Bl***y Banks Again
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Re: Bl***y Banks Again
Panda Fri 26 Oct - 10:12
Royal Bank of Canada and Societe Generale have been named among the 16 Banks to face the U.S. Courrts
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Re: Bl***y Banks Again
Panda Sat 27 Oct - 8:30
BoE's Andrew Haldane: 'Curb King Kong banks further'
Banks are too big and should be broken up or shrunk to curb the risks that “King Kong” lenders still pose to the economy, a senior Bank of England policymaker said.
Andrew Haldane, the BoE's director of financial stability, said removing the state crutch would make big banks, 'like King Kong and Godzilla ... physiological impossibilities'.
By Philip Aldrick, Economics Editor
1:50PM BST 26 Oct 2012
53 Comments
Andrew Haldane, the Bank’s executive director for financial stability, claimed that current bank reforms – including the Government’s plans to ringfence retail banks – do not go far enough and further measures should be considered.
To address properly the “too-big-to-fail” problem, he said regulators should consider doubling banks’ loss-absorbing capital buffers to around 20pc, “placing limits on bank size”, or imposing a “full separation of investment and commercial banking” rather than a ring-fence.
He added that the evidence pointed to the optimal size for a bank to be as small as $100bn (£62bn). However, the “big banks are even bigger” than before the crisis, he noted. Barclays’ balance sheet is £1.5 trillion, Royal Bank of Scotland’s £1.37 trillion, and Lloyds Banking Group’s £930bn.
Although banks claim to be more efficient the larger they are, Mr Haldane said the analysis ignored the cost of the implicit taxpayer guarantee that he calculated was worth $70bn a year for the world’s largest banks between 2002 and 2007, and $300bn a year now.
Without the subsidy, “there is no longer evidence of economies of scale at bank sizes above $100bn. If anything, there is now evidence of dis-economies which rise with bank size, consistent with big banks becoming ‘too big to manage’,” he said.
“Subtracting this subsidy, removing the state crutch, would suggest a dramatically lower socially-optimal banking scale. Like King Kong and Godzilla, these giants would arguably then be physiological impossibilities ... the weight transfer associated with a single step would have shattered their thigh bones.”
Mr Haldane was warning that, despite regulators efforts to build regimes that allow banks to fail without taxpayer support, the risk is that – in the practical event of a giant lender’s imminent collapse – the government would discard the theory and step in.
“Consider that trade-off when a big, complex bank hits the rocks,” Mr Haldane said. “On the one side is a simple, but certain, option – state bail-out. On the other is a complex, and less certain, option – resolution. If governments are risk-averse ... then bail-out may look attractive on the day.
“The history of big bank failure is a history of the state blinking before private creditors.”
In his speech at the Institute of Directors, he argued that “one way of lessening that dilemma, and at the same making resolution more credible, is to act on the scale and structure of banking directly”.
Reform has shifted in that direction recently, with ring-fencing in the UK and proposed for Europe, and the barring of proprietary trading in the US. However, Mr Haldane warned of potential loopholes in the structure. “Today’s ring-fence [can become] tomorrow’s string vest,” he said. He also questioned whether banks would properly separate “cultures and capital” as long as the two operations remained under one roof.
Although he welcomed the progress made on bank reforms so far, he added: “Claims that they have solved the too-big-to-fail problem appear to me, however, premature, probably over-optimistic. Worse, they risk sending a false sense of crisis comfort.”
His comments were released shortly after Christine Lagarde, managing director of the International Monetary Fund, spoke out against the “vested interests” in banking and said that unfinished reforms were hampering economic recovery.
“There are many vested interests working against change and push-back is intensifying,” she said. “It is interesting how some banks say the new regulations will be too burdensome, but then spend hundreds of millions of dollars lobbying to kill them.”
She added that progress was needed on resolution regimes to allow banks to fail and for regulators to coordinate and align their rules, particularly over new rules on bank structures such as ring-fencing or proprietary trading bans. “We need a global level discussion of the pros and cons of direct restrictions on business models,” she said.
Banks are too big and should be broken up or shrunk to curb the risks that “King Kong” lenders still pose to the economy, a senior Bank of England policymaker said.
Andrew Haldane, the BoE's director of financial stability, said removing the state crutch would make big banks, 'like King Kong and Godzilla ... physiological impossibilities'.
By Philip Aldrick, Economics Editor
1:50PM BST 26 Oct 2012
53 Comments Andrew Haldane, the Bank’s executive director for financial stability, claimed that current bank reforms – including the Government’s plans to ringfence retail banks – do not go far enough and further measures should be considered.
To address properly the “too-big-to-fail” problem, he said regulators should consider doubling banks’ loss-absorbing capital buffers to around 20pc, “placing limits on bank size”, or imposing a “full separation of investment and commercial banking” rather than a ring-fence.
He added that the evidence pointed to the optimal size for a bank to be as small as $100bn (£62bn). However, the “big banks are even bigger” than before the crisis, he noted. Barclays’ balance sheet is £1.5 trillion, Royal Bank of Scotland’s £1.37 trillion, and Lloyds Banking Group’s £930bn.
Although banks claim to be more efficient the larger they are, Mr Haldane said the analysis ignored the cost of the implicit taxpayer guarantee that he calculated was worth $70bn a year for the world’s largest banks between 2002 and 2007, and $300bn a year now.
Without the subsidy, “there is no longer evidence of economies of scale at bank sizes above $100bn. If anything, there is now evidence of dis-economies which rise with bank size, consistent with big banks becoming ‘too big to manage’,” he said.
“Subtracting this subsidy, removing the state crutch, would suggest a dramatically lower socially-optimal banking scale. Like King Kong and Godzilla, these giants would arguably then be physiological impossibilities ... the weight transfer associated with a single step would have shattered their thigh bones.”
Mr Haldane was warning that, despite regulators efforts to build regimes that allow banks to fail without taxpayer support, the risk is that – in the practical event of a giant lender’s imminent collapse – the government would discard the theory and step in.
“Consider that trade-off when a big, complex bank hits the rocks,” Mr Haldane said. “On the one side is a simple, but certain, option – state bail-out. On the other is a complex, and less certain, option – resolution. If governments are risk-averse ... then bail-out may look attractive on the day.
“The history of big bank failure is a history of the state blinking before private creditors.”
In his speech at the Institute of Directors, he argued that “one way of lessening that dilemma, and at the same making resolution more credible, is to act on the scale and structure of banking directly”.
Reform has shifted in that direction recently, with ring-fencing in the UK and proposed for Europe, and the barring of proprietary trading in the US. However, Mr Haldane warned of potential loopholes in the structure. “Today’s ring-fence [can become] tomorrow’s string vest,” he said. He also questioned whether banks would properly separate “cultures and capital” as long as the two operations remained under one roof.
Although he welcomed the progress made on bank reforms so far, he added: “Claims that they have solved the too-big-to-fail problem appear to me, however, premature, probably over-optimistic. Worse, they risk sending a false sense of crisis comfort.”
His comments were released shortly after Christine Lagarde, managing director of the International Monetary Fund, spoke out against the “vested interests” in banking and said that unfinished reforms were hampering economic recovery.
“There are many vested interests working against change and push-back is intensifying,” she said. “It is interesting how some banks say the new regulations will be too burdensome, but then spend hundreds of millions of dollars lobbying to kill them.”
She added that progress was needed on resolution regimes to allow banks to fail and for regulators to coordinate and align their rules, particularly over new rules on bank structures such as ring-fencing or proprietary trading bans. “We need a global level discussion of the pros and cons of direct restrictions on business models,” she said.
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Re: Bl***y Banks Again
Panda Sat 27 Oct - 12:50
UBS AG (UBSN), Switzerland’s largest bank, will cut as many as 10,000 jobs companywide as the trading business shrinks, a person with knowledge of the plan said.
Enlarge image
UBS Said to Plan 10,000 Job Cuts Amid Investment-Bank Shrinkage
Chris Ratcliffe/Bloomberg
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland.
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland. Photographer: Chris Ratcliffe/Bloomberg
Enlarge image
UBS Said to Plan 10,000 Job Cuts Amid Investment-Bank Shrinkage
Gianluca Colla/Bloomberg
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland.
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland. Photographer: Gianluca Colla/Bloomberg
Enlarge image
UBS May Reduce Kengeter Role in Overhaul of Investment Bank Unit
Jerome Favre/Bloomberg
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong.
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong. Photographer: Jerome Favre/Bloomberg
Many of the reductions will come in the trading businesses overseen by investment-bank co-head Carsten Kengeter and probably will occur over several quarters, said the person, who requested anonymity because the plans haven’t been publicly announced. An announcement may come when UBS reports third- quarter earnings on Oct. 30, the person said.
Chief Executive Officer Sergio Ermotti, 52, is overhauling the bank as Swiss regulators pressure UBS and Credit Suisse Group AG to boost capital and scale back trading and investment- banking operations. Like rival securities firms, UBS has been struggling to boost profitability as client activity and trading remain sluggish.
“It was a loser’s game for them,” said Terry Connelly, former dean of the Ageno School of Business at Golden Gate University in San Francisco and an ex-managing director at Salomon Brothers Inc. “It wasn’t their fault, they simply tried climbing the wrong mountain.” High fixed costs and weak demand have made it harder to be profitable, and the industry will have to shrink more, he said.
‘Paradigm Shift’
Ermotti told his staff in a memo this month he’ll do whatever it takes “to tackle the current challenging market environment and paradigm shift” in banking and will continue “remodeling” UBS. He said in July that the market environment has completely changed since the firm announced reorganization plans for the securities unit in November.
“UBS is a microcosm for the industry,” Mark Williams, a lecturer at Boston University’s School of Management, said in an interview. “The banking business model is changing and we’ve got to look at cost structure, we’ve got to look at compensation, and we’ve got to readjust.”
The bank had about 63,250 employees as of June 30, according to its most recent financial report, which means the staff cut could equal 16 percent. UBS already announced it is reducing risk-weighted assets at the investment bank by more than half from September 2011 levels, mostly in fixed income.
The plan will lead to a further reduction of as much as 100 billion euros ($129 billion) of risk-weighted assets, the Financial Times reported today, without saying how it calculated the figure.
Kengeter’s Role
The staff cuts were reported earlier by the Financial Times. The eliminations will lead to changes in senior management and reduce costs in the bank’s support functions including information technology, the FT said.
“Investors want UBS to reveal the value of the asset and wealth management businesses, which will make 26 percent returns on our 2013 estimates and downsize materially the investment bank which struggles to make single-digit returns,” said Huw van Steenis, a London-based analyst at Morgan Stanley.
Serge Steiner, a spokesman for the bank, declined to comment. Since taking office last year, Ermotti has been working to cut production costs across all of the bank’s businesses.
The firm also has weighed a shakeup at the top of its investment bank that would give a reduced role to Kengeter, 45, and more responsibilities to his 49-year-old co-head, Andrea Orcel, three people with knowledge of the matter said.
The firm’s boards were meeting in New York to consider a reorganization of the unit that will include cuts centered on the fixed-income operations for which Kengeter has been responsible since 2008, the people said.
Lack of demand in the banking industry means another round of dismissals is likely on Wall Street, permanently damaging careers of some investment bankers, Connelly said.
“People will have a while on the beach,” he said. “Their business has been commoditized to the point where their brains don’t count as much. A lot of investment bankers will have to find another way to make money.”
Enlarge image
UBS Said to Plan 10,000 Job Cuts Amid Investment-Bank Shrinkage
Chris Ratcliffe/Bloomberg
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland.
A tram passes the headquarters of UBS AG bank in Zurich, Switzerland. Photographer: Chris Ratcliffe/Bloomberg
Enlarge image
UBS Said to Plan 10,000 Job Cuts Amid Investment-Bank Shrinkage
Gianluca Colla/Bloomberg
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland.
The UBS AG logo sits on the wall of the company's headquarters in Zurich, Switzerland. Photographer: Gianluca Colla/Bloomberg
Enlarge image
UBS May Reduce Kengeter Role in Overhaul of Investment Bank Unit
Jerome Favre/Bloomberg
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong.
Carsten Kengeter, co-chief executive officer of UBS AG's investment bank, speaks during the Asean Finance Ministers Investors Seminar in Hong Kong. Photographer: Jerome Favre/Bloomberg
Many of the reductions will come in the trading businesses overseen by investment-bank co-head Carsten Kengeter and probably will occur over several quarters, said the person, who requested anonymity because the plans haven’t been publicly announced. An announcement may come when UBS reports third- quarter earnings on Oct. 30, the person said.
Chief Executive Officer Sergio Ermotti, 52, is overhauling the bank as Swiss regulators pressure UBS and Credit Suisse Group AG to boost capital and scale back trading and investment- banking operations. Like rival securities firms, UBS has been struggling to boost profitability as client activity and trading remain sluggish.
“It was a loser’s game for them,” said Terry Connelly, former dean of the Ageno School of Business at Golden Gate University in San Francisco and an ex-managing director at Salomon Brothers Inc. “It wasn’t their fault, they simply tried climbing the wrong mountain.” High fixed costs and weak demand have made it harder to be profitable, and the industry will have to shrink more, he said.
‘Paradigm Shift’
Ermotti told his staff in a memo this month he’ll do whatever it takes “to tackle the current challenging market environment and paradigm shift” in banking and will continue “remodeling” UBS. He said in July that the market environment has completely changed since the firm announced reorganization plans for the securities unit in November.
