Bl***y Banks Again

TURNS OUT ANGLO-IRISH BANK EXECUTIVES LIED TTO IRISH GOVERNMENT ABOUT AMOUNT OF MONEY NEEDED FOR A BAILOUT,SAID THEY NEEDED 7BILLION,BUT ENDED UP COSTING 30BILLION SO THEY COULD GET THE BAILOUT MONEY.

THERE WAS SOMEONE ABOUT BARCLAYS ETC TODAY

SEPARATELY I HEARD THAT SOME BRANCHES OF RBS ARE GOING TO BE SOLD OFF.

Hi Badboy, I think things will get a lot worse, these Banks really are in a mess and more will fail, China's economy is slowing down, the U.S. is teetering and the Government will not be able to borrow any more money from China or anyone else. The Banks responsible for rigging the Currency Exchange Rate will be brought to account and some may lose their Licence.

Panda wrote:Sainsbury's Bank deal could lead to 'domino effect' on UK banks, says FIS
Outsource project could pave the way for major banks to migrate systems
By Matthew Finnegan | Computerworld UK | Published 15:31, 09 May 13








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The outsourcing of Sainsbury’s Bank’s core banking IT could lead to a “domino effect” on the UK financial industry, FIS has claimed.
It was announced on Wednesday that Sainsbury’s would buyout Lloyds’ share of the 50/50 venture, which relied on using Lloyds’ legacy mainframe systems. Outsourcing and software provider for the financial sector, FIS, was chosen to lead the project of migrating retail-only Sainsbury’s Bank’s data over to its hosting environment.
Mark Davey, Executive VP at FIS, said that this is the first time a that an existing UK bank has taken the decision to move its entire banking platform to an external provider.

• Sainsbury's Bank to outsource entire banking system in £90 million migration project
  
  
  
• Nationwide Building Society hit by online banking outage
  
  
  
• Gartner: CIOs at big banks must step up to plate to get a grip on IT costs
  
  
  

“It is very rare to see a bank that is moving all of its system lock stock and barrel onto a new platform and environment,” he told Computerworld UK. “Normally banks do this one solution or product at a time.”

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He added: “In the UK market place there is really no bank of the scale of Sainsbury’s that has ever outsourced the running and the support of these applications ever before.”
However, Sainsbury’s Bank is not the first of any UK bank to outsource the running of its core banking systems using off-the-shelf software. Start-up Metro Bank also outsourced the delivery of its systems through Niu Solutions, running a core banking system from Temenos, and major banks have looked to external providers for elements of their banking IT. MetroBank chief executive Craig Donaldson previously said that the outsourcing of the bank’s IT was “crucial” to it becoming the first new entrant to the UK high street in 100 years.
For Sainsbury’s Bank though the challenge is moving from Lloyds existing infrastructure into the outsourced environment of FIS, an operation that is expected to take up to 42 months, following a year of preparations under a non-disclosure agreement with Sainsbury’s.
According to Davey the lengthy period of transition is necessary to avoid any disruption to the bank’s customers during the difficult process of migrating away from Lloyds’ legacy systems.
“Like any situation where you are moving from one system to another these things are complex and difficult and require an incredible amount of planning and execution, particularly if you don’t want to disrupt business operations which are a critical part of protecting the brand reputation of these organisations 

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url+'&intcmp=s_show_unit;' + chan + ';title' :

I agree.

It's a pain Lionel that gobbledegook ,I try to erase as much as I can. By Son is very clued up on computers and I asked him once why it doesn't happen on every copy and paste. Apparently it depends on whether what you are opying has already been copied , something like that.

I was talking to an ex boss of mine from my days a Ernst and Young in Jersey, I am going there soon and usually meet up with him and his wife. He says the financial  situation is worsening and there is a lot more bad news to come. o keep your money in a sock under the bed.:haha:Not funny really is it, what kind of inheritance for the next generation.

Church of England bids for RBS branches
The Church of England has blessed a consortium of financiers who are battling to win a bid for 315 Royal Bank of Scotland branches with millions of pounds of extra fire-power.

