Bl***y Banks Again

Mark Carney Defends Bank Governor Pay Package


The next boss of the Bank of England defends his pay deal,
but says he's open to review






The next governor of the Bank of England has been forced to
defend his pay and perks package under questioning from MPs.

Mark Carney - the current head of Canada's central bank - insisted his more than £800,000-a-year settlement was
"equivalent" to that of the current boss, Sir Mervyn King.

He was speaking at his first hearing before the Treasury Select Committee
before replacing Sir Mervyn on July 1 following his retirement.

The pay deal, which includes a £250,000 housing allowance, was in line with
that of the current governor's on a "pay and pension" basis, Mr Carney said.

He added: "I'm moving from one of the least
expensive capital cities in the world - Ottawa - to one of the most expensive
capital cities in the world."

Mr Carney will be paid the accommodation allowance on top of a £480,000
salary, well above the £305,000 pay level of Sir Mervyn.

But Erith
& Thamesmead MP Teresa Pearce
questioned whether he was concerned about "resentment" among Bank of England
staff, given that their pay has been frozen for two years.

Mr Carney also told MPs he was open to reviewing the UK's monetary policy
framework.

He stressed it was important that monetary
policy was "reviewed periodically", saying
that in Canada this happens every five years.

But he added that he had not looked at whether
UK monetary policy framework should be altered and that any decisions like that would be made
by the Government.

It comes as the Bank of England's Monetary
Policy Committee kept the UK's interest rate at 0.5%, and left its
quantitative easing programme on
hold.
========================
Mervyn King was not a very good BOE Boss....the worst thing he did was ignore the letter sent to him by the U.S in 2008 regarding the LIBOR scandal. Let's give Carney a chance I say, he has a Mountainous job in front of him, to restore Britains reputation in Banking and now that the FSA is back under BOE scrutiny that is a Depertment King never had, it was Gordon Brown who split them up, Carney has more responsibility.

RBS Boss Hester Paid Bonus Despite Fine


RBS chief executive Stephen Hester will be handed a
£780,000 bonus just weeks after the bailed-out lender was fined £391m.


5:52am UK, Sunday
10 February 2013

RBS was fined for its role in the global interest rate
rigging scandal




The boss of the taxpayer-funded Royal Bank of Scotland will be
paid a bonus of £780,000 just weeks after his bank was fined £391m for
rate-rigging.

Chief executive Stephen Hester will be given the bonus in shares next month
as part of a reward scheme for his performance in 2010.

The payout will undoubtedly anger critics of such schemes across the City,
especially given its timing so soon after the Libor scandal rocked RBS.

Mr Hester will be handed the shares next month, and will be able to cash them
12 months later. The exact value will depend on the share price when he cashes
them in.
Stephen Hester is to get the payout next
month
Mr Hester said last week he would stay to "finish the job" at the bank
despite damning evidence from US and UK authorities over its role in the Libor
scandal, dating back to 2006 and continuing through to late 2010 - when
investigations had already begun.

RBS, which is 81% owned by the Government, will recoup around £300m from its
staff bonus pool and clawing back previous awards to pay for the fines.

RBS said 21 staff were involved in attempting to manipulate interbank lending
rates - specifically Japanese Yen and Swiss Franc Libor submissions - from 2006
to as recently as November 2010.

Mr Hester's payout next month is the second tranche of two-part reward scheme
that was announced in 2011.

Barclays to close tax unit


Barclays is to close its controversial tax avoidance unit as one of the
landmark measures of Antony Jenkins’ much anticipated strategy review designed
to show that “Barclays is changing”.








Photo:
REUTERS





By James Quinn and Kamal
Ahmed

6:45PM GMT 09 Feb 2013

66 Comments




The Sunday Telegraph can reveal that Mr Jenkins, who will deliver the outcome
of the review on Tuesday, will say the bank will shut its structured capital
markets (SCM) business.


In the mid-2000s the unit made profits of as much as £1bn in a single year
and became synonymous with Barclays’ aggressive investment banking culture under
the stewardship of Bob Diamond, Mr Jenkins’ predecessor as chief executive.



The unit, previously run by Barclays’ highest-paid
banker, Roger Jenkins, who was paid as much as £40m a year as a result of SCM’s
success, gave advice to large companies on how to avoid tax. SCM was responsible
for building a network of almost 300 offshore tax-haven subsidiaries which meant
Barclays itself paid only £113m of UK corporation tax in 2009, despite profits
of £4.6bn.


The strategy review will be delivered at London’s Royal Horticultural Halls
just hours after the bank’s full-year results for 2012, which are expected to
show that Barclays will have made adjusted profits of £7.18bn, up from £5.88bn
in 2011.


The review has seen Barclays split into 75 business units, each of which has
been measured on the returns generated and the reputational impact of the
specific activities.



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In addition to SCM, it is believed the axe may fall on Barclays’ Asian
equities business. On SCM, Mr Jenkins is expected to say on Tuesday: “There are
some areas that relied on sophisticated and complex structures, where
transactions were carried out with the primary objective of accessing the tax
benefits.

“Although this was legal, going forward such activity is incompatible with
our purpose. We will not engage in it again.”

As part of the decision, Barclays will publish a series of tax principles
which it says it will adhere to. However,

Mr Jenkins is expected to go on to say that Barclays will continue to provide
non-controversial tax services as part of “real client transactions”.

The move will be seen as part of a major step-change from the previous era,
which ended in the summer of 2012 after the bank was fined £290m by British and
American regulators over Libor fixing.

The scandal saw the resignation of Mr Diamond, chairman Marcus Agius, and
chief operating officer Jerry del Missier within 24 hours.

Sources indicated that Mr Jenkins intends to use Tuesday’s event to signal a
clear break from the past. As part of his speech, he is expected also to say:
“We get it. The old ways weren’t the right way to behave, nor did they deliver
the right results – for banks themselves or for wider society.

“There must be a new approach for a new era of banking. Banks that fail to
change will become failing banks. My message is that Barclays is changing.”

During a hearing of the Parliamentary Commission on Banking Standards last
week, Mr Jenkins said that Barclays had an “aggressive” and “self-serving”
culture under Mr Diamond.

Writing in The Sunday
Telegraph, Mr Jenkins describes the process as “the most
fundamental and complete review of any bank’s operations” saying it will “show a
clear path to a stronger Barclays”.

He sets out his commitment to a “universal bank” with a strong retail arm and
a “high-quality investment bank”.