“UBS is a microcosm for the industry,” Mark Williams, a lecturer at Boston University’s School of Management, said in an interview. “The banking business model is changing and we’ve got to look at cost structure, we’ve got to look at compensation, and we’ve got to readjust.”
The bank had about 63,250 employees as of June 30, according to its most recent financial report, which means the staff cut could equal 16 percent. UBS already announced it is reducing risk-weighted assets at the investment bank by more than half from September 2011 levels, mostly in fixed income.
The plan will lead to a further reduction of as much as 100 billion euros ($129 billion) of risk-weighted assets, the Financial Times reported today, without saying how it calculated the figure.
Kengeter’s Role
The staff cuts were reported earlier by the Financial Times. The eliminations will lead to changes in senior management and reduce costs in the bank’s support functions including information technology, the FT said.
“Investors want UBS to reveal the value of the asset and wealth management businesses, which will make 26 percent returns on our 2013 estimates and downsize materially the investment bank which struggles to make single-digit returns,” said Huw van Steenis, a London-based analyst at Morgan Stanley.
Serge Steiner, a spokesman for the bank, declined to comment. Since taking office last year, Ermotti has been working to cut production costs across all of the bank’s businesses.
The firm also has weighed a shakeup at the top of its investment bank that would give a reduced role to Kengeter, 45, and more responsibilities to his 49-year-old co-head, Andrea Orcel, three people with knowledge of the matter said.
The firm’s boards were meeting in New York to consider a reorganization of the unit that will include cuts centered on the fixed-income operations for which Kengeter has been responsible since 2008, the people said.
Lack of demand in the banking industry means another round of dismissals is likely on Wall Street, permanently damaging careers of some investment bankers, Connelly said.
“People will have a while on the beach,” he said. “Their business has been commoditized to the point where their brains don’t count as much. A lot of investment bankers will have to find another way to make money.”
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Re: Bl***y Banks Again
Panda Sat 27 Oct - 17:28
25 October 2012 Last updated at 10:05
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RBS Libor documents sealed by Singapore High Court
RBS is one of many banks under investigation for alleged fixing of the key Libor bank rate
Singapore's High Court has sealed documents in a lawsuit that is centred around Royal Bank of Scotland (RBS), a trader and allegations of rate fixing.
RBS had fired its former trader Tan Chi Min over allegations of improperly influencing the setting of the London Interbank Offered Rate (Libor).
In his lawsuit, Mr Tan has alleged that he was being made a scapegoat.
RBS is one of many banks being investigated for possible rigging of Libor, a key interbank lending rate.
RBS argued that keeping these documents public may have an impact on the ongoing investigation in the Libor-scandal.
Mr Tan has claimed that it was a part of his duties to provide inputs to rate setters and that senior management in Singapore, Tokyo and London was aware of that.
The BBC could not access any affidavits and exhibits filed after 6 September 2012 in the lawsuit at the court.
================
Romour has it Tan Chi Min has done a runner.
Share this page
RBS Libor documents sealed by Singapore High Court
RBS is one of many banks under investigation for alleged fixing of the key Libor bank rate Singapore's High Court has sealed documents in a lawsuit that is centred around Royal Bank of Scotland (RBS), a trader and allegations of rate fixing.
RBS had fired its former trader Tan Chi Min over allegations of improperly influencing the setting of the London Interbank Offered Rate (Libor).
In his lawsuit, Mr Tan has alleged that he was being made a scapegoat.
RBS is one of many banks being investigated for possible rigging of Libor, a key interbank lending rate.
RBS argued that keeping these documents public may have an impact on the ongoing investigation in the Libor-scandal.
Mr Tan has claimed that it was a part of his duties to provide inputs to rate setters and that senior management in Singapore, Tokyo and London was aware of that.
The BBC could not access any affidavits and exhibits filed after 6 September 2012 in the lawsuit at the court.
================
Romour has it Tan Chi Min has done a runner.
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Re: Bl***y Banks Again
Badboy Mon 29 Oct - 19:34
BARCLAYS BANK IS TO BE SUED OVER INTEREST RATE SWAPS BY GUARDIAN CARE HOMES.
SOUNDS GOOD
SOUNDS GOOD
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Re: Bl***y Banks Again
Panda Tue 30 Oct - 8:33
30 October 2012 Last updated at 07:18
UBS cuts 10,000 jobs as it slims down investment bank arm
UBS plans to become a much smaller, more focussed bank
Continue reading the main story
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Swiss bank UBS has announced it is cutting 10,000 jobs worldwide as it slims down its investment banking activities.
The jobs will go over the next three years, and amount to 16% of its current workforce of 64,000.
UBS lost 39bn Swiss francs (£26bn; $42bn) during the financial crisis and had to be bailed out by the Swiss authorities.
The cuts are aimed at saving 3.4bn Swiss francs.
UBS chief executive Sergio Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.
"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect."
Risk averse
Zurich-based UBS will focus on its private bank and a smaller investment bank, ditching much of the riskier trading business which was responsible for the bulk of its losses.
In a joint letter to shareholders, chairman Axel Weber and chief executive Mr Ermotti said: "We will no longer operate to any significant extent in businesses where risk-adjusted returns cannot meet their cost of capital."
UBS announced its restructuring plans as it reported its results for the third quarter of the year.
The bank reported a net loss of 2.17bn Swiss francs for the July to September period, compared with a profit of 1.02bn Swiss francs a year earlier. The loss was mainly due to an impairment charge of 3.1bn Swiss francs that UBS is taking to cover the cost of the changes to its investment bank.
UBS was one of the banks hardest hit during the global financial crisis.
Then last year, it lost a further 2bn Swiss francs due to the activities of Kweku Adoboli, an alleged rogue trader.
This prompted the-then chief executive Oswald Gruebel to resign. Mr Adoboli is currently on trial for fraud and false accounting. He denies the charges.
UBS cuts 10,000 jobs as it slims down investment bank arm
UBS plans to become a much smaller, more focussed bank Continue reading the main story
Related Stories
Swiss bank UBS has announced it is cutting 10,000 jobs worldwide as it slims down its investment banking activities.
The jobs will go over the next three years, and amount to 16% of its current workforce of 64,000.
UBS lost 39bn Swiss francs (£26bn; $42bn) during the financial crisis and had to be bailed out by the Swiss authorities.
The cuts are aimed at saving 3.4bn Swiss francs.
UBS chief executive Sergio Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.
"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect."
Risk averse
Zurich-based UBS will focus on its private bank and a smaller investment bank, ditching much of the riskier trading business which was responsible for the bulk of its losses.
In a joint letter to shareholders, chairman Axel Weber and chief executive Mr Ermotti said: "We will no longer operate to any significant extent in businesses where risk-adjusted returns cannot meet their cost of capital."
UBS announced its restructuring plans as it reported its results for the third quarter of the year.
The bank reported a net loss of 2.17bn Swiss francs for the July to September period, compared with a profit of 1.02bn Swiss francs a year earlier. The loss was mainly due to an impairment charge of 3.1bn Swiss francs that UBS is taking to cover the cost of the changes to its investment bank.
UBS was one of the banks hardest hit during the global financial crisis.
Then last year, it lost a further 2bn Swiss francs due to the activities of Kweku Adoboli, an alleged rogue trader.
This prompted the-then chief executive Oswald Gruebel to resign. Mr Adoboli is currently on trial for fraud and false accounting. He denies the charges.
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Re: Bl***y Banks Again
Panda Tue 30 Oct - 8:59
Occupy protesters were right, says Bank of England official
The anti-capitalist protesters who occupied St Paul’s Cathedral were both morally and intellectually right, a senior Bank of England official said last night.
Members of the movement occupied the grounds of St Paul’s and remained camped there for more than three months until police evicted them in February last year Photo: AFP
By James Kirkup, Deputy Political Editor
10:29PM GMT 29 Oct 2012
161 Comments Andrew Haldane, a member of the Bank’s financial policy committee, said the Occupy movement was correct in its attack on the international financial system.
The Occupy movement sprang up last year and staged significant demonstrations in both the City of London and New York, protesting about the unequal distribution of wealth and the influence of the financial services industry. Members of the movement occupied the grounds of St Paul’s and remained camped there for more than three months until police evicted them in February last year.
“Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason; they are right,” Mr Haldane said last night. Mr Haldane, the Bank’s executive director for financial stability, was speaking to Occupy Economics, an offshoot of the Occupy movement, at an event in central London.
In a speech entitled Socially Useful Banking, he said the protesters had helped bring about a “reformation” in financial services and the way they are regulated.
Partly because of the protests, he suggested, both bank executives and policymakers were persuaded that banks must behave in a more moral way, and take greater account of inequality in wider society.
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“Occupy’s voice has been both loud and persuasive and policymakers have listened and are acting,” he said. “In fact, I want to argue that we are in the early stages of a reformation of finance, a reformation which Occupy has helped stir.”
The protesters had been right about bankers’ behaviour and the consequences of extremely high salaries and bonuses in the financial sector and other industries, he said.
“I do not just mean right in a moral sense,” he added.
“It is the analytical, every bit as much as the moral, ground that Occupy has taken. For the hard-headed facts suggest that, at the heart of the global financial crisis, were — and are — problems of deep and rising inequality.”
Mr Haldane concluded by telling the activists that they had helped bring about nothing less than a new financial order.
“If I am right and a new leaf is being turned, then Occupy will have played a key role in this fledgling financial reformation,” he said.
“You have put the arguments. You have helped win the debate.”
In the text of his speech distributed by the Bank last night, Mr Haldane made no reference to the techniques employed by the Occupy protesters.
The occupation of St Paul’s last year was controversial, and led to claims that the protesters were despoiling the cathedral’s grounds.
The protest ended after the Corporation of London won a legal order allowing the activists to be evicted.
Earlier this month, members of the group marked the first anniversary of the St Paul’s protest by entering the cathedral during a service and chaining themselves to the pulpit.
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Re: Bl***y Banks Again
Panda Tue 30 Oct - 18:44
UBS bankers in London head for the pub after being turned away at office door
UBS bankers in London were turned away from their offices on Tuesday and handed a letter putting them on "special leave", just hours after the Swiss bank unveiled a radical restructuring to axe 10,000 jobs.
Bankers at UBS's London office were unable to get into the building on Tuesday.
By Jonathan Russell, and Nik Simon
6:38PM GMT 30 Oct 2012
130 Comments
It was only when the UBS bankers had their passes refused that they realised they could be out of a job. Instead of being allowed into the bank’s City headquarters the traders were whisked to special offices on the fourth floor where they were handed an envelope containing details of the redundancy process.
“It was like a scene out of the Village of the Damned up there,” said one of the bankers.
“They said we would be getting two weeks paid leave and then we will be told what is to happen. I expect we’ll just get a call from human resources or lawyers telling us how much we are worth. We won’t be able to talk to our bosses.”
Turned away from their offices, the bankers congregated in The Railway Tavern, one of the only pubs in the area to open at 8am.
“We were banging on the door,” said one. “Today is for drinking, tomorrow is for thinking about our careers,” added another.
UBS bankers in London were turned away from their offices on Tuesday and handed a letter putting them on "special leave", just hours after the Swiss bank unveiled a radical restructuring to axe 10,000 jobs.
Bankers at UBS's London office were unable to get into the building on Tuesday.
By Jonathan Russell, and Nik Simon
6:38PM GMT 30 Oct 2012
130 Comments It was only when the UBS bankers had their passes refused that they realised they could be out of a job. Instead of being allowed into the bank’s City headquarters the traders were whisked to special offices on the fourth floor where they were handed an envelope containing details of the redundancy process.
“It was like a scene out of the Village of the Damned up there,” said one of the bankers.
“They said we would be getting two weeks paid leave and then we will be told what is to happen. I expect we’ll just get a call from human resources or lawyers telling us how much we are worth. We won’t be able to talk to our bosses.”
Turned away from their offices, the bankers congregated in The Railway Tavern, one of the only pubs in the area to open at 8am.
“We were banging on the door,” said one. “Today is for drinking, tomorrow is for thinking about our careers,” added another.
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Re: Bl***y Banks Again
Panda Tue 30 Oct - 20:33
The Bank workers are now saying UBS stands for You Been Sacked. It is mostly the Investment banking side which is being reduced. UBS lost a lot of money and also suffered the rogue Trader who cost them $2 billion. Many Banks are also facing heavy fines over the LIBOR crisis and maybe all this will combine to make Banks more circumspect and behave like Banks instead of gamblers with other peoples money.
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Re: Bl***y Banks Again
Panda Wed 31 Oct - 9:08
UBS Cuts Thousands Of UK Jobs Amid Restructuring
Layoffs in London are confirmed as Swiss bank cuts 10,000 jobs worldwide amid efforts to shrink its investment operations.
6:45pm UK, Tuesday 30 October 2012
Video: London 'To Bear Brunt' Of UBS Cuts
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Number employed
CEBR
Graph: City Jobs Continue To Fall
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Switzerland's biggest bank announced the plans as part of its third-quarter results, which revealed a loss of 2.2 billion Swiss francs (£1.43bn) compared to a profit of 1.02 billion (£0.67bn) in the same period last year.
It said the result for the July-September period was damaged by a one-off charge of 3.1 billion Swiss francs (£2bn) linked to the restructuring of its investment banking division and a debt-related charge of 863 million (£574m).
Chief Executive Sergio Ermotti said the investment unit, which has been hit by a series of costly blunders in recent years, would "continue to be a significant global player in its core businesses" but there would be "a significant acceleration" in its transformation.
