist and notify those who haven’t made it. They will then conduct interviews and make a recommendation to Osborne, with his Liberal Democrat coalition partners also having a say. The decision will be announced by the end of 2012.

Three Inquisitors


The panel comprises Permanent Secretary Nicholas Macpherson, Second Permanent Secretary Tom Scholar and David Lees, chairman of the bank’s court of directors. Lawmakers will also question the new governor before the job commences.

Recent probes over rigging of the London Interbank Offered Rate, which led in June to Barclays Plc being fined a record 290 million pounds ($469 million), have harmed chances of former bankers from applying. John Gieve, a former Bank of England deputy governor, said last month it would be “very difficult”for anyone who has recently worked in banking to get the job.

Tucker, who has spent more than three decades at the central bank, is still a favorite to succeed King, even after his questioning by lawmakers in July over his knowledge of Libor rate-rigging raised concerns about his suitability for the job.

Business Secretary Vince Cable, a Liberal Democrat, said in an interview on Sept. 24 that Tucker’s chances hadn’t been hurt by the Libor probe and that the governor needs to be someone who“understands banking but who isn’t captured by banking.”

‘Best Qualified’


“Tucker is the best qualified,” said Shamik Dhar, a former Bank of England economist and head of investment strategy at Aviva Investors, which oversees $409 billion in London. “If this wasn’t a quasi-political appointment, he’d get it.”

The government’s desire to appear committed to reforming the banking industry may favor a candidate with experience of financial regulation, such as Vickers, said Dhar.

Vickers, a professor at Oxford University and a former Bank of England chief economist, was appointed by the government in June 2010 to lead the Independent Commission on Banking, an inquiry designed to promote stability and competition in the U.K. banking industry. The government has pledged to take action on the commission’s findings by 2015.

Appointing Vickers “would scare the banks sufficiently, a way for the government of saying ‘we’re serious about banking reform, but we’re not downright out to get you,’” said Dhar, who worked at the central bank when Vickers was chief economist.“From that perspective, Vickers fits the bill. The question is, does he have the authority to run a large institution?”

Tucker Leads


Bookmaker William Hill Plc has Tucker as favorite at odds of 7-4, meaning a winning 4-pound bet would yield a 7-pound profit. Bank of Canada Governor Mark Carney is at 5-2, Turner at 3-1 and O’Donnell at 5-1. Vickers is at 10-1.

Other candidates cited by William Hill include former policy maker DeAnne Julius, former Treasury Permanent Secretary Terence Burns, and Goldman Sachs Asset Management Chairman Jim O’Neill, who said in June he would consider the job if asked.

Reserve Bank of Australia Governor Glenn Stevens has been approached by U.K. Treasury officials and is also a contender, the Sunday Times reported today, citing unidentified sources. An RBA spokesman declined to comment on the report.

Turner, who steps down as FSA chairman next year when the regulator is split into two agencies, has been the most outspoken critic of banks among the candidates, saying in 2009 that many of the activities carried out by financial-services companies were “socially useless.” In July, he signaled his interest in the job, saying in an interview that he would“obviously not rule myself out.”

‘Near Impossible’


O’Donnell has also indicated he might send in his resume.

“When they do advertise it, I’ll make up my mind whether I want to apply or not,” he said in an interview after he joined Toronto-Dominion Bank as an adviser in June.

Whoever is appointed will take over a beefed-up institution with new powers over financial regulation to add to its role setting monetary policy. The job of the next governor is “near impossible” and “only superhumans need apply,” Ed Balls, economics spokesman for the opposition Labour Party, has said.

“The new job is a much bigger role, it requires someone who has the authority to walk the corridors of government,”said Steven Bell, a former Treasury official who is now chief economist at hedge fund GLC Ltd. in London. “Gus O’Donnell has very good instincts on monetary policy and is a man of considerable talent. He’d be a great choice.”

Exclusive: RBS Faces New Shake-Up


The Royal Bank of Scotland is under pressure from a government body to shrink its global investment arm.