RBS was ordered to sell the portfolio of branches in 2009 by European competition authorities Photo: Getty Images
By Louise Armitstead, Chief Business Correspondent
6:29PM BST 27 Jun 2013
47 Comments
The Church Commissioners, which manages a £5.5bn investment portfolio, has joined a consortium lined up by Lord Davies, the former Labour minister and boss of Standard Chartered, which is vying with two other rivals to buy the branches. The other members of the consortium are Lord Rothchild’s RIT Capital; Centrebridge, an American investor, and Standard Life.

Archbishop Justin Welby, who recently sat on the Parliamentary Banking Standards Commission, is one of the Church Commissioners charged with directing the investment fund. However sources close to the deal said that the Archbishop of Canterbury was not involved in the decision to bid for the RBS branches which has been planned over many months.

RBS was ordered to sell the portfolio of branches in 2009 by European competition authorities after the bank received £45.5bn in state aid. Santander UK was lined up to buy the branches for an estimated £1.65bn, but pulled out of the deal in October complaining about IT problems.

Lord Davies, who is a partner of Corsair Capital, is part of a consortium whose other investors include Lord Rothschild’s RIT capital; Centrebridge, an American investor, and Standard Life. It is thought to be the first time the Church Commissioners have invested directly in a bank deal. The value of the investment is not known.

Their rivals are a second consortium comprised of a group of powerful institutional investors, including Schroders, Threadneedle and Foreign & Colonial. A third group, led by private equity companies, Blackstoen and AnaCap, also want to bid.

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The Church Commissioners, who declined to comment, have a stated aim to try to have positive ethical impact on the companies they own. As a shareholder in Barclays, the fund has engaged with the bank’s management to push for cultural changes in the wake of the Libor scandal.

In its annual report, the fund said: “Ethical conduct cannot simply be enforced. We will know that Barclays has truly transformed when it inspires its staff to make sustainable profits through serving its customers and fulfilling its fundamental role in society.”

13.26 The Government has officially fired the starting gun for the privatisation of RBS and Lloyds, asking investment banks to submit proposals by July 8. UK Financial Investments, which manages the Treasury's stake in the banks, is looking to appoint a bookrunner, co-lead managers, capital markets advisers and strategic advisors for the sales.

Barclays could cut lending to meet PRA capital rules, warns chief Antony Jenkins
Barclays could cut lending in the UK if it is forced to quickly meet new financial strength targets imposed by the regulator, the bank’s chief executive has warned.

Barclays was one of only two firms whose net UK lending was more than £1bn in the first quarter Photo: Bloomberg News
By Andrew Trotman
9:10PM BST 28 Jun 2013
Comments
The Prudential Regulation Authority told lenders last week that they must meet a 3pc leverage ratio. The PRA notified Barclays it fell short of these new rules by 0.5 percentage points and gave the bank until the end of July to say how it would close the gap.

However, Barclays chief Antony Jenkins said the lender would hit the target by 2015 and that any move to speed up this process could harm its domestic business.

“We have options to accelerate with minor income effects, but an aggressive acceleration requirement from the PRA would require additional actions ...,” he said, adding that this could include squeezing “lending to the UK and other economies, which is something we want to avoid”.

Mr Jenkins added that he is confident of an agreement with the PRA in the next month, with the regulator mindful that Barclays was one of only two firms whose net UK lending exceeded £1bn in the first quarter. Nationwide was the other.

“Given our starting point, we expect the July discussions will centre on possible acceleration,” he said, before arguing that the leverage ratio was a “crude” measure.

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A Bank of England spokesman said: "We have made it very clear that any plans that restrict lending to the economy will not be accepted.”

Barclays also said it plans to move 4,000 jobs, mainly focused on administration and the management of the bank’s computers and data. The announcement is part of a plan to save £250m over the next two years.

Private Banks Leave Switzerland as End of Secrecy Hurts

By Aaron Kirchfeld & Elena Logutenkova - Jun 30, 2013 11:01 PM GMT+0100





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For European lenders with private-banking aspirations, a presence in Switzerland used to be a must. Now, with bank secrecy eroding and rising compliance costs chipping away at profits, more are saying adieu.

The number of foreign-owned Swiss banks fell to 129 by the end of May from 145 at the start of 2012, according to data from the Association of Foreign Banks in Switzerland. Assets under management slid by a quarter to 870.7 billion Swiss francs ($921 billion) in the five years through 2012 as clients withdrew money or paid taxes on undeclared accounts, the data show.