The move will see the lender and wealth manager focus on its private bank and a smaller investment bank, ditching much of the trading business that cost it $50bn (£30bn) in the financial crisis and which had been "rendered uneconomical by changes in regulation and market developments".
UBS wants to concentrate on its traditional strengths in advisory, research, equities, foreign exchange and precious metals.
Of the total job cuts, which represent 15% of the workforce, 2,500 positions would be lost in Switzerland while the rest would be felt in the UK and US.
A UBS source told Sky News there was currently no confirmed figure for UK losses but said it would be fair to assume it would be around two thousand.
Dozens of traders in the City were told to go home following the announcement.
Mr Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.
"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect.
"Throughout the process we will ensure that our people will be supported and treated with care."
UBS shares were trading 6% higher in early trading in Zurich as investors welcomed the transformation plan.
Layoffs in London are confirmed as Swiss bank cuts 10,000 jobs worldwide amid efforts to shrink its investment operations.
6:45pm UK, Tuesday 30 October 2012
Video: London 'To Bear Brunt' Of UBS Cuts
Enlarge
The number of jobs in London's financial service sector
over the last ten years
over the last ten years
Number employed
2002
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
230,000
256,000
282,000
308,000
334,000
360,000
FusionCharts
CEBR
Graph: City Jobs Continue To Fall
Enlarge
that it is cutting 10,000 jobs as it looks to drastically shrink its ailing investment bank, which has a large presence in London.
Switzerland's biggest bank announced the plans as part of its third-quarter results, which revealed a loss of 2.2 billion Swiss francs (£1.43bn) compared to a profit of 1.02 billion (£0.67bn) in the same period last year.
It said the result for the July-September period was damaged by a one-off charge of 3.1 billion Swiss francs (£2bn) linked to the restructuring of its investment banking division and a debt-related charge of 863 million (£574m).
Chief Executive Sergio Ermotti said the investment unit, which has been hit by a series of costly blunders in recent years, would "continue to be a significant global player in its core businesses" but there would be "a significant acceleration" in its transformation.
The move will see the lender and wealth manager focus on its private bank and a smaller investment bank, ditching much of the trading business that cost it $50bn (£30bn) in the financial crisis and which had been "rendered uneconomical by changes in regulation and market developments".
UBS wants to concentrate on its traditional strengths in advisory, research, equities, foreign exchange and precious metals.
Of the total job cuts, which represent 15% of the workforce, 2,500 positions would be lost in Switzerland while the rest would be felt in the UK and US.
A UBS source told Sky News there was currently no confirmed figure for UK losses but said it would be fair to assume it would be around two thousand.
Dozens of traders in the City were told to go home following the announcement.
Mr Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.
"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect.
"Throughout the process we will ensure that our people will be supported and treated with care."
UBS shares were trading 6% higher in early trading in Zurich as investors welcomed the transformation plan.
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Barclays told to pay $470m (£293) in fines
Panda Thu 1 Nov - 7:49
Barclays told to pay $470m for electricity market manipulation
Barclays has been ordered to pay a $470m (£293m) in fines and other penalties by the US energy regulatory after being found to have manipulated the American electricity market.
Four Barclays traders were named by the authorities and fined a total of $18m for taking part in the alleged scheme
By Harry Wilson
11:34PM GMT 31 Oct 2012
32 Comments
The US Federal Energy Regulatory Commission (FERC) has provisionally fined Barclays a total of $435m and ordered the bank to repay $34.9m in "unjust profits" as it accused the lender of engaging in a "coordinated scheme to manipulate trading at four electricity trading points in the Western United States".
Four Barclays traders were named by the authorities and fined a total of $18m for taking part in the alleged scheme.
Scott Connelly, managing director of North American power at Barclays, who was described by the regulator as the "leader of the manipulative scheme" and its "highest paid member", was hit with the largest fine and provisionally ordered to pay $15m. Three other traders, named as Daniel Brin, Karen Levine and Ryan Smith, were each fined $1m.
Reporting a third-quarter pre-tax loss on Wednesday of £47m, Barclays warned that it was expecting a fine from the energy regulatory, but added that it intended to fight the allegations "vigorously".
The fines follow an investigation by FERC officials into electricity market trading by Barclays between November 2006 and December 2008.
In one email cited by the regulator, Mr Smith described how he “f***ed with the Palo market,” and “propped up the palo index". He wrote: “Gonna try to crap on the NP light and it should drive the SP light lower.”
FERC's report claims that over 655 trading days, Barclays' alleged manipulation of the electricity market cost other firms $139.3m, as traders on its "West power desk" built up large positions in physical power indices, which it would then use to raise or lower an index according to separate floating rate positions the traders had amassed.
The energy regulator's provisional findings came as Barclays revealed it was facing a corruption investigation in the US related to a 2008 £4.5bn investment in the bank by Middle Eastern investors.
The US Department of Justice and the US Securities and Exchange Commission are looking into the deal to see whether it breached anti-corruption laws.
The investigation comes just months after Barclays admitted it had attempted to manipulate Libor. The Libor scandal has already cost the bank £290m in fines and led to the resignation of its chairman, Marcus Agius, as well as chief executive, Bob Diamond, and chief operating officer, Jerry del Missier.
Barclays new chief executive, Antony Jenkins, oversaw his first set of results since taking over from Mr Diamond in August.
However, the results were overshadowed by the new investigations.
Asked about the new US corruption probe, Mr Jenkins said the American authorities had become "interested" in the case after the Serious Fraud Office and the Financial Services Authority said they were looking into the deal.
Libor report suggests Lord Turner not right man for BOE
Bob Diamond foregoes £20m bonus
Barclays has been ordered to pay a $470m (£293m) in fines and other penalties by the US energy regulatory after being found to have manipulated the American electricity market.
Four Barclays traders were named by the authorities and fined a total of $18m for taking part in the alleged scheme
By Harry Wilson
11:34PM GMT 31 Oct 2012
32 Comments The US Federal Energy Regulatory Commission (FERC) has provisionally fined Barclays a total of $435m and ordered the bank to repay $34.9m in "unjust profits" as it accused the lender of engaging in a "coordinated scheme to manipulate trading at four electricity trading points in the Western United States".
Four Barclays traders were named by the authorities and fined a total of $18m for taking part in the alleged scheme.
Scott Connelly, managing director of North American power at Barclays, who was described by the regulator as the "leader of the manipulative scheme" and its "highest paid member", was hit with the largest fine and provisionally ordered to pay $15m. Three other traders, named as Daniel Brin, Karen Levine and Ryan Smith, were each fined $1m.
Reporting a third-quarter pre-tax loss on Wednesday of £47m, Barclays warned that it was expecting a fine from the energy regulatory, but added that it intended to fight the allegations "vigorously".
The fines follow an investigation by FERC officials into electricity market trading by Barclays between November 2006 and December 2008.
In one email cited by the regulator, Mr Smith described how he “f***ed with the Palo market,” and “propped up the palo index". He wrote: “Gonna try to crap on the NP light and it should drive the SP light lower.”
FERC's report claims that over 655 trading days, Barclays' alleged manipulation of the electricity market cost other firms $139.3m, as traders on its "West power desk" built up large positions in physical power indices, which it would then use to raise or lower an index according to separate floating rate positions the traders had amassed.
The energy regulator's provisional findings came as Barclays revealed it was facing a corruption investigation in the US related to a 2008 £4.5bn investment in the bank by Middle Eastern investors.
The US Department of Justice and the US Securities and Exchange Commission are looking into the deal to see whether it breached anti-corruption laws.
The investigation comes just months after Barclays admitted it had attempted to manipulate Libor. The Libor scandal has already cost the bank £290m in fines and led to the resignation of its chairman, Marcus Agius, as well as chief executive, Bob Diamond, and chief operating officer, Jerry del Missier.
Barclays new chief executive, Antony Jenkins, oversaw his first set of results since taking over from Mr Diamond in August.
However, the results were overshadowed by the new investigations.
Asked about the new US corruption probe, Mr Jenkins said the American authorities had become "interested" in the case after the Serious Fraud Office and the Financial Services Authority said they were looking into the deal.
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Libor report suggests Lord Turner not right man for BOE
Bob Diamond foregoes £20m bonus
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Re: Bl***y Banks Again
Panda Thu 1 Nov - 22:08
This will interest you in light of all the Bank Scandals .....Muslims are buying up lots of properties from Sharia Banks and British Banks could learn from it.
The Sharia Bank pays for the Property after the buyer pays a Deposit. There is no Mortgage, but the buyer of the property pays rent every week and a bit over until the House is paid for when the title deeds are made over to him.
The Sharia Bank pays for the Property after the buyer pays a Deposit. There is no Mortgage, but the buyer of the property pays rent every week and a bit over until the House is paid for when the title deeds are made over to him.
Last edited by Panda on Fri 2 Nov - 8:10; edited 1 time in total
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Re: Bl***y Banks Again
Panda Fri 2 Nov - 8:09
RBS Confirms £1.2bn Loss After PPI Hit
Taxpayer-backed RBS makes a loss as it sets asides millions more to compensate those hit by mis-selling and its IT glitch.
7:34am UK, Friday 02 November 2012
The bank's IT meltdown in the summer has cost it £175m to date
Taxpayer-backed RBS makes a loss as it sets asides millions more to compensate those hit by mis-selling and its IT glitch.
7:34am UK, Friday 02 November 2012
The bank's IT meltdown in the summer has cost it £175m to date
RBS has confirmed it made a loss before tax of £1.2bn in the third quarter, compared with a profit of £2bn for the same period last year.
As revealed by Sky's City Editor, the bank has set aside a further £400m for the mis-selling of payment protection insurance (PPI), meaning the scandal has cost it £1.7bn to date.
The 82%-taxpayer owned bank also said it had taken a further hit of £50m to cover costs relating to the summer's massive IT failure - which saw many RBS, NatWest and Ulster Bank customers locked out of their accounts.
This takes its total bill for the meltdown to £175m.
RBS also said it expects to enter negotiations to settle investigations into Libor rate-fixing at the bank, incurring some financial penalties.
But the group's core banking operations - if the mis-selling and IT charges and stripped out - performed well, with operating profit for the three months hitting £1bn.
A decline in charges on bad debt helped boost performance at the bank, which said its restructuring would be complete in the next 18 months.
But the group's chief executive, Stephen Hester, said RBS needed to focus on improving its reputation.
"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully," he said in a statement.
"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank’s safety and soundness has advanced so well."
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Re: Bl***y Banks Again
Panda Fri 2 Nov - 9:47
RBS says it will pay the LIBOR fine and hopes to settle fairly soon. However, there is still the Singapore problem to contend with, plus there is massive litigation in the pipeline from Town councils, Investment Managers etc which the Banks have to face . RBS has lost money and it's share price has dropped. It is thought the Government will sell RBS to recover some of the money it paid to save the Bank.
RBS has shown better than expected profits......more massaging the figures????
RBS has shown better than expected profits......more massaging the figures????
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Re: Bl***y Banks Again
Panda Fri 2 Nov - 17:19
Deutsche Bank Faces Top Surcharge as FSB Shuffles Tiers
By Jim Brunsden and Michael J. Moore - Nov 2, 2012 11:02 AM GMT
Citigroup Inc. (C), HSBC Holdings Plc (HSBA) and JPMorgan Chase & Co. (JPM)join Deutsche Bank as firms that will be targeted for a capital surcharge of 2.5 percent, according to an updated list published yesterday by the Financial Stability Board. The change means Bank of America already exceeds requirements, while Deutsche Bank would be more than 2 percentage points below the new minimum of 9.5 percent.
Enlarge image
Deutsche Bank Faces Top Surcharge as FSB Shuffles Capital Tiers
Hannelore Foerster/Bloomberg
The Deutsche Bank AG company logo is seen displayed outside their headquarters in Frankfurt.
The Deutsche Bank AG company logo is seen displayed outside their headquarters in Frankfurt. Photographer: Hannelore Foerster/Bloomberg
1:33
Nov. 1 (Bloomberg) -- Citigroup, Deutsche Bank, HSBC and JPMorgan may be targeted by the Group of 20 nations for top capital surcharges of 2.5 percentage points, according to an updated list published by global regulators. The German lender was moved up from a lower tier by the Financial Stability Board. Michael McKee reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)
“That limits earnings potential for Citigroup, JPMorgan and Deutsche Bank compared to Bank of America, all other things being equal, so it’s certainly a competitive advantage for them,” said David Kass, a professor at the University ofMaryland’s Robert H. Smith School of Business.
The capital surcharges for systemic banks, set in half-percentage-point increments ranging from 1 percent to 2.5 percent, come on top of agreements by the Basel Committee on Banking Supervision to more than triple the core reserves they must hold against possible losses. The extra requirements are calculated against banks’ interconnectedness, size, complexity, global reach, and the ability of other firms to take over their functions if they fail.
RBS, Dexia
Royal Bank of Scotland Plc will be subject to a 1.5 percent buffer, down 1 percentage point from last year’s list. Three banks -- Dexia SA (DEXB), Lloyds Banking Group Plc (LLOY) and Commerzbank AG - - were removed from the list, the FSB said. Standard Chartered Plc (STAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), which weren’t included in 2011, were added to the lowest surcharge group.
Dexia is being broken up by the French and Belgian governments after losing access to unsecured funding. The other two have seen a “decline in their global systemic importance,”the FSB said. The quality of data it used in determining the list “improved considerably” from last year, the group said.