7:45pm UK, Saturday 06 October 2012

RBS is trying to finalise its departure from the Asset Protection Scheme

• Mark Kleinman
  

City Editor

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Royal Bank of Scotland (RBS) is coming under renewed pressure to scale back its investment banking arm as it seeks to exit a costly Government insurance scheme.

I have learned that the taxpayer-backed bank is being urged to shrink its global banking and markets (GBM) division, as well as to reconsider its ownership of Citizens, the giant US retail bank.

RBS is resisting the pressure, which has emerged in recent weeks as the bank attempts to finalise its departure from the Asset Protection Scheme (APS).

The APS was set up in the aftermath of RBS's rescue in 2008 to insure more than £300bn of toxic assets on the bank's balance sheet.

RBS has since wound down or sold the vast majority of those loans. The insurance scheme is now worthless, since the bank will never be able to claim under it, but is costing RBS a £500m annual premium.

Executives at the bank have been asked to revisit its presence in investment banking as well as to assess whether RBS's value would be enhanced by selling Citizens.

I understand that the latest demands were made through UK Financial Investments (UKFI), the body set up to manage the Government's shareholdings in bailed-out banks.

George Osborne, the Chancellor, is aware of the discussions between RBS and UKFI and is thought to be keen to extract material concessions from the bank before it is allowed to leave the APS.

"Neither the Treasury nor the Financial Services Authority (FSA) wants to give the bank a free pass to exiting the scheme," a person close to the talks said.
Mr Hester says the bank should be allowed to withdraw from the APS
The Government's strategy for realising value from the taxpayer-backed banks is likely to be one of many economy-related subjects likely to be discussed at the Conservatives' autumn conference, which starts in Birmingham tomorrow.

RBS has already shrunk its investment bank, selling and shutting significant divisions and shedding tens of thousands of jobs since its state rescue four years ago.

It has also offloaded a chunk of its business banking operations and is in the process of floating its Direct Line Group insurance arm.

The £2.5bn minimum fee to which RBS committed when it joined the APS has now expired, and the bank is now paying a daily fee for its continued presence in the scheme.

Stephen Hester, RBS's chief executive, has argued publicly for the bank to be allowed to withdraw. The FSA has to authorise the exit because of the implications it has for the bank's capital structure.

I also understand that there is continued disagreement between the bank and the Government over the value of something called a dividend access share (DAS), which gives the Treasury special rights over its shareholding in the bank.

The DAS has to be cancelled before RBS can resume paying dividends to ordinary shareholders without such payments taking place on punitive terms. The bank believes the DAS has a substantially lower value than minister

European parliament to make Libor-rigging criminal offence


European Parliament will widen scope of its market abuse rules

• 
  Reuters
  
• The Guardian, Friday 5 October 2012 18.56 BST
  

The scope of the European Parliament's criminal laws against banking abuse are to be widened Photograph: Vassil Donev/EPA

Traders found guilty of rigging Libor and other financial market benchmarks would face jail from next year under a cross-party deal to be voted through on Tuesday in the European Parliament.

The Parliament's economic affairs committee will back new rules to bring manipulation or insider trading involving indices within the EU's market abuse rules.

Martin Wheatley, the head of the UK's emerging Financial Conduct Authority has also recommended making manipulation of Libor a criminal offence in a review following the Barclays Libor rigging scandal.

The bank was fined a record £290 million in June to settle allegations that it manipulated Libor - the London Interbank Offered Rate - an interest rate used as a basis for pricing products worth more than $300 trillion, including home loans and credit cards. Other banks are still under investigation.

The European Parliament may back minimum criminal sentences for market abuse of five years for serious crimes and two years for lesser breaches but some countries are likely to oppose this as it touches on national sovereignty.

Arlene McCarthy, the committee's British centre-left member who is steering the measure through the parliament, said fines had failed to change the culture of banking.

"We are therefore extending the law to, for the first time, impose tough EU wide criminal sanctions and jail time," McCarthy said in a statement. "We have also extended the scope to cover all benchmarks and indices as the Libor manipulation shows that abuse is still rife in the banking sector."