Enlarge image









A Swiss flag sits above a bank in Geneva, Switzerland. Photographer: Valentin Flauraud/Bloomberg
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A crackdown on bank secrecy and increased regulatory scrutiny may unlock a wave of mergers and acquisitions in the next 12 to 18 months, according to bankers, consultants and analysts interviewed by Bloomberg News. While Switzerland remains the biggest center for global offshore wealth with $2.2 trillion, or about 26 percent of the market, according to Boston Consulting Group, departures may further chip away at the Alpine Republic’s status.

“There will be a bit of a shakeout among private banks,” said Felix Wenger, a Zurich-based director and co-head of the private-banking practice at consulting firm McKinsey & Co. “Specifically for Switzerland, some foreign players might conclude that an exit is a better option.”

Some already have. Lloyds Banking Group Plc, Britain’s biggest mortgage lender, sold its international private-banking business in May to Swiss wealth manager Union Bancaire Privee, which also bought part of the offshore business in Geneva from Spain’s Banco Santander SA a year ago. In 2009, Commerzbank AG sold its Swiss units and ING Groep NV disposed of its private bank in Switzerland.

HSBC, Generali

More deals may be imminent. HSBC Holdings Plc (HSBA), the biggest foreign private bank in Switzerland by assets under management, may sell parts of the unit, Chief Executive Officer Stuart Gulliver signaled in May. The bank doesn’t plan to exit Swiss private banking altogether, he said.

Italian insurer Assicurazioni Generali SpA is trying to sell BSI Group, the 140-year-old Lugano-based private bank. More banks may also be reviewing their presence in Switzerland, said Christopher Wheeler, a London-based analyst at Mediobanca SpA.

A report last week by PricewaterhouseCoopers LLP showed that an increasing number of wealth-management firms worldwide see more mergers. More than a third of those surveyed expect “significant consolidation” over the next two years, compared with 7 percent in the last two years, PwC said in the report.

Reviewing ‘Footprints’

The shake-up in Europe is leading to a widening gap between top performers and “also rans,” McKinsey said in an industry survey last month. Almost a third of private banks in the region had outflows of funds in 2012, while about one bank in six recorded a loss, according to the report, based on an analysis of more than 160 private banks globally.

“As a result, many players are reviewing their geographical footprint, especially in offshore markets, leading to renewed M&A activity,” the McKinsey report said.

An eastward shift in riches is nibbling away at Switzerland’s lead over rival centers of cross-border wealth. Its market share slipped to 26 percent from 27 percent in 2011, and by 2017 may decline to 25 percent, according to Boston Consulting’s Global Wealth report in May. Singapore is likely to grow to 12 percent from 10 percent, according to the forecasts.

Secrecy Crackdown

The U.S. has been investigating Swiss banks and units of foreign banks in the country, including that of London-based HSBC, after UBS AG (UBSN) in 2009 avoided prosecution by admitting it fostered tax evasion and delivering data on about 4,700 accounts of Americans. France and Germany have been searching for tax dodgers using data stolen from Swiss banks and also sharing some of the information with authorities in other European countries.

Agreements with the U.K. and Austria to collect taxes on behalf of those countries on accounts held in Switzerland have been in force since January, and Switzerland is in talks with other European countries on taxing secret accounts. The country will join the international push against tax dodgers and help develop global standards allowing banks to share customers’ details to combat tax evasion, Finance Minister Eveline Widmer-Schlumpf said in June.

“A combination of government actions from the U.S. and the EU and increased regulatory pressure is likely to trigger further changes in Swiss private banking because it will make it more costly to do business,” said Francois-Xavier de Mallmann, head of investment-banking services in Europe for Goldman Sachs Group Inc. “We expect consolidation to continue in private banking and to likely accelerate as the uncertainty weighing on the sector decreases.”

Margins Squeezed

St. Galler Kantonalbank AG (SGKN) agreed last week to sell parts of its Hyposwiss private bank, citing lower margins and rising costs. Julius Baer Group Ltd. (BAER) purchased Bank of America Corp.’s Merrill Lynch wealth management units outside the U.S. last year. Safra Group, founded in the Syrian city of Aleppo in the 19th century, agreed to acquire the Rabobank Groep’s controlling stake in Bank Sarasin & Cie. in November 2011.