Barclays review: 3,700 jobs cut and tax unit axed - live


The banking giant has published its much-awaited strategic review, in which
it lays out plans to dramatically slim down the business and cut 3,700 jobs, in
an effort to make a clean break from scandals that have engulfed the lender in
recent months.








Antony Jenkins, Barclays new
chief executive, has vowed to overhaul the culture of the bank Photo: ALAMY





By Denise Roland

8:03AM GMT 12 Feb 2013

11 Comments



runUpdate = true;



90000
2013-02-12 08:06:52.0
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9864144/Barclays-review-3700-jobs-cut-and-tax-unit-axed-live.html?service=artBody
This page will automatically update every 90 secondsOn
Off



• Barclays to cut 3,700 jobs, and close tax avoidance
unit
• Plan will cut £1.7bn in annual costs and improve
standards
• Barclays publishes strategic
review
• Anthony Jenkins: "Barclays is changing."






0803 Some early reaction on Antony Jenkins' overhaul from
the Twittersphere:


Whatever your view on bankers, 3,700 job losses by
anyone's standards is miserable. A lot of worried families & friends. @VFritzNews





Anthony Jenkins - strong on management speak - but let's
see actions & trials/prosecution of those suspected of crimes. @HonestyBanking

0751 The strategic review also pledges some wider cultural
changes, namely 'to provide greater disclosure and transparency around our
financial performance' and 'embed our purpose and values across Barclays and
publish and annual scorecard assessing our performance'

0748 Antony Jenkins has just been interviewed on Radio
Four's Today programme. He says the overhaul at Barclays will boost value for
shareholders as well as improve the bank for its customers.

The chief executive insists the bank will not lose market share by refusing
to sell products that are not in customers' interests. He laid down a firm line
on staff compliance, saying:

If you don't want to work this way, you can go work
somewhere else.

Mr Jenkins also said the bank's bonus culture was changing. He pointed out
that on the bank's total spend on remuneration was down 16pc in the group and
down 20pc in the investment bank in 2012, and that the ratio of pay to net
profit had fallen to 38pc from 42pc. He told added that this ratio would
continue on a "downward path" to the mid-thirties in coming years.

We were too short term focussed and that's something that
will change

In my view the returns in financial services which were historically
driven by leverage, those days are gone. Banks have to reposition themselves to
become more efficient and effective to serve customers and clients.



^{Antony Jenkins said that staff who don't like the changes at the bank
can leave}

0725 We've also had Barclays' full-year results for 2013,
which report adjusted pre-tax profit up 26pc
to £7.05bn,and 2pc revenue growth to
£29bn. The group put aside £3.6bn for PPI and
swap misselling compensation.

Meanwhile the bank posted statutory pre-tax profits £246m, down from £5.88bn
last time.

0713 Antony Jenkins, Barclays chief executive, said in a
statement accompanying:

Barclays is changing. We have today set out a new course
for the future of Barclays.

I am extremely proud of the way our 140,000 staff have overcome the
difficulties of the last year and shown the resilience necessary to deliver the
results we announced this morning.

It gives me great confidence in our ability to deliver our goal and from
today I am determined that no-one should be able to question our intent or our
commitment to the path that I have set out.



0705 The bank has just published the outcome of its
strategic review. It plans to:

• cut 3,700 jobs across the group in 2013
• close the tax avoidance
unit
• achieve common equity tier 1 ratio above its target ration of 10.5pc
in 2015
• boost dividend payouts from 2014, targeting a payout ration of 30pc
over time
• narrow down the business to focus solely on activities that
support customers and clients in markets where Barclays has scale and
"competitive advantage"
• focus investment activities in the UK, US and
Africa, while maintaining an "appropriate" presence across Europe and Asia

0700 Good morning and welcome to our live coverage of
Barclays much-anticipated strategic review
====================================
Barclays announce latest earnings from £6 billion last year to £278 million . They still have fines and lawsuits to pay.

Antony Jenkins' moral choices as he shreds 'Bob's baby'


We now know that whilst Bob Diamond was extolling his belief in
"citizenship" at Barclays, Antony Jenkins was, to put it mildly, a little
cynical.









Change of style: Antony Jenkins,
left, and his predecessor, Bob Diamond
(Reuters)




By Harry Wilson, Banking
Editor

9:50AM GMT 12 Feb 2013


16 Comments




Giving evidence to a parliamentary commission last week, Mr Jenkins said he
had had "debates" with his predecessor about the way he ran the bank.


Woe betide Mr Diamond if roles had been reversed and he had questioned the
wisdom of Mr Jenkins's Transform programme.


"Cynics and sceptics never built anything," said the Barclays chief executive this
morning. And what of those sneering behind his back?


"If you don't want to work this way, you can go somewhere else."

;











Related Articles

• 
  Barclays review: as it happened
  12 Feb 2013
  
• 
  Barclays cuts 3,700 jobs in overhaul to restore
  reputation
  12 Feb 2013
  
• 
  Barclays to close tax unit
  09 Feb 2013
  
• 
  A road map for success and our commitment to real
  change
  09 Feb 2013
  
• 
  City eagerly awaits Barclays’ strategy review
  
  09 Feb 2013
  

No nuance in that. He might as well have said: 'It's my way or the highway'.


This is admirable stuff. No British bank has changed more in the last decade
than Barclays.

While Royal Bank of Scotland destroyed itself in the headlong pursuit of
growth, Barclays morphed from a respected pillar of high street banking into a
business that made its money competing with the likes of Goldman Sachs and
Morgan Stanley.

The transformation was enormously profitable. At its peak, investment banking
made more money than the rest of the bank combined, propelling Mr Diamond, the
arch Wall Street trader, to its top office.

With his Midlands twang and decidedly commercial banking pedigree, Mr Jenkins
has come in by his own admission to "shred" the legacy of his more showy
predecessor.

"Bob's baby", as the investment bank was sometimes known, is clearly in his
sights and is where he will face the most determined resistance to his plans.


You don't have to be a regular reader of The Daily Telegraph's 'Alex' cartoon
to realise that traders and investment bankers are masters in just this type of
urban warfare.

Mr Jenkins is certainly well aware of this and if he is to succeed he will
need to deploy the ruthlessness he appears keen to highlight in public.

To do this he will require allies on whom he can rely when things get tough.
This will mean either co-opting members of the old regime to his cause, or
promoting others to provide the support that he will need.

This is probably the easy bit. As Royal Bank of Scotland's former head of
investment banking, Johnny Cameron warned yesterday: "You can’t impose moral
standards on people who don’t wish to be moral."