A cross-party compromise in the Parliament would apply the EU's market abuse rules to interest rates, currencies, benchmarks, interbank rates like Libor, indices and financial instruments or any interest rate-based derivative contract.

"I am confident that the full committee will back a tough approach to abuse and manipulation which, as the Libor crisis showed, continues to undermine confidence and integrity in financial markets," McCarthy said.

The UK Financial Services Authority still has no direct power over Libor and used breaches of principles as the basis for its action against Barclays. The UK watchdog has also outlined plans to overhaul Libor, which is meant to reflect the the rates at which banks borrow from one another.

Neither did the Libor riggingcome under the EU's market abuse rules, which the bloc is now revising.

The Parliament will sit down with EU states after the vote to agree a final legal text. EU member states are also set to back making financial benchmark rigging illegal.



Fast trading curb




The Parliament is also going to amend plans to curb the activities of so-called high-frequency traders who bombard markets with many unfilled orders.

These dealers, armed with the latest computer software, can dart in and out of markets to exploit tiny price differences. Policymakers say it creates volatility but traders say it boosts trading volume.

It will ditch a specific order-to-execution ratio that would trigger higher trading fees on these fast-moving traders.

McCarthy had proposed a ratio of 250:1 but other policymakers feared this could easily be overtaken by rapid advances in trading technology. The European Commission may get powers to set the ratio which can then be amended as circumstances change.

12 October 2012 Last updated at 22:03
RBS sale of 316 branches to Santander collapses
RBS chief executive Stephen Hester said the news was "disappointing".
Continue reading the main story
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Royal Bank of Scotland's proposed sale of 318 branches and other interests to Santander has collapsed.

The Spanish bank pulled the plug on the deal, it is thought in large part because of problems over integrating the two banks' IT systems.

RBS chief executive Stephen Hester said the collapse was "disappointing" and that a new buyer would be sought.

The disposal was ordered by the European Commission in return for UK government's £45bn rescue of the bank.

RBS had been working on the sale for more than two years. The UK bank struck a preliminary deal with Santander to sell the branches and the business of 1.8 million customers in August 2010. However, completion has been delayed several times.

In a statement released late on Friday, Mr Hester said: "It is of course disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved.

"RBS will commence a new process of disposal and will provide a further update on this in due course."
'Heavy lifting'
The assets being sold included the RBS branch business in England and Wales, and the NatWest branch business in Scotland, plus some small business and other corporate lending interests.

Mr Hester said that much of the "heavy lifting" work on the disposal had been done, including separating out customer data and putting in place a separate management. This meant that the assets were "largely ready to be taken on by a new owner," he said.

One problem for Santander is thought to have been trying to integrate the banks' computer systems, an issue that has dogged other mergers and acquisitions in the financial sector.

There were also suggestions earlier this year that Santander was trying to negotiate a lower price for the acquisition, which was initially thought to be worth £1.6bn.

The EU required RBS to complete the sale by 2014.

Santander had hoped the acquisition would boost substantially the size of its small business lending business in the UK, which the Spanish bank sees as a key area for growth.

Another disposal forced on RBS by the EU was the sale of insurer Direct Line, whose shares began trading on the London Stock Exchange on Thursday.
'Automatically terminate'
Santander said it had pulled out of the deal after it became apparent that a revised deadline for completion would not be met.

The bank said in a statement: "It is now apparent that this revised target will not be achieved. Santander UK confirms that it has therefore notified RBS that it does not believe the conditions to the transfer of the business from RBS to Santander UK will be satisfied by the agreed final deadline of February 2013 and that it is not willing to agree a further extension to that deadline.

"In that case, the agreement will automatically terminate in accordance with its terms and the transfer of the business to Santander UK will not take place."

Santander UK chief executive Ana Botin said: "Our guiding principle throughout this transaction has been a seamless journey for customers - which requires the business to be delivered to Santander UK by RBS in a steady state.

"We have concluded that given delays it is not possible to complete this within a reasonable timeframe."