“We’re going to see more of that,” Mediobanca’s Wheeler said. “It’s a question of whether you can afford it, whether it’s making the returns or whether it’s there to facilitate something else within the group.”

The pretax margin for the group of foreign banks in Switzerland fell to 20 basis points in 2012 from 38 basis points in 2007, calculations based on data from the association show. That includes some revenue from non-private-banking activities. A basis point is a hundredth of a percentage point.

‘Critical Mass’

A contraction in profitability in recent years has been more pronounced for offshore private banks than for onshore banks, according to the McKinsey report. That meant that the threshold for keeping attractive returns on assets booked in a particular country is moving toward 10 billion euros ($13.1 billion) from 5 billion euros, it said.

“Smaller players will either be forced to close or merge with larger banks as the compliance and regulatory costs become unbearable for banks which don’t have a critical mass,” said Eleni Papoula, a London-based analyst at Berenberg Bank, citing firms with less than 10 billion francs in assets under management. Information technology and compliance expenses are expected to increase given tighter regulation and greater scrutiny by the financial and tax authorities, she said.

Only about 20 of the foreign banks in Switzerland, including HSBC and Societe Generale SA (GLE), have close to or more than 10 billion francs in assets under management, data from the association show. The private-banking business sold by Lloyds in May had 7.2 billion pounds ($11 billion) of assets under management.

Reason to Exist

Some of the smaller ones are very focused on a particular market and are profitable, while others grew before the financial crisis by hiring relationship managers who brought in clients from all over the world, said Martin Maurer, secretary general of the Association of Foreign Banks in Switzerland.

“Now they don’t really have a good idea about why they should exist,” Maurer said. “They’re not focused on any particular markets or countries, don’t have a long tradition, and in those cases shareholders may not be interested in supporting businesses that make losses or very small returns on capital here and be exposed to risks.”

Banks in Switzerland will also need to develop new products and services to attract foreign clients now that banking secrecy is no longer an argument, said Ray Soudah, the founder and chairman of MilleniumAssociates AG, a Zurich-based independent M&A adviser focusing on the financial industry.

“Every country has its own tax rules and reporting, so banks have to have products and reporting for each country, and that’s a huge cost,” Soudah said.

As Switzerland tries to transform itself from a haven for undeclared funds, the private-banking landscape is likely to undergo a further makeover.

“Historically most international banks considered their Swiss private-banking presence as an important -- and often strategic -- part of their footprint,” said Goldman’s De Mallmann. “The question is how strategic will it be at the end of this period.”

Banks blocked entry to €10trn derivatives market, says inquiry



2 July 2013

Presseurop
EUobserver.com


“Thirteen big banks colluded to shut out competition from the multi-trillion euro derivatives market, according to an investigation by the European Commission”, reveals the EUobserver, outlining the conclusions of a large scale probe into bank practices.

The report says that banks including Barclays, BNP Paribas, Deutsche Bank and the Royal Bank of Scotland, who controlled industry organisations responsible for issuing licences, such as the International Swaps and Derivatives Association, colluded to avoid granting trading permits to rivals. These would have allowed competitors to take part in the €10 trn trade in credit default swaps (CDS), a type of insurance product designed to protect institutions against debt defaults. The news websites continues –


The banks allegedly coordinated their behaviour to jointly prevent the Deutsche Börse stock market and the Chicago Mercantile Exchange from being issued licenses allowing them to enter the CDS market. The two exchanges were allegedly shut out of the market between 2006 and 2009, covering the end of the credit boom and the financial crisis in 2008-9.

Quoting a statement made by Joaquin Almunia, European Commission vice president responsible for Competition Policy, the banks "delayed the emergence of exchange trading of these financial products because they feared that it would reduce their revenues."

If the investigation conclusions are confirmed and the banks are found to have breached anti-trust regulations, the Commission can impose fines of up to 10 per cent of a firm’s annual turnover.

Portugal’s Coalition Splinters on Austerity Fatigue

By Anabela Reis & Joao Lima - Jul 3, 2013 2:45 PM GMT+0100.
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..

Portuguese borrowing costs topped 8 percent for the first time this year after two ministers quit, signaling the government will struggle to implement further budget cuts as its bailout program enters its final 12 months.

Secretary of State for Treasury Maria Luis Albuquerque replaced Vitor Gaspar at the Ministry of Finance. That prompted Paulo Portas, who leads the smaller CDS party in the coalition government, to quit, saying the new minister would offer “mere continuity” of the country’s deficit-cutting plans.