“It would have been more helpful if FSB explained why some banks fell off the list and why some joined or moved around buckets -- does this mean the framework was wrong last year?”said Barbara Matthews, managing director of BCM International Regulatory Analytics LLC, a Washington-based consulting firm.“This is a classic case of informational asymmetry between banks, regulators and markets that perpetuates moral hazard.”
Capital Levels
JPMorgan Chief Executive Officer Jamie Dimon last year predicted a “race to the top” as lenders tried to meet requirements well before the deadline and said his company would win business because of its higher capital levels.
Investment banks that aren’t in the top group will have to see if clients care whether they have as much capital as Citigroup and JPMorgan, said Christopher Wheeler, a London-based analyst at Mediobanca SpA.
“The guys at the top are stuck, and the guys below are scratching their heads and saying, ‘Do we have to go up and be in line to be competitive,’” Wheeler said. “If your clients don’t worry, you’re probably fine” to hold lower equity capital, he said.
Barclays Plc (BARC) and BNP Paribas SA (BNP) may face surcharges of 2 percent. BNP, based in Paris, and Edinburgh-based RBS were previously targeted for the highest 2.5 percent surcharges.Charlotte, North Carolina-based Bank of America, the second-largest U.S. lender, now faces capital requirements a full point lower than JPMorgan and Citigroup, the first- and third-biggest.
‘Head-Scratcher’
“Bank of America is a head-scratcher,” said Christopher Kotowski, an Oppenheimer & Co. analyst. “How you would come to the conclusion that Bank of America is less of a SIFI and less risky than JPMorgan and Citibank is just a real puzzler.”
Bank of America said last month that it had an estimated Basel III common equity ratio of 8.97 percent, above the 8.5 percent it would need with the surcharge in yesterday’s list. Still, U.S. regulators may be cautious in letting the lender return capital to shareholders in the form of dividends or buybacks, Kotowski said.
Deutsche Bank said earlier this week that it plans to have a Basel III ratio of 7.2 percent at the end of this year, below the 9.5 percent it would need with a 2.5 percent surcharge. The lender set a target of more than 10 percent by March 31, 2015.
“This ups the ante for Deutsche Bank,” Wheeler said.“They haven’t been in a great hurry to get where they probably need to be. We’ve been rattling on about how weak their capital is.”
Deutsche Bank
Then-CEO Josef Ackermann said last year he was proud thatGermany’s biggest lender was considered the world’s most systemically important financial institution by Japanese regulators. Japan’s Financial Services Agency and central bank ranked Deutsche Bank the most important among 60 peers based on the impact their failure would have on the global financial system, the Mainichi newspaper reported in December 2010.
Some banks in the European Union already face requirements to hold core reserves equivalent to 9 percent of their risk-weighted assets, after sovereign-debt writedowns, under plans adopted by EU regulators in response to the bloc’s fiscal crisis.
9 Percent
The definition of what banks can count as capital to meet the international surcharges is stricter than that used by the EU, which allows lenders to use some contingent convertible instruments to meet the 9 percent threshold.
Standard Chartered already exceeds the capital levels it needs to meet the requirements, said Doris Fan, a Hong Kong-based spokeswoman for the bank. “Our inclusion in the list does not change the way we run the bank or think about our capital structure,” she said in an e-mail.
Large international lenders would have faced a 374.1 billion-euro shortfall ($483.8 billion) in the capital needed to meet the Basel capital rules had they been in force at the end of 2011, according to data published by the Basel committee in September. The figure factors in the surcharges for globally systemic banks.
Other changes included Mitsubishi UFJ Financial Group Inc. (8306), which moved from 1 percent to 1.5 percent, pushing its total requirement to 8.5 percent. Credit Agricole SA (ACA) moved down half a point to 1 percent.
“Our global scale and activities probably prompted the adjustment,” Yuji Okumura, a spokesman for Tokyo-based Mitsubishi UFJ, Japan’s biggest publicly traded bank, said by phone today. He said the lender already had an estimated Basel III common equity ratio of at least 9 percent as of June 30.
Japan Megabanks
Japanese Financial Services Minister Ikko Nakatsuka told reporters he’s not concerned that Mitsubishi UFJ’s proposed capital surcharge was raised. Sumitomo Mitsui Financial Group Inc. (8316) and Mizuho Financial Group Inc. (8411), the country’s other two so-called megabanks, remain on the list with targeted surcharges of 1 percent.
The capital buffers are scheduled to be phased in beginning Jan. 1, 2016, the FSB has said. The updated list was based on banks’ data at the end of 2011, the group said. The FSB said last year regulators would update the list annually, with each revision to be published in November. The 2014 version will be the first to be applied.
“A lot of work remains to be done on determining what risk weightings these banks will ultimately be subject to,” Richard Reid, research director for the International Centre for Financial Regulation in London, said in an e-mail. It’s also unclear how capital rules will “be applied in the coming years.”
Shrink Further
Regulators have said the list may shrink further as lenders take steps to reduce their systemic importance and ensure they can be wound down if they fail.
“There should come a day” when the list is blank, Stephen Cecchetti, head of the monetary and economic department at theBank for International Settlements, said in an October speech.“That day will come when either the institutions change, the rules change, or both.”
The FSB published the updated list ahead of a meeting of Group of 20 finance ministers starting Nov. 4. The FSB brings together central bankers, regulators and government officials from G-20 nations to coordinate financial rule-making.
Others included on the list are Bank of New York Mellon Corp., Credit Suisse Group AG (CSGN), Goldman Sachs Group Inc., Morgan Stanley (MS), UBS AG (UBSN), Bank of China Ltd., Groupe BPCE, ING Groep NV (INGA),Nordea Bank AB (NDA), Banco Santander SA (SAN), Societe Generale SA (GLE), State Street Corp., Unicredit SpA (UCG), and Wells Fargo & Co.
“Citi’s estimated Tier 1 common ratio of 8.6 percent under Basel 3 at the end of the third quarter is among the highest in the industry,” said Shannon Bell, a spokeswoman for New York-based Citigroup. “We expect to continue to generate capital through earnings and divestitures of non-core assets.”
Jerry Dubrowski, a Bank of America spokesman, JPMorgan’s Mark Kornblau and BNP’s Cesaltine Gregorio all declined to comment on the FSB report. Duncan King, a spokesman for Deutsche Bank, and Mary Guzman, a Credit Agricole spokeswoman in New York, didn’t immediately respond to e-mailed requests for comment, as did a spokesman for Lloyds.
·
By Jim Brunsden and Michael J. Moore - Nov 2, 2012 11:02 AM GMT
- Bank AG (DBK) would be required to hold more capital and Bank of America Corp.’s burden stands to be reduced as global regulators shuffled the competitive balance among the world’s biggest banks.
Citigroup Inc. (C), HSBC Holdings Plc (HSBA) and JPMorgan Chase & Co. (JPM)join Deutsche Bank as firms that will be targeted for a capital surcharge of 2.5 percent, according to an updated list published yesterday by the Financial Stability Board. The change means Bank of America already exceeds requirements, while Deutsche Bank would be more than 2 percentage points below the new minimum of 9.5 percent.
Enlarge image
Deutsche Bank Faces Top Surcharge as FSB Shuffles Capital Tiers
Hannelore Foerster/Bloomberg
The Deutsche Bank AG company logo is seen displayed outside their headquarters in Frankfurt.
The Deutsche Bank AG company logo is seen displayed outside their headquarters in Frankfurt. Photographer: Hannelore Foerster/Bloomberg
1:33
Nov. 1 (Bloomberg) -- Citigroup, Deutsche Bank, HSBC and JPMorgan may be targeted by the Group of 20 nations for top capital surcharges of 2.5 percentage points, according to an updated list published by global regulators. The German lender was moved up from a lower tier by the Financial Stability Board. Michael McKee reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)
“That limits earnings potential for Citigroup, JPMorgan and Deutsche Bank compared to Bank of America, all other things being equal, so it’s certainly a competitive advantage for them,” said David Kass, a professor at the University ofMaryland’s Robert H. Smith School of Business.
The capital surcharges for systemic banks, set in half-percentage-point increments ranging from 1 percent to 2.5 percent, come on top of agreements by the Basel Committee on Banking Supervision to more than triple the core reserves they must hold against possible losses. The extra requirements are calculated against banks’ interconnectedness, size, complexity, global reach, and the ability of other firms to take over their functions if they fail.
RBS, Dexia
Royal Bank of Scotland Plc will be subject to a 1.5 percent buffer, down 1 percentage point from last year’s list. Three banks -- Dexia SA (DEXB), Lloyds Banking Group Plc (LLOY) and Commerzbank AG - - were removed from the list, the FSB said. Standard Chartered Plc (STAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), which weren’t included in 2011, were added to the lowest surcharge group.
Dexia is being broken up by the French and Belgian governments after losing access to unsecured funding. The other two have seen a “decline in their global systemic importance,”the FSB said. The quality of data it used in determining the list “improved considerably” from last year, the group said.
“It would have been more helpful if FSB explained why some banks fell off the list and why some joined or moved around buckets -- does this mean the framework was wrong last year?”said Barbara Matthews, managing director of BCM International Regulatory Analytics LLC, a Washington-based consulting firm.“This is a classic case of informational asymmetry between banks, regulators and markets that perpetuates moral hazard.”
Capital Levels
JPMorgan Chief Executive Officer Jamie Dimon last year predicted a “race to the top” as lenders tried to meet requirements well before the deadline and said his company would win business because of its higher capital levels.
Investment banks that aren’t in the top group will have to see if clients care whether they have as much capital as Citigroup and JPMorgan, said Christopher Wheeler, a London-based analyst at Mediobanca SpA.
“The guys at the top are stuck, and the guys below are scratching their heads and saying, ‘Do we have to go up and be in line to be competitive,’” Wheeler said. “If your clients don’t worry, you’re probably fine” to hold lower equity capital, he said.
Barclays Plc (BARC) and BNP Paribas SA (BNP) may face surcharges of 2 percent. BNP, based in Paris, and Edinburgh-based RBS were previously targeted for the highest 2.5 percent surcharges.Charlotte, North Carolina-based Bank of America, the second-largest U.S. lender, now faces capital requirements a full point lower than JPMorgan and Citigroup, the first- and third-biggest.
‘Head-Scratcher’
“Bank of America is a head-scratcher,” said Christopher Kotowski, an Oppenheimer & Co. analyst. “How you would come to the conclusion that Bank of America is less of a SIFI and less risky than JPMorgan and Citibank is just a real puzzler.”
Bank of America said last month that it had an estimated Basel III common equity ratio of 8.97 percent, above the 8.5 percent it would need with the surcharge in yesterday’s list. Still, U.S. regulators may be cautious in letting the lender return capital to shareholders in the form of dividends or buybacks, Kotowski said.
Deutsche Bank said earlier this week that it plans to have a Basel III ratio of 7.2 percent at the end of this year, below the 9.5 percent it would need with a 2.5 percent surcharge. The lender set a target of more than 10 percent by March 31, 2015.
“This ups the ante for Deutsche Bank,” Wheeler said.“They haven’t been in a great hurry to get where they probably need to be. We’ve been rattling on about how weak their capital is.”
Deutsche Bank
Then-CEO Josef Ackermann said last year he was proud thatGermany’s biggest lender was considered the world’s most systemically important financial institution by Japanese regulators. Japan’s Financial Services Agency and central bank ranked Deutsche Bank the most important among 60 peers based on the impact their failure would have on the global financial system, the Mainichi newspaper reported in December 2010.
Some banks in the European Union already face requirements to hold core reserves equivalent to 9 percent of their risk-weighted assets, after sovereign-debt writedowns, under plans adopted by EU regulators in response to the bloc’s fiscal crisis.
9 Percent
The definition of what banks can count as capital to meet the international surcharges is stricter than that used by the EU, which allows lenders to use some contingent convertible instruments to meet the 9 percent threshold.
Standard Chartered already exceeds the capital levels it needs to meet the requirements, said Doris Fan, a Hong Kong-based spokeswoman for the bank. “Our inclusion in the list does not change the way we run the bank or think about our capital structure,” she said in an e-mail.
Large international lenders would have faced a 374.1 billion-euro shortfall ($483.8 billion) in the capital needed to meet the Basel capital rules had they been in force at the end of 2011, according to data published by the Basel committee in September. The figure factors in the surcharges for globally systemic banks.
Other changes included Mitsubishi UFJ Financial Group Inc. (8306), which moved from 1 percent to 1.5 percent, pushing its total requirement to 8.5 percent. Credit Agricole SA (ACA) moved down half a point to 1 percent.
“Our global scale and activities probably prompted the adjustment,” Yuji Okumura, a spokesman for Tokyo-based Mitsubishi UFJ, Japan’s biggest publicly traded bank, said by phone today. He said the lender already had an estimated Basel III common equity ratio of at least 9 percent as of June 30.
Japan Megabanks
Japanese Financial Services Minister Ikko Nakatsuka told reporters he’s not concerned that Mitsubishi UFJ’s proposed capital surcharge was raised. Sumitomo Mitsui Financial Group Inc. (8316) and Mizuho Financial Group Inc. (8411), the country’s other two so-called megabanks, remain on the list with targeted surcharges of 1 percent.
The capital buffers are scheduled to be phased in beginning Jan. 1, 2016, the FSB has said. The updated list was based on banks’ data at the end of 2011, the group said. The FSB said last year regulators would update the list annually, with each revision to be published in November. The 2014 version will be the first to be applied.