As Mr Jenkins will soon discover, if he does not already know, there are some
corners of banking that will defy all his attempts to turn them into exemplars
of good behaviour and morality.

He has already shut down the bank's controversial structured capital markets
unit, but he may need to be prepared to shut more businesses if he is truly to
transform Barclays.
===================================
It was reported that Bob Diamond was paid £200 million in the few years he was Chairman , shareholders are saying that was obscene.

Osborne Plays Down Talk Of RBS Share Giveaway


The Chancellor tells Sky News it is a "premature
discussion" amid claims of a £400 windfall each before the next election.


8:19am UK,
Saturday 16 February 2013



Video: Osborne: No RBS Share Giveaway





By Katie Stallard, Moscow correspondent

George Osborne has played down claims the Treasury is planning to
give Britons up to £400 in Royal Bank of Scotland shares before the next
election.

The Chancellor, speaking to Sky News at a G20 meeting in Moscow, said it was
too early to consider handing out shares and returning the bailed out bank to
the private sector.

His intervention came after reports that Economic Secretary to the Treasury
Sajid Javid was exploring plans to sell the Government's stake by 2015.

The Chancellor insisted a sell-off could not happen soon because it would
mean a huge loss to the taxpayer, but he notably did not rule out such a
move.

Mr Osborne said: "It is just a premature discussion about what to do with the
shares when we get to the point where they are worth what the country paid for
them.

"Gordon Brown bought them at a price that they are not worth today and we
have got to get the Royal Bank of Scotland to a point where it is worth what the
taxpayer paid.

"Then we can have a no doubt big national discussion about what to do with
the shares and how to return it to the private sector."

RBS was bailed out with £45bn in public funds in 2008 at the height of the
financial crisis and is now 81% owned by the state.
Royal Bank of Scotland is 81% state-owned
after a £45bn bailout
In Moscow for the finance ministers' meeting, Mr Osborne also renewed his
call for a global tax crackdown and issued a warning about international
"currency wars".

There is increasing concern about competitive devaluations between major
exporting economies as they struggle to recover from the global downturn.

Japan has been criticised for weakening the Yen, which is down 15% against
the dollar since September, to give its exporters a price advantage in the short
term.

"These so-called currency wars are what in previous decades have led to huge
problems in the international economy," the Chancellor said.

"I think people will be pleasantly surprised by the strong statement that
you’ll see from the G20 today that currency is not a tool of economic
warfare.

"What we want to do in our own countries is put our own houses in order and
make our economies competitive and our currencies will reflect that rather than
being used as a weapon to achieve it."

On tax, Mr Osborne said current rules are out of date and that Britain would
lead efforts to stop companies shifting their profits around the globe to avoid
large bills.

"The international rules on taxes haven't kept pace with changes in the world
economy, changes in the way we shop online and use the internet so we’re taking
action with countries like France, Germany, and the United States," he said.

"Britain is leading the way in getting a set of rules that mean that
businesses can come to Britain, and Britain is one of the best places to do
business, but also when they come to Britain - they pay their taxes.

"It means that big international companies that may have their headquarters
in one country, their shops in many other countries, may locate their so-called
intellectual property in another country altogether, perhaps a low tax place
like Bermuda or the Cayman Islands.

"They'll find that a more difficult arrangement because the international tax
rules will change and they will have to pay taxes much more where the profits
are generated - that’s the objective."

But he acknowledged that Britain could not act alone and that they needed
global consensus to make it happen.

Just getting agreement on the need for a crackdown from the 20 countries
represented in Moscow on Saturday would represent significant progress in
itself.

Mr Osborne said: "There is no single law Britain can pass that will make this
happen.

"This has to be done internationally and so we are working with other
countries to make sure it does happen and that the tax laws which were actually
created about a 100 years ago are appropriate for an economy of the 21st century
rather than the 20th century."

Libor Lies Revealed in Rigging of $300 Trillion Benchmark


By Liam Vaughan & Gavin Finch - Jan 28, 2013 9:54 PM GMT
Bloomberg Markets Magazine

• 
  
  
  
  The benchmark rate for more than $300 trillion of contracts was based on honesty. New evidence in banking's biggest scandal shows traders took it as a license to cheat. Graphic: Bloomberg MarketsEvery morning, from his desk by the bathroom at the far end of Royal Bank of Scotland Group Plc’s trading floor overlooking London’s Liverpool Street station, Paul White punched a series of numbers into his computer.
  
  
  
  
  
  Enlarge image
  Diamond Testifies in Libor Probe
  
  
  
  Paul Thomas/Bloomberg
  Former Barclays CEO Robert Diamond gave evidence to the Treasury Select Committee in London on July 10, 2012. Diamond stepped down from his position after regulators fined the bank 290 million pounds for attempting to rig the benchmark interest rate.
  Former Barclays CEO Robert Diamond gave evidence to the Treasury Select Committee in London on July 10, 2012. Diamond stepped down from his position after regulators fined the bank 290 million pounds for attempting to rig the benchmark interest rate. Photographer: Paul Thomas/Bloomberg
  
  
  
  Enlarge image
  How Libor Was Rigged
  
  
  
  
  
  
  
  
  
  Enlarge image
  Gensler Began CFTC Investigation of Libor Manipulation
  
  
  
  Peter Foley/Bloomberg
  Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, started an investigation after listening to a tape of a conversation between traders and rate setters at Barclays.
  Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, started an investigation after listening to a tape of a conversation between traders and rate setters at Barclays. Photographer: Peter Foley/Bloomberg
  
  
  
  Enlarge image
  London Lawyer Takes on Libor Banks
  
  
  
  Harry Borden/ Bloomberg Markets
  Stephen Rosen, an attorney at Collyer Bristow in London, represents a real estate company, three nursing homes and more than a dozen other firms that bought Libor-linked interest-rate swaps from banks.
  Stephen Rosen, an attorney at Collyer Bristow in London, represents a real estate company, three nursing homes and more than a dozen other firms that bought Libor-linked interest-rate swaps from banks. Photographer: Harry Borden/ Bloomberg Markets
  
  
  
  Enlarge image
  Libor Score Card
  
  
  
  
  
  
  White, who had joined RBS in 1984, was one of the employees responsible for the firm’s submissions for the London interbank offered rate, or Libor, the global benchmark for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps. Behind him sat Neil Danziger, a derivatives trader who had worked at the bank since 2002.
  On the morning of March 27, 2008, Tan Chi Min, Danziger’s boss in Tokyo, told him to make sure the next day’s submission in yen would increase, Bloomberg Markets magazine will report in its March issue. “We need to bump it way up high, highest among all if possible,” Tan, who was known by colleagues as Jimmy, wrote in an instant message to Danziger, according to a transcript made public by a Singapore court and reported on by Bloomberg before being sealed by a judge at RBS’s request.
  