“A lot of work remains to be done on determining what risk weightings these banks will ultimately be subject to,” Richard Reid, research director for the International Centre for Financial Regulation in London, said in an e-mail. It’s also unclear how capital rules will “be applied in the coming years.”
Shrink Further
Regulators have said the list may shrink further as lenders take steps to reduce their systemic importance and ensure they can be wound down if they fail.
“There should come a day” when the list is blank, Stephen Cecchetti, head of the monetary and economic department at theBank for International Settlements, said in an October speech.“That day will come when either the institutions change, the rules change, or both.”
The FSB published the updated list ahead of a meeting of Group of 20 finance ministers starting Nov. 4. The FSB brings together central bankers, regulators and government officials from G-20 nations to coordinate financial rule-making.
Others included on the list are Bank of New York Mellon Corp., Credit Suisse Group AG (CSGN), Goldman Sachs Group Inc., Morgan Stanley (MS), UBS AG (UBSN), Bank of China Ltd., Groupe BPCE, ING Groep NV (INGA),Nordea Bank AB (NDA), Banco Santander SA (SAN), Societe Generale SA (GLE), State Street Corp., Unicredit SpA (UCG), and Wells Fargo & Co.
“Citi’s estimated Tier 1 common ratio of 8.6 percent under Basel 3 at the end of the third quarter is among the highest in the industry,” said Shannon Bell, a spokeswoman for New York-based Citigroup. “We expect to continue to generate capital through earnings and divestitures of non-core assets.”
Jerry Dubrowski, a Bank of America spokesman, JPMorgan’s Mark Kornblau and BNP’s Cesaltine Gregorio all declined to comment on the FSB report. Duncan King, a spokesman for Deutsche Bank, and Mary Guzman, a Credit Agricole spokeswoman in New York, didn’t immediately respond to e-mailed requests for comment, as did a spokesman for Lloyds.
·
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Re: Bl***y Banks Again
Badboy Fri 2 Nov - 21:08
BARCLAYS TO BE FINED OVER ELECTRICITY PRICE FIXING IN USA.
LLOYDS BANK ETC TO INCREASE PPI MISSSELLING PROVISION,
IT WILL TAKE FOR EVER AND A DAY FOR ALL BANKS SCANDAL TO BE UNCOVERED.
LLOYDS BANK ETC TO INCREASE PPI MISSSELLING PROVISION,
IT WILL TAKE FOR EVER AND A DAY FOR ALL BANKS SCANDAL TO BE UNCOVERED.
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Panda Sat 3 Nov - 10:35
RBS could settle Libor investigations within months
Royal Bank of Scotland could announce a multi-million pound settlement within months over allegations its staff attempted to manipulate Libor.
Stephen Hester, chief executive of RBS, said he would be 'disappointed' if the bank had not settled at least one of the Libor investigations it is facing by February Photo: Getty Images
By Harry Wilson, Banking Correspondent
6:24PM GMT 02 Nov 2012
9 Comments The state-backed lender would become the second bank since Barclays to admit involvement and is likely to face fines similar in scale to the £290m paid out by its rival in June.
Stephen Hester, chief executive, said he would be “disappointed” if the bank had not agreed a Libor settlement by the time of the bank’s full-year results in February.
“We are up for settling with each and everyone of them when they’re ready… [but] we have to dance to the tune of the relevant regulator,” said Mr Hester.
His comments came as RBS reported a £1.38bn loss for the third quarter, largely driven by a £1.5bn charged against the value of its own debt and a further £400m provision against payment protection insurance mis-selling that took the total amount set aside by the bank to compensate customers to £1.7bn.
RBS did not make any provision against the expected costs of any Libor settlements; however, it said any fines are likely to be material.
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RBS has already dismissed and suspended several staff in relation to Libor-rigging and is facing a lawsuit in Singapore from a former trader who claims interest rate manipulation was rife at the bank.
As well as Libor-rigging, RBS is also among the major banks to be taking part in a Financial Services Authority-led redress programme for victims of swap mis-selling.
RBS put aside £50m as an initial estimate of the cost of swap mis-selling in its first-half figures, and while the bank did not add to this fund on Friday, Mr Hester said it was possible the lender may have to make a “significantly bigger provision” once the results of a pilot compensation scheme are revealed later this month.
In total, Britain’s high street banks have set aside about £630m against swap mis-selling, a figure that is dwarfed by the just over £11bn currently expected to be paid out in PPI compensation.
An increase in swap costs would be a blow to RBS as it spends millions upgrading its IT systems in the wake of this summer’s computer "glitch", which left millions of the bank’s customers without access to their money for more than a week.
Most recently, RBS was hit by the withdrawal of Santander UK from a deal to buy 316 branches it is being forced to sell as a result of an European Commission state-aid ruling. Mr Hester insisted there were no plans to ask the EC to reverse its decision and that RBS was looking to relaunch the sale of the branches.
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Libor Scandal
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QE 'counterproductive', Charles Goodhart warns
More money printing may not just be ineffective but “counterproductive”, a former Bank of England ratesetter has warned ahead of next week’s key decision.
The Bank of England has admitted that QE caused pension scheme deficits to balloon Photo: Alamy
By Philip Aldrick, Economics Editor
4:22PM GMT 02 Nov 2012
151 Comments Charles Goodhart, a professor after whom an economic law has been named, raised his concerns about quantitative easing (QE) as Lord Turner, chairman of the Financial Services Authority, said new policies need to be devised to boost the economy.
Mr Goodhart is the most senior economist to date to warn that more QE in its current form could harm growth. Speaking at a Fathom Consulting event, he said the first £200bn round of QE was “extraordinarily effective” but that subsequent money printing, which has taken the total to £375bn, “had much less effect”.
“It is even arguable that, due to its effect on pension schemes, by the time you got to QE3 it was counterproductive,” he added.
The Bank has admitted that QE caused pension scheme deficits to balloon, which forced companies to plough money into the schemes that might otherwise have been used to invest in jobs and growth. Pensioners have also seen their incomes fall as a result of low annuity rates, impacting spending.
Mr Goodhart’s comments came as Lord Turner, a contender to be the next Governor of the Bank, said in a speech in South Africa that low rates and QE may not be enough to stave off a worse crisis. “We may need to consider innovative and unconventional combinations of policies to offset deflationary risks,” he said.
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Stopping short of Mr Goodhart’s analysis, Lord Turner said QE “may be subject to declining marginal impact” as it now “has little impact on behaviour and thus on demand”. His views reflected those of Charlie Bean, the Bank’s deputy governor, who has questioned whether QE can help boost growth in the current economic environment.
Next week, the Bank’s Monetary Policy Committee (MPC) will decide whether to relaunch QE in one of the most hotly-anticipated meetings for months. Until recently, it was expected to add another £50bn but most economists now expect the MPC to leave policy on hold.
Business lobby groups such as the British Chambers of Commerce (BCC) and pensioner groups have urged the Bank to pause QE. The BCC on Friday described QE as “misguided and counterproductive” and “should only be considered if new threats emerge to the stability of the UK banking system”.
If QE is necessary, it added, the Bank should use it to support businesses directly rather than buying gilts. It should also consider “measures other than QE”.
While welcoming the Bank’s Funding for Lending Scheme to boost credit availability, Lord Turner said: “If these measures prove insufficient we may have to consider further policy innovations, and further integration of different aspects of policy, to overcome the powerful economic headwinds created by deleveraging across the developed world economies.”
Mr Goodhart dismissed as “nonsense” suggestions that the Treasury simply cancel the £375bn of gilts bought through QE, in a stroke reducing the national debt by more than a third. He warned the policy could lead to surging inflation and higher interest rates.
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Re: Bl***y Banks Again
Badboy Sat 3 Nov - 16:30
ITS BEING SAID THAT THE PPI COMPENSATION IS BOOSTING THE ECONOMY AS PEOPLE SPEND THE COMPENSATION MONEY ON NEW CARS ETC.
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Libor Scandal Could Turn 'Ugly' As U.S. Cities Begin To Sue
The Huffington Post | By Mark Gongloff
Get updates from Mark Gongloff
Posted: 07/11/2012 4:07 pm Updated: 07/11/2012 4:07 pm
Financial Crisis, Banks, Funding For State And Local Government, Barclays Libor Scandal, Credit Derivatives, Derivatives, LIBOR, Libor Scandal, Municipal Debt, Municipalities, State And Local Governments, Business News
The news on Wednesday that cities and states are suing some of the world's largest banks over Libor manipulation shows how this scandal could blow up into one of history's biggest bank frauds.
That's because interest-rate manipulation might well have kept your town or state from hiring firefighters or teachers, from paving roads or paying for indigent care or after-school programs for your kids -- adding to the human suffering of the economic collapse these same banks caused in the first place.
If it's any consolation, the lawsuits and fines over this manipulation could potentially cost the banks -- which include not only Barclays but Bank of America, JPMorgan Chase, Citigroup, and many more -- billions of dollars.
"This could get very ugly in a hurry for some banks," Peter Tchir of TF Market Advisors wrote in a note.
And this could finally be enough to make Americans stop reacting to the Libor scandal with "a shrug," as Joe Nocera recently put it, and push them closer to believing what Robert Shapiro, founder of economic advisory firm Sonecon, calls possibly "the biggest financial fraud in history."
Would it be enough, maybe, to finally cause banks to lose the argument that regulating them too much will hurt the economy?
The New York Times wrote Wednesday that several states, towns and other municipalities are rounding up posses of lawyers to sue big banks over their manipulation of Libor, a short-term interest rate that affects borrowing costs throughout the global economy. Barclays has admitted to manipulating the rate for years, paying $450 million in penalties. Other banks are under investigation for doing the same thing. The scandal has already engulfed Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke who have been asked to testify before a Senate subcommittee about rate manipulation.
The states and cities suing the banks often bought -- from some of the same banks they're suing -- credit derivatives called interest-rate swaps. The swaps protected them when Libor rose, but hurt them when Libor fell. If these states and cities can prove the banks manipulated Libor lower, then they could have a case that the banks owe them some money.
Other potential litigants -- hedge funds, maybe -- bought derivatives that cost them money when Libor rose. Again, if they can prove that banks manipulated Libor higher, then they, too, could have a case that banks owe them money.
How much money are we talking?
Some of Wall Street's best thinkers have scoffed that such lawsuits will likely result in small potatoes, or maybe tater tots at best. It could be hard to suss out how much financial damage somebody really suffered from this, or how much any one bank -- or even more than one bank -- is responsible.
And a lot of borrowers, maybe including the same states and cities suing the banks, arguably benefited when the banks manipulated Libor lower, because it lowered their borrowing costs.
But the sheer vastness of the derivatives market makes this a potentially huge headache for the banks. There's a general estimate floating around that Libor affects about $800 trillion in notional derivatives -- that's "trillion," not "billion" or "million." Banks are not going to be on the hook for anything near that much, as the bulk of this amount is "notional" -- meaning, roughly, "not real."
What is far more likely is that people with derivatives contracts tied to Libor lost tiny percentages of that $800 trillion with some regularity because of Libor manipulation. Some municipalities in the Times story estimate Libor manipulation cost them millions of dollars -- $13 million in the case of Nassau County, New York, for example. That's the same Nassau County whose crushing long-term unemployment is the subject of an HBO documentary, "Hard Times: Lost On Long Island."
That's "millions," not "trillions." Tater tots, if you're a bank. But priceless for a municipality struggling to hire workers, build infrastructure or take care of the people being crushed by the recession and painfully slow recovery.
And there are hundreds, maybe thousands, of municipalities involved in this. A 2010 Wall Street Journal article about how states and cities were losing money on derivatives noted that in Pennsylvania alone, 107 school districts owned interest-rate derivatives during the time period banks were allegedly manipulating rates.
That's 107 school districts in one state alone losing untold millions of dollars because of lower interest rates, which may have been lower than they should have been because of Libor manipulation. That's 107 school districts in one state alone that had a harder time paying teachers, buying computers, of funding art programs.
Peter Tchir of TF Market Advisors tried in a research note this morning to arrive at what some of the big numbers might look like, if all of these potential litigants decided to up and hit the banks all at once.
If the banks were responsible for moving the three-month Libor rate by just 1/100th of a percentage point on that entire universe of $800 trillion in notional derivatives contracts, then that would be worth $20 billion, according to Tchir's calculations.
Banks are probably not going to be on the hook for derivatives worth anything close to that $800 trillion. But if banks manipulated rates by more than that 1/100th of a point, or for more than 90 days -- the term of three-month Libor -- on even smaller notional derivative amounts, then the numbers can still get big in a hurry. And that doesn't even include punitive damages. And it doesn't include the estimated $10 trillion in mortgages and other loans tied to Libor, including $275 billion worth of U.S. mortgages, according to an estimate from the Office of the Comptroller of the Currency referenced in the FT.
"That is the real exposure a bank caught 'lying' faces," Tchir writes. "If the lie was big enough and for a long enough period and anyone entitled to receive payment based on LIBOR can make the claim, the potential damage to the bank is enormous."
The Huffington Post | By Mark Gongloff
Get updates from Mark Gongloff
Posted: 07/11/2012 4:07 pm Updated: 07/11/2012 4:07 pm
Financial Crisis, Banks, Funding For State And Local Government, Barclays Libor Scandal, Credit Derivatives, Derivatives, LIBOR, Libor Scandal, Municipal Debt, Municipalities, State And Local Governments, Business News
The news on Wednesday that cities and states are suing some of the world's largest banks over Libor manipulation shows how this scandal could blow up into one of history's biggest bank frauds.