• More from the March 2013 issue of Bloomberg Markets
  
• How Libor Works
  
• Jeanne Gang vs. Frank Lloyd Wright | Slideshow
  
• Shaking Up Korea Inc.
  
• The Perils of Doing Business in Russia
  
• Slideshow: The Top 20 Emerging Markets
  
• The Master of Shangri-La
  

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

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

Talking off banks...I got a letter the other day regarding my savings account.


At the moment I have two debit cards which i can use....one for current account and one for savings.


The letter stated that I will be receiving a new saving card which is NOT a debit card...in other words ...it stops you using the debit cards for your savings card anywhere except the 'hole in the wall' and thus leaving your savings in the account for longer ...


Creeps.

kitti wrote:Talking off banks...I got a letter the other day regarding my savings account.


At the moment I have two debit cards which i can use....one for current account and one for savings.


The letter stated that I will be receiving a new saving card which is NOT a debit card...in other words ...it stops you using the debit cards for your savings card anywhere except the 'hole in the wall' and thus leaving your savings in the account for longer ...


Creeps.

I must give credit where it's due, someone at my Bank phoned me a couple of weeks ago and said there were some recent debits on my account and he would like to go through them.Some were small sums I donate to charities but 2 I couldn't identify , one for £10 a month payable to a Company I had never heard of and one for £5 similarly unknown. I get quarterly payments to save paper.
I wrote and asked for these to be cancelled but the Bank replied there was no evidence of my instructions to initiate these payments and they could only give me the name,. Let this be a lesson to everyone.!!1 I checked back on recent purchases and had recently purchased some item from an online retailer FashionWorld for the first time. I phoned them and they said there was an affiliate of theirs which offers deals on purshases and they gave me the number. It turned out this Company had used my bank details without my knowledge and deducted £10 a month!!!! Anyway, they agreed to repay the money and cancel the direct debits......Bl***y cheek!!! I havn't traced the £5 one yet but it's good to know my bank is looking after my interests.

I HAVE RECEIVED A LETTER SAYING STATEMENTS COULD BE EVERY THREE MONTH INSTEAD OF EVERY MONTH LIKE NOW

Badboy wrote:I HAVE RECEIVED A LETTER SAYING STATEMENTS COULD BE EVERY THREE MONTH INSTEAD OF EVERY MONTH LIKE NOW

Badboy, If you don't use your account every day it makes sense and saves paper , to have quarterly Statements. You can always get an immediate balance from an ATM mini statement .

• 
  
  
  

The more we learn about the manipulation of the London interbank offered rate, the more expensive the scandal becomes for the financial institutions involved. If banks want to control the damage, they would do well to come clean sooner rather than later about the full extent and effect of their misbehavior.
Recent revelations about misdeeds at Barclays Plc, Royal Bank of Scotland Group Plc and UBS AG -- only three of more than a dozen banks under investigation -- are enough to keep lawyers and courts busy for years. In thousands of incidents throughout much of the 2000s, traders sought to manipulate Libor and other benchmark interest rates that influenced the value of hundreds of trillions of dollars in loans, bonds and derivatives. Judging from the traders’ communications, they often succeeded and profited handsomely. What’s more, the culture of deception was sometimes institutional. During the 2008 financial crisis, banks misrepresented their borrowing costs to make themselves look healthier than they were -- behavior that would have skewed payments on Libor-linked financial contracts worldwide.
While we can expect government settlements with the banks to be costly, it’s safe to assume that the ensuing civil litigation will be more expensive still. If, for example, payments on $300 trillion in financial contracts were off by only 0.1 percentage point for a year, plaintiffs could potentially demand compensation for $300 billion in losses. That’s the equivalent of more than four years’ net income for the 16 banks involved in setting Libor in 2008.
Triple Damages

As Bloomberg Markets reports in its latest issue, the lawsuits are piling up. At least 30 cases are pending in federal court in New York, many claiming triple damages under antitrust and other statutes. In London, lawyers are suggesting that the level of manipulation was so great that contracts tied to Libor should be considered null and void, forcing banks to return any related payments. Such a “nuclear option” could severely damage the legal foundation required for the broader financial markets to function.
How bad it gets depends largely on the banks. Intransigence and obfuscation would serve mainly to delay the reckoning and increase everyone’s legal bills. Alternatively, the banks could try to head off the litigation before it gets out of hand, taking an approach similar to that of oil giant BP Plc after the 2010 Deepwater Horizon disaster. This would entail releasing all available information on the banks’ actual borrowing transactions and making a best-possible estimate of how much Libor was off. It would also require all the banks involved to contribute to a joint fund and set up a mechanism to compensate victims willing to settle out of court.
Deutsche Bank AG co-Chief Executive Anshu Jain said Jan. 31 that CEOs of the institutions involved in the Libor scandal had discussed the possibility of a global settlement at the World Economic Forum in Davos. Although it wasn’t clear exactly what he had in mind, the talks suggest that the banks are capable of the necessary level of coordination.
A well-executed compensation fund would have the added advantage of demonstrating that the banks want to make a clean break with the sordid past and that they care how their behavior affects their customers. The question, then, is whether they really do.

City Diary: Financial Ombudsman’s PPI jobs offer 50 hair shirts for Barclays









The Financial Ombudsman is
taking on 50 staff this year to handle the "unprecedented" level of PPI
complaints






By Harriet Dennys, City Diary
Editor

7:00AM GMT 19 Feb 2013

Comment




Here's a chance for Barclays staff “let go” for mis-selling payment
protection insurance (PPI) to make amends.


The Financial Ombudsman service is so overwhelmed by PPI cases – it continues
to receive an “unprecedented” 8,000 to 10,000 complaints a week – that it is
looking to hire 50 ombudsmen this year.


Might ex-Barclays bankers who are, as the job advert puts it, “ready to look
beyond where you are now” think about throwing their hats in the ring? Granted,
the salary of a dispute-solver is less than that of a banker – £58,807, “plus
excellent benefits”.