That's because interest-rate manipulation might well have kept your town or state from hiring firefighters or teachers, from paving roads or paying for indigent care or after-school programs for your kids -- adding to the human suffering of the economic collapse these same banks caused in the first place.
If it's any consolation, the lawsuits and fines over this manipulation could potentially cost the banks -- which include not only Barclays but Bank of America, JPMorgan Chase, Citigroup, and many more -- billions of dollars.
"This could get very ugly in a hurry for some banks," Peter Tchir of TF Market Advisors wrote in a note.
And this could finally be enough to make Americans stop reacting to the Libor scandal with "a shrug," as Joe Nocera recently put it, and push them closer to believing what Robert Shapiro, founder of economic advisory firm Sonecon, calls possibly "the biggest financial fraud in history."
Would it be enough, maybe, to finally cause banks to lose the argument that regulating them too much will hurt the economy?
The New York Times wrote Wednesday that several states, towns and other municipalities are rounding up posses of lawyers to sue big banks over their manipulation of Libor, a short-term interest rate that affects borrowing costs throughout the global economy. Barclays has admitted to manipulating the rate for years, paying $450 million in penalties. Other banks are under investigation for doing the same thing. The scandal has already engulfed Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke who have been asked to testify before a Senate subcommittee about rate manipulation.
The states and cities suing the banks often bought -- from some of the same banks they're suing -- credit derivatives called interest-rate swaps. The swaps protected them when Libor rose, but hurt them when Libor fell. If these states and cities can prove the banks manipulated Libor lower, then they could have a case that the banks owe them some money.
Other potential litigants -- hedge funds, maybe -- bought derivatives that cost them money when Libor rose. Again, if they can prove that banks manipulated Libor higher, then they, too, could have a case that banks owe them money.
How much money are we talking?
Some of Wall Street's best thinkers have scoffed that such lawsuits will likely result in small potatoes, or maybe tater tots at best. It could be hard to suss out how much financial damage somebody really suffered from this, or how much any one bank -- or even more than one bank -- is responsible.
And a lot of borrowers, maybe including the same states and cities suing the banks, arguably benefited when the banks manipulated Libor lower, because it lowered their borrowing costs.
But the sheer vastness of the derivatives market makes this a potentially huge headache for the banks. There's a general estimate floating around that Libor affects about $800 trillion in notional derivatives -- that's "trillion," not "billion" or "million." Banks are not going to be on the hook for anything near that much, as the bulk of this amount is "notional" -- meaning, roughly, "not real."
What is far more likely is that people with derivatives contracts tied to Libor lost tiny percentages of that $800 trillion with some regularity because of Libor manipulation. Some municipalities in the Times story estimate Libor manipulation cost them millions of dollars -- $13 million in the case of Nassau County, New York, for example. That's the same Nassau County whose crushing long-term unemployment is the subject of an HBO documentary, "Hard Times: Lost On Long Island."
That's "millions," not "trillions." Tater tots, if you're a bank. But priceless for a municipality struggling to hire workers, build infrastructure or take care of the people being crushed by the recession and painfully slow recovery.
And there are hundreds, maybe thousands, of municipalities involved in this. A 2010 Wall Street Journal article about how states and cities were losing money on derivatives noted that in Pennsylvania alone, 107 school districts owned interest-rate derivatives during the time period banks were allegedly manipulating rates.
That's 107 school districts in one state alone losing untold millions of dollars because of lower interest rates, which may have been lower than they should have been because of Libor manipulation. That's 107 school districts in one state alone that had a harder time paying teachers, buying computers, of funding art programs.
Peter Tchir of TF Market Advisors tried in a research note this morning to arrive at what some of the big numbers might look like, if all of these potential litigants decided to up and hit the banks all at once.
If the banks were responsible for moving the three-month Libor rate by just 1/100th of a percentage point on that entire universe of $800 trillion in notional derivatives contracts, then that would be worth $20 billion, according to Tchir's calculations.
Banks are probably not going to be on the hook for derivatives worth anything close to that $800 trillion. But if banks manipulated rates by more than that 1/100th of a point, or for more than 90 days -- the term of three-month Libor -- on even smaller notional derivative amounts, then the numbers can still get big in a hurry. And that doesn't even include punitive damages. And it doesn't include the estimated $10 trillion in mortgages and other loans tied to Libor, including $275 billion worth of U.S. mortgages, according to an estimate from the Office of the Comptroller of the Currency referenced in the FT.
"That is the real exposure a bank caught 'lying' faces," Tchir writes. "If the lie was big enough and for a long enough period and anyone entitled to receive payment based on LIBOR can make the claim, the potential damage to the bank is enormous."
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Panda Mon 5 Nov - 8:51
HSBC to face £1bn fines over money-laundering
HSBC is set to face a final bill for fines as high as $1.5bn (£937m) for the “shameful and embarrassing” US money-laundering scandal that has engulfed Britain’s biggest bank.
Stuart Gulliver, chief executive of HSBC, apologised for the scandal in July. Photo: Reuters
By Nathalie Thomas, and Harry Wilson
8:13PM GMT 04 Nov 2012
76 Comments The lender is tomorrow expected to spell out the full financial damage caused by the crisis, which erupted earlier this year. The bank stands accused of leaving America’s financial system exposed to Mexican drug cartels and rogue nations such as Iran and Sudan, by failing to enforce US anti money- laundering laws.
HSBC said at its half-year results in the summer that it had set aside $700m to cover the cost of the scandal. The bank said at the time that the huge sum was only its “best estimate” for the fines and penalties it would face from US authorities. But Stuart Gulliver, HSBC’s chief executive, admitted the actual total could be higher.
The final bill is now expected to have more than doubled to $1.5bn, forcing the bank to make a further provision of up to $800m in its third quarter results tomorrow, according to Sky News.
HSBC is understood to have held talks with US authorities over the past few months to settle the claims, which came to light following a year-long investigation by a powerful US senate committee.
The Senate Committee on Homeland Security in July branded HSBC as having been “pervasively polluted for a long time” by allowing funds to be moved to and from its US branches to countries including Mexico, Syria, the Cayman Islands, Iran and Saudi Arabia.
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The scandal forced David Bagley to step down as HSBC’s head of compliance, while the bank’s chief, Mr Gulliver, issued a humbling apology. “We have sometimes failed to meet the standards regulators and customers expect… we take responsibility for fixing what went wrong,” Mr Gulliver said in July.
The bank has since initiated an overhaul of its compliance operations and hired a number of big hitters to raise standards, including Preeta Bansal, a former senior official in the Obama administration, who has been appointed global general counsel for litigation and regulatory affairs at HSBC.
If the final penalties settlement does reach $1.5bn, it will be one of the biggest ever imposed on a UK bank and will cause further shame, following a string of controversies in Britain’s banking sector.
On Friday, Royal Bank of Scotland signalled it could soon announce a multi-million pound settlement over allegations that its staff sought to manipulate Libor, the inter-bank lending rate.
Barclays was fined £290m in June for attempting to rig Libor, while Standard Chartered is in negotiations with US authorities to settle allegations that it breached anti-money laundering sanctions against Iran. Standard Chartered has already paid $340m to the New York Department of Financial Services, which accused the bank of concealing billions of dollars worth of illegal transactions with Iran.
In addition to the increased money laundering bill, analysts at Nomura have warned that HSBC might have to make a new provision for the mis-selling of Payment Protection Insurance (PPI) of about £150m.
The bank is forecast to announce a fall in third quarter pre-tax profits to $5.3bn (£3.3bn), down about $2bn on the $7.2bn it made for the same period in 2011.
HSBC refused to comment.
========================
The U.S. Treasury is making a small fortune for being so diligent.....pity the FSA hadn't done the investigating first.!!!
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The Bank of England might need to take a leap of faith on an untested credit plan to do what quantitative easing is failing to achieve.
With both of its deputy governors questioning the effectiveness of asset purchases, and economists forecasting a halt to that stimulus, that leaves the so-called Funding for Lending Scheme as officials’ primary policy tool. Policy makers begin a two-day meeting on Nov. 7 to decide on QE’s future.
Enlarge image
BOE Tests Faith in Funding for Lending as QE Loses Its Bite
Simon Dawson/Bloomberg
The Bank of England’s three-month old plan encourages banks to provide cheap credit to companies and households, which contrasts with the trickle-down effect of gilt purchases through QE.
5:44
Nov. 5 (Bloomberg) -- Kevin Daly, an economist at Goldman Sachs International, discusses the outlook for the U.K. economy and Bank of England monetary policy. He speaks with Guy Johnson on Bloomberg Television's "City Central." (Source: Bloomberg)
“We are in unchartered territory,” said Steven Bell, chief economist at hedge fund GLC Ltd. in London and a former U.K. Treasury official. “The search for alternatives to QE is gathering pace” and with the FLS, the central bank is “trying new ways as the economy fails to respond to the medicine.”
The Bank of England’s three-month-old plan encourages banks to provide cheap credit to companies and households, which contrasts with the trickle-down effect of gilt purchases through QE. A rethink by policy makers will reach a climax this week as they assess new forecasts and the impact of a program that’s left them with almost a third of the gilt market.
The nine-member Monetary Policy Committee will probably leave the target for asset purchases at 375 billion pounds ($602 billion) on Nov. 8, according to 35 of 45 economists in a Bloomberg News survey. Six forecast a 50 billion-pound increase, and four anticipate a 25 billion-pound expansion.
Disenchantment
Officials’ disenchantment with QE has become increasingly apparent, with minutes of their October meeting showing that some members questioned the impact future gilt purchases could have. The central bank said last week it had completed the final tranche of its latest 50 billion-pound round of bond-buying.
In a speech last week, Bank of England Deputy Governor Charlie Bean said consumers’ and businesses’ concerns about the outlook may undermine the impact of QE. In September, Deputy Governor Paul Tucker said the asset-purchase program no longer has “the same bite.”
Royal Bank of Scotland Group Plc and JPMorgan Chase & Co. are among banks that have abandoned forecasts for more QE this week, citing comments by policy makers. Even with bond purchases falling out of favor, the economy may still need support. BOE Chief Economist Spencer Dale said the 1 percent surge in third-quarter gross domestic product might not be sustained and there could be a “sharp fall back.”
‘Relatively Low’
Goldman Sachs Group Inc. said in a Nov. 2 note that its conviction that the MPC will expand QE this week is “relatively low.” It changed its forecast for more stimulus on Nov. 8 to 25 billion pounds from 50 billion pounds.
“While we continue to see the need for more easing, it looks increasingly likely that any further action will take the form of additional ‘credit easing’ rather than QE,” Goldman economists including Kevin Daly in London said.
Governor Mervyn King introduced the FLS in June as a“coordinated action” between the central bank and the Treasury to fight the “black cloud of uncertainty” related to the euro-area crisis that has stifled Britain’s economy.
The program, which began on Aug. 1 and could boost credit by at least 80 billion pounds, allows banks to borrow treasury bills from the central bank to fund lending into the economy. Lenders will have 18 months to use the facility and then up to four years to repay. The central bank said last month that 30 financial institutions had signed up to the FLS, including Lloyds Banking Group Plc and Barclays Plc.
‘Too Much’
“The FLS has always been a substitute, not a complement”to stimulus, said Richard Barwell, an economist at RBS in London and a former central bank official. “You’re asking QE to do too much. The Bank of England is more than just about monetary policy now.”
Former MPC member Charles Goodhart said in an interview on Nov. 2 that the central bank should expand its toolkit to aid the economy. Business Secretary Vince Cable has described the FLS as “the best conceived” initiative currently in existence to stimulate the economy, though he noted it would take a “few months” before its effects would be visible.
“Although quantitative easing was originally successful, it’s now largely a spent force,” Goodhart said. “The problem is that it’s not answering the correct problem, and the correct problem is nothing to do with a shortage of liquidity.”
Inflation Concerns
Concerns about mounting inflation pressures may also lead the MPC to stay its hand on QE this week. The central bank said last month that consumer-price growth was likely to remain above its 2 percent target in the near term. While inflation cooled to 2.2 percent in September, the least in almost three years, cost increases by some of Britain’s biggest power companies may add to price pressures in the coming months.
Policy maker Martin Weale said last month that he’s concerned about whether pumping more money into the economy is the right thing to do with inflation above the target.
“It is certainly not self-evident to me in the light of the apparent stickiness of inflation that substantial extra support for the economy would be compatible with the inflation target,” Weale said in an interview with the Daily Mail.
“You do sense the internal discussions that they have on QE are concluding that either enough has been done, or to do more risks increasing financial imbalances,” said Neil Mackinnon, global macro strategist at VTB Capital and a former U.K. Treasury official. “The bank is having a rethink of where they go from here. The FLS is in part a response to some of those concerns.”
Economic Risks
Risks to Britain’s economic recovery still persist, with an index of services falling to its weakest level in almost two years in October. The gauge dropped to 50.6 from 52.2 in September, Markit Economics said today, below even the lowest estimate in a survey of 30 economists by Bloomberg.
The pound extended its decline against the dollar after the report. It was at $1.5978 as of 10:40 a.m. in London, down 0.3 percent on the day.