But since the ombudsman’s funding arrangements ensure that “the businesses
responsible for generating the biggest workload contribute the most to sorting
it out”, then Barclays – the biggest PPI complaint generator in the most recent
records – would still (effectively) be underwriting the new hires’ salaries.



Home from home, in other words.
=============================
Banks started selling all kinds of things, Life Insurance, Property Ins, Holiday Ins. PPI's without any experience , pure greed motivated this departure from Banking . Add to this the lack of monitoring by the FSA and look at the result.
Yet still the Board and Traders of these Banks continue to earn mega Salaries while the good reputation of British Banking is in tatters.

Libor Lies Revealed in Rigging of $300 Trillion Benchmark


By Liam Vaughan & Gavin Finch - Jan 28, 2013 9:54 PM GMT
Bloomberg Markets Magazine







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





Enlarge image
Diamond Testifies in Libor Probe



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



Enlarge image
How Libor Was Rigged









Enlarge image
Gensler Began CFTC Investigation of Libor Manipulation



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



Enlarge image
London Lawyer Takes on Libor Banks



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



Enlarge image
Libor Score Card






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

• More from the March 2013 issue of Bloomberg Markets
  
• How Libor Works
  
• Jeanne Gang vs. Frank Lloyd Wright | Slideshow
  
• Shaking Up Korea Inc.
  
• The Perils of Doing Business in Russia
  
• Slideshow: The Top 20 Emerging Markets
  
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Danziger typically would have swiveled in his chair, tapped White on the shoulder and relayed the request to him, people who worked on the trading floor say. Instead, as White was away that day, Danziger input the rate himself. There were no rules at RBS and other banks prohibiting derivatives traders, who stood to benefit from where Libor was set, from submitting the rate -- a flaw exploited by some traders to boost their bonuses.

The next morning, RBS said it would have to pay 0.97 percent to borrow in yen for three months, up from 0.94 percent the previous day. The Edinburgh-based bank was the only one of 16 surveyed to raise its submission that day, inflating that day’s rate by one-fifth of a basis point, or 0.002 percent. On a $50 billion portfolio of interest-rate swaps, RBS could have gained as much as $250,000.
Events like those that took place on RBS’s trading floor, across the road from Bishopsgate police station and Dirty Dicks, a 267-year-old pub, are at the heart of what is emerging as the biggest and longest-running scandal in banking history. Even in an era of financial deception -- of firms peddling bad mortgages, hedge-fund managers trading on inside information and banks laundering money for drug cartels and terrorists -- the manipulation of Libor stands out for its breadth and audacity.
Details are only now revealing just how far-reaching the scam was.
“Pretty much anything you could do to increase the revenue of your organization appeared legitimate,” says Martin Taylor, chief executive officer of London-based Barclays Plc from 1994 to 1998. “Here was the market doing something blatantly dishonest. I never imagined that people in the financial markets were saints, but you expect some moral standards.”
Where Libor is set each day affects what families pay on their mortgages, the interest on savings accounts and returns on corporate bonds. Now, banks are facing a reckoning, as prosecutors make arrests, regulators impose fines and lawyers around the world file lawsuits claiming the manipulation pushed homeowners into poverty and deprived brokerage firms of profits.
For years, traders at Deutsche Bank AG, UBS AG, Barclays, RBS and other banks colluded with colleagues responsible for setting the benchmark and their counterparts at other firms to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators. UBS traders went as far as offering bribes to brokers to persuade others to make favorable submissions on their behalf, regulatory filings show.
Members of the close-knit group of traders knew each other from working at the same firms or going on trips organized by interdealer brokers, which line up buyers and sellers of securities, to French ski resort Chamonix and the Monaco Grand Prix. The manipulation flourished for years, even after bank supervisors were made aware of the system’s flaws.
“We will never know the amounts of money involved, but it has to be the biggest financial fraud of all time,” says Adrian Blundell-Wignall, a special adviser to the secretary-general of the Organization for Economic Cooperation and Development in Paris. “Libor is the basis for calculating practically every derivative known to man.”
More than five years after alarms first sounded, regulators and prosecutors are closing in. UBS was fined a record $1.5 billion by U.S., U.K. and Swiss regulators in December for rigging global interest rates. Tom Hayes, 33, a former yen trader at the Zurich-based bank, was charged by the U.S. Justice Department on Dec. 20 with wire fraud and price fixing for colluding with brokers, contacts at other firms and his colleagues to manipulate Libor. Hayes hadn’t entered a plea as of mid-January, and his lawyers at Fulcrum Chambers in London declined to comment.
Barclays paid a 290 million pound ($464 million) fine in June to settle with regulators, and three top executives, including CEO Robert Diamond, departed. Other banks, including RBS, were negotiating settlements in early 2013, according to people with knowledge of the talks. RBS may pay as much as £500 million to settle allegations that traders tried to rig interest rates, two people with knowledge of the matter say. UBS and Barclays admitted wrongdoing as part of their settlement agreements. Spokesmen for the two banks, and for RBS, declined to comment.

Banks should face 'much bigger fines', say MPs


Banks should be forced to pay much bigger fines if they “fail” to co-operate
with investigations into their misbehaviour, according to the Treasury Select
Committee.








The FSA should consider hitting
banks with 'much bigger' fines, according to the Treasury Select
Committee Photo:
PA







By Harry Wilson, Banking
Editor

6:30AM GMT 21 Feb 2013


8 Comments




The MPs said the Financial Services Authority should have more “flexibility”
to levy “much heavier penalties” against institutions found to be involved in
scandals such as Libor-rigging.


Firms found to have broken market rules are currently allowed as much as a
30pc discount on any fine if they begin helping the authorities early on in
their inquiries.


In its response to a Treasury Committee report on Libor, the FSA said the
degree of co-operation it received was a “relevant factor” when “determining the
appropriate sanction if action is taken”.


Barclays received a full 30pc discount from the FSA when it settled with the
US and British authorities over its involvement in attempts to manipulate key
global borrowing rates. The bank was fined £59.5m by the FSA instead of the £85m
fine it would have faced if it had refused to assist with the Libor
investigation.


However, the Treasury Committee said that regulators should be prepared to
take a tougher line in future settlements with those banks found to have broken
the rules.



Related Articles

• 
  FSA to publish internal Libor probe 'within
  weeks'
  21 Feb 2013
  
• 
  RBS Libor fine: what the authorities said
  
  06 Feb 2013
  
• 
  FSA fines UBS £160m over Libor rigging: FSA
  final notice in full
  19 Dec 2012
  
• 
  'Double strike’ fear for RBS over Libor
  fines
  25 Nov 2012
  
• 
  Barclays hit with £290m fine over Libor
  fixing
  27 Jun 2012
  

“Co-operation with inquiries needs to be encouraged by regulators, who need
to take into account first-mover disadvantage, but it does not excuse or
diminish wrongdoing. Nor does the fact that others may have been engaged in
similar practices,” said the Committee.

Andrew Tyrie, the Conservative chairman of the Committee, is currently
leading a cross-party commission looking at ethics in the banking industry. Mr
Tyrie said the Libor scandal showed “serious regulatory shortcomings” at the
FSA, which he said had to “shoulder its share of the blame”.

Mr Tyrie said the evidence he had seen showed the FSA had missed “early
warning signs” about the soundness of Libor.

The FSA is conducting an internal review into the scandal to see what if
anything it could have done to have clamped down on the manipulation.

The Royal Bank of Scotland this month became the latest lender to admit its
involvement in Libor-rigging, paying fines totalling £390m to the British and US
authorities.

Mr Tyrie said the new settlements showed the rigging of Libor and other rates
appeared to be “pervasive in the banking industry over a long period”.

DID I READ HERE OR IN GUARDIAN THAT BANKS LIKE LLOYDS HAVE MISSED THEIR TARGETS FOR SETTLING PPI CLAIMS.

Irish Will Be ‘Looked After’ as Bank Refund Chased, Noonan Says


By Finbarr Flynn & Joe Brennan - Feb 21, 2013 2:12 PM GMT

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Irish Finance Minister Michael Noonan says Germany and France have got his back.
Noonan is seeking as much as 30 billion euros ($39.6 billion) from Europe’s new rescue funds as a refund for the money it spent on the recapitalizing its surviving banks. German Chancellor Angela Merkel and French President Francois Hollande called Ireland a special case.
That phrase is “shorthand,” Noonan said in an interview with Francine Lacqua and Guy Johnson on Bloomberg Television inLondon today. The message is “we realized that there was a very heavy imposition put on you, so you’ll be looked after.”
Noonan’s comments come two weeks after Ireland’s government secured a deal to stretch out the cost of rescuing the former Anglo Irish Bank Corp., which he said removed a “millstone” from taxpayers. Now, Noonan wants back the money it put into the remainder of the banking system, mainly Allied Irish Banks Plc (ALBK)and Bank of Ireland Plc, after a real estate bubble collapsed in 2008. He said the banks won’t need new capital.
“While some of it was our own fault, a lot of the action was taken at the direction of the European Central Bank to prevent contagion spreading to the European banking system,”Noonan said. “As Ronald Reagan used to say, ‘we took one for the team.’”
Debt Plans

Irish bonds slumped in September after finance chiefs from Germany, the Netherlands and Finland excluded “legacy assets”from their rescue facility’s responsibility.
After a late afternoon phone call between Irish Prime Minister Enda Kenny and Merkel said Oct. 21 that Ireland is a“special case,” without elaborating what that might mean. Hollande used the same phrase a day later.
Ireland sought an international aid package in 2010 as the country came close to bankruptcy under the weight of rescuing its financial system.
Noonan said the International Monetary Fund is prepared to“hold our hand” as we exit the program at the end of the year. The government aims to sell a 10-year bond in the first half of this year, as part of a campaign to qualify for the ECB bond-buying program as a “backstop,” Noonan said.
“I don’t think we’d apply to avail of it,” he said. “We’d apply to use it as a backstop so that we could access the market, so that lenders would know that it’s there.”
Anglo Irish

On the restructuring of the Anglo Irish debt, Noonan said there is “no suggestion” that the agreement will be unwound. He also said he wasn’t surprised by the comments on the deal by ECB Governing Council member Jens Weidmann. The Bundesbank President said the transaction on the Irish promissory notes comes close to contravening a ban on the monetary financing of governments.
Discussions “had been going on for several months” and the deal couldn’t have happened unless agreed by all ECB council members including Weidmann, Noonan said.
“They didn’t challenge the fact that it was done and that it was in accordance with the treaty,” he said. “No rules were broken.”
The yield on Ireland’s bonds maturing in October 2020 rose 7 basis points to 3.72 percent. Ireland raised 500 million euro from the sale of 3-month Treasury bills earlier today, at an average yield of 24 basis points, an increase of four basis points on its last bill auction in January.

Italy Court Rejects Challenge to State Bailout of Paschi


By Elisa Martinuzzi & Sonia Sirletti - Feb 22, 2013 8:38 AM GMT

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An Italian court rejected a legal challenge to Banca Monte dei Paschi di Siena SpA receiving 3.9 billion euros ($5.2 billion) in state aid.
The court in Rome threw out the claim by consumer group Codacons that the Bank of Italy and other regulators didn’t adequately monitor the Siena-based lender’s activities, the court said in a ruling published on its website.





Enlarge image
Italy Court Rejects Challenge to State Bailout of Monte Paschi



Alessia Pierdomenico/Bloomberg
Visitors walk past a logo inside the Banca d'Italia in Rome. Under the government’s rescue plan, Monte Paschi will sell securities, dubbed “Monti bonds” after the prime minister’s surname, to the government with a 9 percent coupon that may rise to as much as 15 percent.
Visitors walk past a logo inside the Banca d'Italia in Rome. Under the government’s rescue plan, Monte Paschi will sell securities, dubbed “Monti bonds” after the prime minister’s surname, to the government with a 9 percent coupon that may rise to as much as 15 percent. Photographer: Alessia Pierdomenico/Bloomberg



Enlarge image
Italy Court Rejects Challenge to State Bailout of Monte Paschi



Alessia Pierdomenico/Bloomberg
The Banca d'Italia, Italy's central bank, stands in Rome. The bank is seeking financial aid from the government to bolster its balance sheet after failing to meet capital requirements set by the European Banking Authority.
The Banca d'Italia, Italy's central bank, stands in Rome. The bank is seeking financial aid from the government to bolster its balance sheet after failing to meet capital requirements set by the European Banking Authority. Photographer: Alessia Pierdomenico/Bloomberg