In contrast, China’s services industries rebounded from the slowest expansion in at least 19 months, adding to manufacturing gains that indicate the world’s second-biggest economy is recovering from a seven-quarter slowdown.
The purchasing managers’ index rose to 55.5 in October from 53.7 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. A separate services index released today by HSBC Holdings Plc and Markit Economics in Beijing fell to 53.5 in October from 54.3.
Elsewhere in the Asia-Pacific region, Indonesia’s economic growth held above 6 percent for an eighth quarter as domestic consumption and rising investment countered an export slump. Meanwhile, Australia said retail sales rose 0.5 percent in September from August, compared with the previous month’s pace of 0.3 percent.
U.S. Services
In the U.S., service industries probably kept growing in October, lifted by gains in consumer spending that are helping bolster the expansion, economists said before a report today. The Institute for Supply Management’s non-manufacturing index was at 54.5 last month, little changed from 55.1 in September, according to the median forecast in a Bloomberg survey before tomorrow’s figures.
With both of its deputy governors questioning the effectiveness of asset purchases, and economists forecasting a halt to that stimulus, that leaves the so-called Funding for Lending Scheme as officials’ primary policy tool. Policy makers begin a two-day meeting on Nov. 7 to decide on QE’s future.
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BOE Tests Faith in Funding for Lending as QE Loses Its Bite
Simon Dawson/Bloomberg
The Bank of England’s three-month old plan encourages banks to provide cheap credit to companies and households, which contrasts with the trickle-down effect of gilt purchases through QE.
5:44
Nov. 5 (Bloomberg) -- Kevin Daly, an economist at Goldman Sachs International, discusses the outlook for the U.K. economy and Bank of England monetary policy. He speaks with Guy Johnson on Bloomberg Television's "City Central." (Source: Bloomberg)
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“We are in unchartered territory,” said Steven Bell, chief economist at hedge fund GLC Ltd. in London and a former U.K. Treasury official. “The search for alternatives to QE is gathering pace” and with the FLS, the central bank is “trying new ways as the economy fails to respond to the medicine.”
The Bank of England’s three-month-old plan encourages banks to provide cheap credit to companies and households, which contrasts with the trickle-down effect of gilt purchases through QE. A rethink by policy makers will reach a climax this week as they assess new forecasts and the impact of a program that’s left them with almost a third of the gilt market.
The nine-member Monetary Policy Committee will probably leave the target for asset purchases at 375 billion pounds ($602 billion) on Nov. 8, according to 35 of 45 economists in a Bloomberg News survey. Six forecast a 50 billion-pound increase, and four anticipate a 25 billion-pound expansion.
Disenchantment
Officials’ disenchantment with QE has become increasingly apparent, with minutes of their October meeting showing that some members questioned the impact future gilt purchases could have. The central bank said last week it had completed the final tranche of its latest 50 billion-pound round of bond-buying.
In a speech last week, Bank of England Deputy Governor Charlie Bean said consumers’ and businesses’ concerns about the outlook may undermine the impact of QE. In September, Deputy Governor Paul Tucker said the asset-purchase program no longer has “the same bite.”
Royal Bank of Scotland Group Plc and JPMorgan Chase & Co. are among banks that have abandoned forecasts for more QE this week, citing comments by policy makers. Even with bond purchases falling out of favor, the economy may still need support. BOE Chief Economist Spencer Dale said the 1 percent surge in third-quarter gross domestic product might not be sustained and there could be a “sharp fall back.”
‘Relatively Low’
Goldman Sachs Group Inc. said in a Nov. 2 note that its conviction that the MPC will expand QE this week is “relatively low.” It changed its forecast for more stimulus on Nov. 8 to 25 billion pounds from 50 billion pounds.
“While we continue to see the need for more easing, it looks increasingly likely that any further action will take the form of additional ‘credit easing’ rather than QE,” Goldman economists including Kevin Daly in London said.
Governor Mervyn King introduced the FLS in June as a“coordinated action” between the central bank and the Treasury to fight the “black cloud of uncertainty” related to the euro-area crisis that has stifled Britain’s economy.
The program, which began on Aug. 1 and could boost credit by at least 80 billion pounds, allows banks to borrow treasury bills from the central bank to fund lending into the economy. Lenders will have 18 months to use the facility and then up to four years to repay. The central bank said last month that 30 financial institutions had signed up to the FLS, including Lloyds Banking Group Plc and Barclays Plc.
‘Too Much’
“The FLS has always been a substitute, not a complement”to stimulus, said Richard Barwell, an economist at RBS in London and a former central bank official. “You’re asking QE to do too much. The Bank of England is more than just about monetary policy now.”
Former MPC member Charles Goodhart said in an interview on Nov. 2 that the central bank should expand its toolkit to aid the economy. Business Secretary Vince Cable has described the FLS as “the best conceived” initiative currently in existence to stimulate the economy, though he noted it would take a “few months” before its effects would be visible.
“Although quantitative easing was originally successful, it’s now largely a spent force,” Goodhart said. “The problem is that it’s not answering the correct problem, and the correct problem is nothing to do with a shortage of liquidity.”
Inflation Concerns
Concerns about mounting inflation pressures may also lead the MPC to stay its hand on QE this week. The central bank said last month that consumer-price growth was likely to remain above its 2 percent target in the near term. While inflation cooled to 2.2 percent in September, the least in almost three years, cost increases by some of Britain’s biggest power companies may add to price pressures in the coming months.
Policy maker Martin Weale said last month that he’s concerned about whether pumping more money into the economy is the right thing to do with inflation above the target.
“It is certainly not self-evident to me in the light of the apparent stickiness of inflation that substantial extra support for the economy would be compatible with the inflation target,” Weale said in an interview with the Daily Mail.
“You do sense the internal discussions that they have on QE are concluding that either enough has been done, or to do more risks increasing financial imbalances,” said Neil Mackinnon, global macro strategist at VTB Capital and a former U.K. Treasury official. “The bank is having a rethink of where they go from here. The FLS is in part a response to some of those concerns.”
Economic Risks
Risks to Britain’s economic recovery still persist, with an index of services falling to its weakest level in almost two years in October. The gauge dropped to 50.6 from 52.2 in September, Markit Economics said today, below even the lowest estimate in a survey of 30 economists by Bloomberg.
The pound extended its decline against the dollar after the report. It was at $1.5978 as of 10:40 a.m. in London, down 0.3 percent on the day.
In contrast, China’s services industries rebounded from the slowest expansion in at least 19 months, adding to manufacturing gains that indicate the world’s second-biggest economy is recovering from a seven-quarter slowdown.
The purchasing managers’ index rose to 55.5 in October from 53.7 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. A separate services index released today by HSBC Holdings Plc and Markit Economics in Beijing fell to 53.5 in October from 54.3.
Elsewhere in the Asia-Pacific region, Indonesia’s economic growth held above 6 percent for an eighth quarter as domestic consumption and rising investment countered an export slump. Meanwhile, Australia said retail sales rose 0.5 percent in September from August, compared with the previous month’s pace of 0.3 percent.
U.S. Services
In the U.S., service industries probably kept growing in October, lifted by gains in consumer spending that are helping bolster the expansion, economists said before a report today. The Institute for Supply Management’s non-manufacturing index was at 54.5 last month, little changed from 55.1 in September, according to the median forecast in a Bloomberg survey before tomorrow’s figures.
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Rigged Libor Hits States-Localities With $6 Billion: Muni Credit
By Darrell Preston - Oct 9, 2012 5:00 AM GMT+0100
The Libor bid-rigging scandal is poised to more than double the losses suffered by U.S. states and localities that bought $500 billion in interest-rate swapsbefore the financial crisis.
Manipulation of the London interbank offered rate cost issuers in the $3.7 trillion municipal-bond market at least $6 billion, according Peter Shapiro, managing director of Swap Financial Group in South Orange, New Jersey. Shapiro, a muni adviser for more than 20 years, specializes in the contracts.
Any taxpayer losses on derivative deals linked to Libor would add to at least $4 billion in payments that localities have already made to unwind backfiring interest-rate swaps sold by Wall Street banks as hedges to cut borrowing costs, data compiled by Bloomberg show.
“This number shows that banks can’t be trusted in this market,” said Marcus Stanley, policy director for Americans for Financial Reform, a Washington group that has pushed for stronger regulation of lenders. “Municipalities would be the group most likely victimized by the abuse of Libor.”
Issuers from New York to California have entered swap agreements, which are bets on the direction of interest rates. They attempted to lower borrowing costs while guarding against increasing rates by exchanging variable-rate loans for fixed ones. The strategy went awry when the Federal Reserve lowered its benchmark rate almost to zero to counter the 18-month recession that began in December 2007.
$500 Billion
Banks sold as much as $500 billion of swaps to municipalities before the credit crisis, according to a reportby Randall Dodd, a researcher on the U.S. Financial Crisis Inquiry Commission. Shapiro based his calculation of losses on his estimate that $200 billion of the derivatives were tied to Libor and that banks suppressed the rate by 0.30 percentage points for three years.
Some U.S. municipal interest-rate swap payments were tied to Libor, the basis for more than $300 trillion in securities and loans worldwide, which is supposed to represent what banks pay each other for short-term loans. While traders have said for years that the benchmark was rigged, the suspicions were confirmed in June when Barclays Plc (BARC), Britain’s second-biggest lender by assets, paid a record 290 million-pound ($468 million) fine for manipulating the rate.
Raised Cost
Three-month dollar Libor, the most commonly used of the rates overseen by the British Bankers’ Association, was at 0.35025 percent yesterday, down from 0.58250 percent at the start of the year.
In the derivatives market, setting Libor too low raised what issuers had to pay to their swap counterparties. That drove up their costs and boosted the price of ending the arrangements.
Libor losses may spawn “a wave of lawsuits,” said Michael Greenberger, who studies derivatives at the University ofMaryland’s law school in Baltimore. He said civil complaints, settlements with more banks, and, possibly, criminal indictments lie ahead.
“Libor was a bid-rigged rate,” said Greenberger. “Almost all interest-rate swaps begin with Libor.”
Five-State Probe
Since the Barclays settlement, governments around the U.S. have started their own probes, including attorneys general of at least five states, including Florida and Connecticut. Jaclyn Falkowski, spokeswoman for Connecticut Attorney General George Jepsen, and Jennifer Meale, spokeswoman for Florida Attorney General Pam Bondi, each confirmed the investigations. They declined to comment further.
“I have a board and they want to know what Libor is doing to us,” Brian Mayhew, chief financial officer of the San Francisco Bay area’s Metropolitan Transportation Commission, which finances roads and bridges, said in an interview.
The Libor investigations have implications for states and cities that are still contending with the fiscal legacy of the recession, which left them grappling with falling tax revenue and rising costs. States have had to deal with combined deficits of more than $500 billion since fiscal 2009, according to the Washington-based Center on Budget & Policy Priorities.
Baltimore, Maryland, and the New Britain Firefighters’Benefit Fund, a pension for workers in the Connecticut city, had already sued more than a dozen banks before the Barclays settlement, alleging Libor was artificially suppressed as part of a conspiracy.
Rates Diverge
Baltimore claimed that Libor’s divergence from its historical correlation to overnight swaps showed manipulation. Since the financial crisis, the spread between three-month Libor and three-month swap rates has increased by 95 percent, data compiled by Bloomberg show.
Hilary Scherrer, a lawyer for the plaintiffs at Washington-based Hausfeld LLP, didn’t return a phone call seeking comment.
North Carolina is among states waiting for findings from federal investigations into the abuse of Libor, Treasurer Janet Cowell said in a Sept. 28 interview on Bloomberg Television.
“We don’t know what the manipulation was at this point,”Cowell said. “It’s a lot of analytics and data collection.”
Because each swap is unique in its pricing and structure, it is possible that not all issuers were harmed by the Libor rigging.
Libor Theory
“There’s a theory that the Libor manipulation lowered the interest rate we got paid on our swaps,” said Mayhew. “But the inverse of that is it also then lowered what we were paying on the variable-rate debt.”
Mayhew said he doesn’t expect a quick resolution.
“This is one of those things that won’t be solved in court, it won’t be solved by lawsuits,” said Mayhew. “This is going to be a global settlement where whoever is guilty of whatever gets in a room, makes a global settlement, and then that’s it.”
In muni trading last week, the yield on 10-year munis rated AAA dropped about 0.07 percentage point to 1.65 percent, data compiled by Bloomberg show. The index touched 1.63 percent on July 27, the lowest since at least January 2009, when data collection began. The U.S. bond market was closed yesterday for the Columbus Day holiday.
Following are pending sales:
CITY & COUNTY OF DENVER plans to issue $700 million in airport system revenue bonds as soon as Oct. 10, according to data compiled by Bloomberg. The debt will be used to finance part of Denver International Airport’s capital plan. Standard & Poor’s rates the securities A+, fifth-highest. (Added Oct. 9)
MASSACHUSETTS SCHOOL BUILDING AUTHORITY will sell $725 million in sales-tax bonds as soon as Oct. 11, Bloomberg data show. Proceeds will be used to refund debt. S&P rates the bonds AA+, its second-best grade. (Added Oct. 9)
By Darrell Preston - Oct 9, 2012 5:00 AM GMT+0100
The Libor bid-rigging scandal is poised to more than double the losses suffered by U.S. states and localities that bought $500 billion in interest-rate swapsbefore the financial crisis.
Manipulation of the London interbank offered rate cost issuers in the $3.7 trillion municipal-bond market at least $6 billion, according Peter Shapiro, managing director of Swap Financial Group in South Orange, New Jersey. Shapiro, a muni adviser for more than 20 years, specializes in the contracts.
Any taxpayer losses on derivative deals linked to Libor would add to at least $4 billion in payments that localities have already made to unwind backfiring interest-rate swaps sold by Wall Street banks as hedges to cut borrowing costs, data compiled by Bloomberg show.
“This number shows that banks can’t be trusted in this market,” said Marcus Stanley, policy director for Americans for Financial Reform, a Washington group that has pushed for stronger regulation of lenders. “Municipalities would be the group most likely victimized by the abuse of Libor.”
Issuers from New York to California have entered swap agreements, which are bets on the direction of interest rates. They attempted to lower borrowing costs while guarding against increasing rates by exchanging variable-rate loans for fixed ones. The strategy went awry when the Federal Reserve lowered its benchmark rate almost to zero to counter the 18-month recession that began in December 2007.
$500 Billion
Banks sold as much as $500 billion of swaps to municipalities before the credit crisis, according to a reportby Randall Dodd, a researcher on the U.S. Financial Crisis Inquiry Commission. Shapiro based his calculation of losses on his estimate that $200 billion of the derivatives were tied to Libor and that banks suppressed the rate by 0.30 percentage points for three years.
Some U.S. municipal interest-rate swap payments were tied to Libor, the basis for more than $300 trillion in securities and loans worldwide, which is supposed to represent what banks pay each other for short-term loans. While traders have said for years that the benchmark was rigged, the suspicions were confirmed in June when Barclays Plc (BARC), Britain’s second-biggest lender by assets, paid a record 290 million-pound ($468 million) fine for manipulating the rate.
Raised Cost
Three-month dollar Libor, the most commonly used of the rates overseen by the British Bankers’ Association, was at 0.35025 percent yesterday, down from 0.58250 percent at the start of the year.
In the derivatives market, setting Libor too low raised what issuers had to pay to their swap counterparties. That drove up their costs and boosted the price of ending the arrangements.
Libor losses may spawn “a wave of lawsuits,” said Michael Greenberger, who studies derivatives at the University ofMaryland’s law school in Baltimore. He said civil complaints, settlements with more banks, and, possibly, criminal indictments lie ahead.
“Libor was a bid-rigged rate,” said Greenberger. “Almost all interest-rate swaps begin with Libor.”
Five-State Probe
Since the Barclays settlement, governments around the U.S. have started their own probes, including attorneys general of at least five states, including Florida and Connecticut. Jaclyn Falkowski, spokeswoman for Connecticut Attorney General George Jepsen, and Jennifer Meale, spokeswoman for Florida Attorney General Pam Bondi, each confirmed the investigations. They declined to comment further.
“I have a board and they want to know what Libor is doing to us,” Brian Mayhew, chief financial officer of the San Francisco Bay area’s Metropolitan Transportation Commission, which finances roads and bridges, said in an interview.
The Libor investigations have implications for states and cities that are still contending with the fiscal legacy of the recession, which left them grappling with falling tax revenue and rising costs. States have had to deal with combined deficits of more than $500 billion since fiscal 2009, according to the Washington-based Center on Budget & Policy Priorities.
Baltimore, Maryland, and the New Britain Firefighters’Benefit Fund, a pension for workers in the Connecticut city, had already sued more than a dozen banks before the Barclays settlement, alleging Libor was artificially suppressed as part of a conspiracy.
Rates Diverge
Baltimore claimed that Libor’s divergence from its historical correlation to overnight swaps showed manipulation. Since the financial crisis, the spread between three-month Libor and three-month swap rates has increased by 95 percent, data compiled by Bloomberg show.
Hilary Scherrer, a lawyer for the plaintiffs at Washington-based Hausfeld LLP, didn’t return a phone call seeking comment.
North Carolina is among states waiting for findings from federal investigations into the abuse of Libor, Treasurer Janet Cowell said in a Sept. 28 interview on Bloomberg Television.
“We don’t know what the manipulation was at this point,”Cowell said. “It’s a lot of analytics and data collection.”
Because each swap is unique in its pricing and structure, it is possible that not all issuers were harmed by the Libor rigging.
Libor Theory
“There’s a theory that the Libor manipulation lowered the interest rate we got paid on our swaps,” said Mayhew. “But the inverse of that is it also then lowered what we were paying on the variable-rate debt.”
Mayhew said he doesn’t expect a quick resolution.
“This is one of those things that won’t be solved in court, it won’t be solved by lawsuits,” said Mayhew. “This is going to be a global settlement where whoever is guilty of whatever gets in a room, makes a global settlement, and then that’s it.”
In muni trading last week, the yield on 10-year munis rated AAA dropped about 0.07 percentage point to 1.65 percent, data compiled by Bloomberg show. The index touched 1.63 percent on July 27, the lowest since at least January 2009, when data collection began. The U.S. bond market was closed yesterday for the Columbus Day holiday.
Following are pending sales:
CITY & COUNTY OF DENVER plans to issue $700 million in airport system revenue bonds as soon as Oct. 10, according to data compiled by Bloomberg. The debt will be used to finance part of Denver International Airport’s capital plan. Standard & Poor’s rates the securities A+, fifth-highest. (Added Oct. 9)
MASSACHUSETTS SCHOOL BUILDING AUTHORITY will sell $725 million in sales-tax bonds as soon as Oct. 11, Bloomberg data show. Proceeds will be used to refund debt. S&P rates the bonds AA+, its second-best grade. (Added Oct. 9)
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Re: Bl***y Banks Again
Panda Wed 7 Nov - 9:25
Banks risk 'reputational bonfire' on industry reform
Banks and other finance companies have been warned to get on the “front foot” in dealing with their reputational problems or risk a further public backlash against the industry.
Companies had to face up to the 'challenges' rather than 'wait for regulators and authorities to tackle the problems' Photo: Getty Images
By Harry Wilson, Banking Correspondent
6:30AM GMT 07 Nov 2012
2 Comments The Institute of Chartered Accountants said companies should create their own bodies to oversee professional standards, as well as taking a “constructive approach” in dealings with regulators and customers.
Companies had to face up to the “challenges” rather than “wait for regulators and authorities to tackle the problems”, said the institute’s Iain Coke.
“If the sector acts defensively, the public will interpret this as trying to avoid its obligations, which will be like pouring fuel on the reputational bonfire,” he said.
Along with new professional bodies and talks with regulators, the Institute recommends in a report published on Wednesday that its members invest more in staff training, to reduce the chance of new mis-selling scandals, as well as improving the design of financial products to ensure that customers fully understand the risks they are taking.
“The public can understand and forgive honest mistakes but only if the sector acknowledges and deals with problems quickly and responsibly,” said Mr Coke.
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The Institute’s report comes as the number of jobs in the financial services industry comes under precedented pressure. A survey by eFinancialCareers found the number of new job vacancies in the third quarter was down 24pc year-on-year. The Centre for Economics and Business Research is predicting that the number of City jobs will hit a 20-year low by 2014.
Despite the Institute’s call for a more active approach to the industry’s problems, senior executives are wary about being seen to be too aggressive in defending their interests.
Giving evidence on Monday to the parliamentary Commission on Banking Standards, Douglas Flint, chief executive of HSBC, argued that banks had lost their right to “self-determination”.
He said that, in the wake of the financial crisis, it was no longer appropriate for firms to influence the shape of future regulation.
“It doesn’t really matter whether any of us think it [the new rules] will be our optimal choice as I think we’ve lost the right to determine ourselves what we think the optimal choice is,” he said.
Mr Flint warned that HSBC was still considering its domicile but said a decision had been deferred to 2015. The bank is one of the largest employers in London’s Canary Wharf, where its global headquarters is located
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Re: Bl***y Banks Again
Panda Wed 7 Nov - 15:52
Banks threatened with break-up law if they dodge ring-fencing plans
Banks should be broken up if they fail to implement the Government’s ring-fencing plans properly under new legislation proposed by the Bank of England’s financial stability director, Andy Haldane.
Andy Haldane, Bank of England executive director for financial stability, has proposed a size limit on banks to protect the economy
By Philip Aldrick, Economics Editor
2:13PM GMT 07 Nov 2012
10 Comments
Addressing the Parliamentary Commission on Banking Standards, Mr Haldane said putting the threat of full separation on the statute book would help ensure banks faithfully abide by the so-called Vickers reforms.
The idea was first floated earlier this week by Andrew Tyrie, the commission’s Conservative chairman, and Mr Haldane urged the commission members to take it up. “Legislation if the ring-fence proves permeable, that struck me as quite a clever way of implementing Vickers faithfully,” he said. “It creates incentives.”
To make the legislation work, he said regulators would need to define clearly what constituted a proper ringfence between the retail and investment banking arms of a big lender. Mr Haldane argued that it would only work if the retail unit had separate governance, risk management, treasury, balance sheet, remuneration, and human resources operations.
Bankers have claimed that the ring-fence needs to be “flexible” but regulators fear that flexibility would make it “permeable”, allowing risk-taking that is meant to be barred and letting the investment banking culture infect high street lending practices. Mr Haldane stopped short of calling for full separation so long as Vickers was properly implemented.
The proposal was one of a number of ideas that Mr Haldane gave the commission to improve the banking industry. Citing recent discussion by high-ranking policymakers in the US, he also suggested setting a size limit for banks.
Related Articles
In the US, legislation is already going through that will prevent banks from taking more than 10pc of the market share of customer deposits. Mr Haldane said a better way of protecting the economy would be to limit the size of a bank’s balance sheet to a fixed proportion of GDP.
Barclays and Royal Bank of Scotland are both roughly the same size as Britain’s national output at around £1.5 trillion - a level considered by many to be economically dangerous.
Mr Haldane also came up with the radical idea of putting all customer accounts – both loans and deposits – on a centralised “shared platform” to make switching bank provider simple and quick. Pooling all customer information would make it easier for new entrants to “plug in and play”, thereby boosting competition, he said.
“It would potentially deliver real benefits for customers. That would restore some of the faith in hat banking is supposed to do. This would be a good news story, and banking needs a good news story,” he said.
Banks have claimed that the cost of building the platform would be prohibitive, but Mr Haldane said a full cost-benefit analysis needs to be done. Some “70pc-80pc of banks’ IT spend is about maintenance of legacy systems”, he said. Citing RBS’s computer malfunction earlier this year, he added that many are "antiquated".
“Technology specialists say there is no technological barrier. A cost-benefit analysis could come out in favour of radical change, not just incremental change,” he said. “Having looks at a little of the evidence, it’s clear that no change is not an option.”
Banks should be broken up if they fail to implement the Government’s ring-fencing plans properly under new legislation proposed by the Bank of England’s financial stability director, Andy Haldane.
Andy Haldane, Bank of England executive director for financial stability, has proposed a size limit on banks to protect the economy
By Philip Aldrick, Economics Editor
2:13PM GMT 07 Nov 2012
10 Comments Addressing the Parliamentary Commission on Banking Standards, Mr Haldane said putting the threat of full separation on the statute book would help ensure banks faithfully abide by the so-called Vickers reforms.
The idea was first floated earlier this week by Andrew Tyrie, the commission’s Conservative chairman, and Mr Haldane urged the commission members to take it up. “Legislation if the ring-fence proves permeable, that struck me as quite a clever way of implementing Vickers faithfully,” he said. “It creates incentives.”
To make the legislation work, he said regulators would need to define clearly what constituted a proper ringfence between the retail and investment banking arms of a big lender. Mr Haldane argued that it would only work if the retail unit had separate governance, risk management, treasury, balance sheet, remuneration, and human resources operations.
Bankers have claimed that the ring-fence needs to be “flexible” but regulators fear that flexibility would make it “permeable”, allowing risk-taking that is meant to be barred and letting the investment banking culture infect high street lending practices. Mr Haldane stopped short of calling for full separation so long as Vickers was properly implemented.
The proposal was one of a number of ideas that Mr Haldane gave the commission to improve the banking industry. Citing recent discussion by high-ranking policymakers in the US, he also suggested setting a size limit for banks.
Related Articles
Banks risk 'reputational bonfire' on reform
07 Nov 2012
Banks have lost 'right to self-determination'
05 Nov 2012
In the US, legislation is already going through that will prevent banks from taking more than 10pc of the market share of customer deposits. Mr Haldane said a better way of protecting the economy would be to limit the size of a bank’s balance sheet to a fixed proportion of GDP.
Barclays and Royal Bank of Scotland are both roughly the same size as Britain’s national output at around £1.5 trillion - a level considered by many to be economically dangerous.
Mr Haldane also came up with the radical idea of putting all customer accounts – both loans and deposits – on a centralised “shared platform” to make switching bank provider simple and quick. Pooling all customer information would make it easier for new entrants to “plug in and play”, thereby boosting competition, he said.
“It would potentially deliver real benefits for customers. That would restore some of the faith in hat banking is supposed to do. This would be a good news story, and banking needs a good news story,” he said.
Banks have claimed that the cost of building the platform would be prohibitive, but Mr Haldane said a full cost-benefit analysis needs to be done. Some “70pc-80pc of banks’ IT spend is about maintenance of legacy systems”, he said. Citing RBS’s computer malfunction earlier this year, he added that many are "antiquated".
“Technology specialists say there is no technological barrier. A cost-benefit analysis could come out in favour of radical change, not just incremental change,” he said. “Having looks at a little of the evidence, it’s clear that no change is not an option.”
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