Enlarge image
Italy Court Rejects Challenge to State Bailout of Monte Paschi



Alessia Pierdomenico/Bloomberg
A pedestrian uses his mobile phone as he passes a Banca Monte dei Paschi di Siena SpA bank branch in Rome.
A pedestrian uses his mobile phone as he passes a Banca Monte dei Paschi di Siena SpA bank branch in Rome. Photographer: Alessia Pierdomenico/Bloomberg
As part of the suit Codacons sought access to a central bank technical opinion on Monte Paschi drafted last month and not released to the public. The document was filed to the court in sealed envelope. The central bank said two weeks ago Codacons’s assertions were “inadmissible and unfounded.”
“Blocking aid would have hurt Italy’s credibility,”Alessandro Frigerio, a fund manager at RMJ Sgr in Milan, said by telephone before the ruling was announced. “We have never seen a government procedure, backed by the central bank, obstructed by a tribunal.”
The parties can appeal the ruling at Council of State within 30 days. Officials for Codacons weren’t immediately available to comment.
Shares Gain

Monte Paschi, the best performer on FTSE MIB Index, rose as much as 3.3 percent, and was up 3 percent to 22.85 cents at 9:20 a.m. in Milan. The Bloomberg Europe Banks and Financial Services Index, which was up 0.6 percent today, has risen 22 percent in the last six months, compared with Paschi’s 4 percent decline.
Monte Paschi, engulfed by investigations of its former managers, said on Feb. 6 it will take a 730 million-euro hit to its assets after reviewing structured deals from 2008 and 2009 that hid losses. In one transaction that wasn’t fully disclosed, the bank made a money-losing bet on Italian government bonds in a structured deal disguised as a loan, Bloomberg News reported on Jan. 17. Accounting irregularities also prompted a criminal probe targeting previous management.
The bank is seeking financial aid from the government to bolster its balance sheet after failing to meet capital requirements set by the European Banking Authority. The company is also selling assets and reducing risk and costs in a three-year plan to restore liquidity.
Under the government’s rescue plan, Monte Paschi will sell securities, dubbed “Monti bonds” after the prime minister’s surname, to the government with a 9 percent coupon that may rise to as much as 15 percent. According to the decree approved by Monti’s Cabinet in December, the state aid is set to be completed by March 1.
=====================
Italy goes to the Polls on Sunday and apparently someone named "Grillo"? not sure about the spelling, a protest contender has surprised all the pundits by overtaking Berlesconi as front runner !!!

Exclusive: RBS Mis-Selling Bill To Add £1.1bn


New provisions for PPI and swaps compensation will cause
further headache for the state-backed bank, Sky News learns.


4:36pm UK,
Saturday 23 February 2013

RBS will set aside another £1.1bn to compensate
customers

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By Mark Kleinman, City Editor

The state-backed Royal Bank of Scotland (RBS) will next week set
aside another £1.1bn to compensate customers for mis-selling products to
consumers and small businesses.

I can reveal that the bank is preparing to say in its full-year results
announcement next Thursday that it is increasing its provision for mis-selling
interest rate swaps by roughly £700m, which will take its cumulative bill to
£750m.

City sources say that RBS will also announce that it is raising its payment
protection insurance (PPI) mis-selling bill by just over £400m, meaning it will
have put aside just over £2.1bn for its part in the industry-wide scandal.

The new provisions will further elevate the total bill for Britain's biggest
banks from two of the sector's biggest mis-selling episodes. RBS's new PPI
charge will mean that the four major lenders have had to provide more than £11bn
for compensation, while its hit on interest rate hedging products will enlarge
the industry bill to £1.6bn.

Neither of those figures will, however, include imminent upward revisions in
both categories by both HSBC and Lloyds Banking Group, which also report
full-year results in the next ten days.

Both RBS and Lloyds, which are 82% and 39% owned by British taxpayers
respectively, will report losses for 2012.

RBS is also expected to confirm that it is examining a separation of its US
retail banking business, Citizens, through a stock market listing in the US, in
a move that over time could raise billions of pounds for the British lender.

George Osborne, the Chancellor, is likely to welcome the move when he appears
in front of the Parliamentary Commission on Banking Standards on Monday.

Both Mr Osborne and David Cameron have been increasing the pressure on RBS's
management, led by chief executive Stephen Hester, to accelerate the group's
restructuring.

Mr Hester is expected to respond next week by pointing to a further
retrenchment of its investment banking operations. RBS, he is understood to be
preparing to say, will continue to reshape its operations into a British retail
bank that is also able to support the international business objectives of core
UK clients.

The new provisions for PPI and swaps mis-selling will reflect ongoing claims
trends and the recent agreement between the major banks and the Financial
Services Authority to offer redress to small business customers according to a
defined framework.

Barclays added another £1bn to its own mis-selling tab when it reported its
full-year results earlier this month.

The major banks have grudgingly accepted the swaps settlement with the City
regulator although they have argued that many of the cases for which they will
have to pay compensation should not be categorised as mis-selling.

They have also pointed to the vast numbers of bogus PPI claims they have
received, many of which have been paid out anyway. The industry has been
discussing the imposition of a time limit on PPI mis-selling claims although at
least one major bank is lukewarm about the idea.
----------------------------------------------------
I think these Bank Executives should be tried in Court , Hester , given the job by Brown should be sacked immediately these greedy b'stards have helped to destroy Britain's reputation around the World .

Panda wrote:Exclusive: RBS Mis-Selling Bill To Add £1.1bn


New provisions for PPI and swaps compensation will cause
further headache for the state-backed bank, Sky News learns.


4:36pm UK,
Saturday 23 February 2013

RBS will set aside another £1.1bn to compensate
customers

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By Mark Kleinman, City Editor

The state-backed Royal Bank of Scotland (RBS) will next week set
aside another £1.1bn to compensate customers for mis-selling products to
consumers and small businesses.

I can reveal that the bank is preparing to say in its full-year results
announcement next Thursday that it is increasing its provision for mis-selling
interest rate swaps by roughly £700m, which will take its cumulative bill to
£750m.

City sources say that RBS will also announce that it is raising its payment
protection insurance (PPI) mis-selling bill by just over £400m, meaning it will
have put aside just over £2.1bn for its part in the industry-wide scandal.

The new provisions will further elevate the total bill for Britain's biggest
banks from two of the sector's biggest mis-selling episodes. RBS's new PPI
charge will mean that the four major lenders have had to provide more than £11bn
for compensation, while its hit on interest rate hedging products will enlarge
the industry bill to £1.6bn.

Neither of those figures will, however, include imminent upward revisions in
both categories by both HSBC and Lloyds Banking Group, which also report
full-year results in the next ten days.

Both RBS and Lloyds, which are 82% and 39% owned by British taxpayers
respectively, will report losses for 2012.

RBS is also expected to confirm that it is examining a separation of its US
retail banking business, Citizens, through a stock market listing in the US, in
a move that over time could raise billions of pounds for the British lender.

George Osborne, the Chancellor, is likely to welcome the move when he appears
in front of the Parliamentary Commission on Banking Standards on Monday.

Both Mr Osborne and David Cameron have been increasing the pressure on RBS's
management, led by chief executive Stephen Hester, to accelerate the group's
restructuring.

Mr Hester is expected to respond next week by pointing to a further
retrenchment of its investment banking operations. RBS, he is understood to be
preparing to say, will continue to reshape its operations into a British retail
bank that is also able to support the international business objectives of core
UK clients.

The new provisions for PPI and swaps mis-selling will reflect ongoing claims
trends and the recent agreement between the major banks and the Financial
Services Authority to offer redress to small business customers according to a
defined framework.

Barclays added another £1bn to its own mis-selling tab when it reported its
full-year results earlier this month.

The major banks have grudgingly accepted the swaps settlement with the City
regulator although they have argued that many of the cases for which they will
have to pay compensation should not be categorised as mis-selling.

They have also pointed to the vast numbers of bogus PPI claims they have
received, many of which have been paid out anyway. The industry has been
discussing the imposition of a time limit on PPI mis-selling claims although at
least one major bank is lukewarm about the idea.
----------------------------------------------------
I think these Bank Executives should be tried in Court , Hester , given the job by Brown should be sacked immediately these greedy b'stards have helped to destroy Britain's reputation around the World .

Not only has Britain's reputation been destroyed by these obscene teflon suited crooks, millions of ordinary peoples lives, aspirations and homes have been ruined also. the likes of Blair, Brown and the bankers who caused and have profited from the disaster would be executed in countries such as China.... Now that would be a definite, 100% positive outcome if we had the same system here.

ARTICLES AND WHITEPAPERS Learn more about influential legal trends, and how you can harness them to become more efficient and reduce costs.

Libor's Long and Winding Road


February 11, 2013
When Paul McCartney sat at the piano of a Scottish farmhouse to pen the words to The Beatles' last number-one single, "The Long and Winding Road", he was describing the twilight of the iconic group that would soon part ways. When the song was released in the June of 1970, the London Inter-Bank Offered Rate, or Libor, was a mere twinkle in the eye of hopeful city bankers. But today, Sir Paul's song, which signaled the waning days of the iconic quartet, could well describe the beleaguered state of the once heralded and respected financial metric, which today faces a dubious and uncertain future. In June 2012, British banking giant Barclays PLC announced a blockbuster settlement with U.S. and U.K. regulators. While the settlement value grabbed attention at the time, the manipulation of the Libor, resting at the heart of the matter, proved far more consequential. But just as we see the Beatles are still selling albums on Apple's iTunes® 40 years later because of their dominance, Libor is a story that is likely to be with us for several years hence.

https://www.youtube.com/watch?v=st40Gps08KI&feature=endscreen&NR=1

It's an hour long but very interesting ...... Fred , the Guy responsible for this catastrophe out of shame eventually agreed to halve his Pension to £347,000 p.a.

Bankers' Bonuses: EU Agrees Cap On Payments


A deal to cap bankers' bonuses has been thrashed out by EU
officials as part of a package of banking reforms.


6:38am UK,
Thursday 28 February 2013

Britain opposed the measures, fearing job losses in The
City

• 
  
• 
  
• 
  
• 
  
  
  
  European Union officials have agreed a provisional deal to cap
  bankers' bonuses, despite the UK Government's efforts to protect the country's
  dominant financial services sector.
  
  The plan would see the maximum payout set at a year's salary but that could
  be increased to two year's salary with shareholder approval.
  
  The Treasury opposed the idea because it feared that limits could cost jobs
  in the City and prompt firms to leave for more favourable shores.
  
  The measures are part of a sweeping overhaul of EU banking rules, which are
  designed to ensure that banks in the future have enough capital to withstand
  financial shocks.
  
  Wednesday night's agreement, reached during an eight-hour session between EU
  lawmakers, the EU Commission and representatives of the bloc's 27 governments in
  Brussels, ensures the package can take effect next year.
  
  Currently there is no legal pay limit on top bankers and traders, who can
  earn performance bonuses many times their base salaries.
  
  But public outrage has grown across Europe over large payments to executives
  of banks that received huge state bailouts during the financial crisis.
  
  Supporters of the bonus cap say the payments encouraged bankers to take
  massive risks at the expense of the long-term future of their businesses, which
  helped to destabilise the financial system.
  
  Othmar Karas, the European Parliament's chief negotiator, said: "For the
  first time in the history of EU financial market regulation, we will cap
  bankers' bonuses.
  
  "The essence is that from 2014, European banks will have to set aside more
  money to be more stable and concentrate on their core business, namely financing
  the real economy, that of small and medium-sized enterprises and jobs."
  
  Final approval by parliament and government leaders of the package is
  expected to be a formality.
  
  Britain had tried to rally other EU governments behind its position but
  failed to garner enough support.
  

The Treasury opposed the idea because it feared that limits could cost jobs
in the City and prompt firms to leave for more favourable shores."
Ir was Banker's greed that caused this catastrophe and the Treasury opposed a sensible idea??? One Year's salary is plenty for a Bonus when these Traders and Boardroom Staff earn enough to start with.

28 February 2013 Last updated at 08:26

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Bankia turns in record loss of 19.2bn euros for 2012


Bankia was formed when seven
smaller savings banks were merged
Continue reading the main story
Related Stories

• Spanish bank has 'negative value'
  
• Ex-Bankia chief in Spanish court Watch
  
• Santander cuts branches in Spain
  

Spain's troubled Bankia - formed of
the merger of seven floundering savings banks - has reported a record loss.

The bank, which received aid of 18bn euros, made a loss of 19.2bn euros
(£17bn, $25.2bn) for 2012 and put aside provisions of 26.8bn euros.

Last year, Bankia and its parent firm, BFA, asked for EU funds to help
rebuild its capital.

Spain's bank rescue fund said Bankia itself had a negative value, although
its parent had some worth.

Bankia was born out of the merger of seven savings banks that were highly
exposed to Spain's property sector, which crashed five years ago.

The Bankia-BFA group as a whole made losses after tax of 21.2bn euros in
2012.

Bankia's seven component banks were severely damaged by their loans to
property developers and home buyers during the country's property bubble that
ended in the late 2000s.

The bank's shares were suspended at the start of the year.