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Pedro Passos Coelho, Portugal's prime minister, right, greats Vitor Gaspar, former finance minister, during a swearing in ceremony for new government ministers in Lisbon on July 2, 2013. Photographer: Mario Proenca/Bloomberg




3:52

July 3 (Bloomberg) -- Portuguese Prime Minister Pedro Passos Coelho has lost his finance minister and foreign minister as the final 12 months of the nation’s bailout program collide with mounting austerity fatigue. Manus Cranny reports on Bloomberg Television's "Countdown." (Source: Bloomberg)




0:42

July 3 (Bloomberg) -- Portuguese Prime Minister Pedro Passos Coelho said he won’t quit after a coalition partner resigned, adding to political uncertainty that has driven bond yields higher. (Source: Bloomberg)




6:36

July 3 (Bloomberg) -- Edmund Shing, non-executive director at Inferno, examines the state of the European debt crisis as Portugal becomes the latest center of risk, offers his investment outlook and explains why the U.K. economy is not so bad. He speaks on Bloomberg Television's "The Pulse."



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Maria Luis Albuquerque, Portugal's new finance minister, stands during a swearing in ceremony for new government ministers in Lisbon July 2, 2013. Photographer: Mario Proenca/Bloomberg



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Protestors march during a general strike in Lisbon, on June 27 2013. Photogrpher: Armando Franca/AP Photo
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“It sounds the alarm bell of austerity fatigue,” said David Schnautz, a strategist at Commerzbank AG in New York. “This domestic noise is definitely negative.”

Portugal’s 10-year (GSPT10YR) bond yield jumped above 8 percent today for the first time since Nov. 27. The rate was 7.84 percent at 2:40 p.m. London time. The nation pays an average 3.2 percent for loans it received as part of the aid package.

Prime Minister Pedro Passos Coelho is battling rising unemployment and a deepening recession as he cuts spending and increases taxes to meet terms of a 78 billion-euro ($101 billion) rescue plan monitored by the European Union, the International Monetary Fund and the European Central Bank, known as the Troika. Coelho announced measures on May 3 intended to generate savings of about 4.8 billion euros through 2015 that include reducing the number of state workers.

Coelho Speech

“I will try to clarify and guarantee with the CDS party all the conditions for the stability of the government and to proceed with the strategy of overcoming the nation’s crisis,” Coelho said in a speech last night, adding that he has no plans to resign.

The difference in yield that investors demand to hold 10-year Portuguese bonds instead of German bunds is about 617 basis points, exceeding this year’s average of 461. The gap is down from a euro-era record of 16 percentage points in January 2012.

“The issue at stake here is whether the present government follows policies of fiscal responsibility or not,” said Ciaran O’Hagan, head of European rates strategy at Societe Generale SA in Paris. “The public seems to imagine a better deal with the Troika can be struck, as if Greece and Cyprus are not sufficient warning.”

The eighth review of Portugal’s aid program is due to start on July 15, the Finance Ministry said on June 19.

Government Tensions

Coelho said he didn’t accept Portas’s resignation and hasn’t asked President Anibal Cavaco Silva to dismiss his partner, citing the foreign affairs minister’s role as leader of a coalition party.

President Cavaco Silva will meet with Coelho tomorrow and will also meet the country’s political parties following the foreign minister’s resignation request, the presidency said on its website today.

“Portas’s resignation is likely to prove final, and he seems to have the solid backing of both his party and its supporters,” Mujtaba Rahman, a London-based analyst at Eurasia Group, said in a note today.

Social Security Minister Pedro Mota Soares and Agriculture Minister Assuncao Cristas will hand in their resignations to Coelho today after a meeting of the CDS party’s executive commission, broadcaster TVI reported on its website last night, without saying how it obtained the information. Both ministers are from Portas’s CDS party.

“The grand bargain in the euro zone is that the strong, notably Germany and the ECB, support the weak and that the weak accept the conditions attached to such support,” Christian Schulz, an economist at Berenberg Bank in London, wrote in a note following the Portuguese resignations. “If one country were to lose the political will to stay the course, tensions in the euro zone could rise again.”

Market Return

Portugal has planned to return to the bond markets with the country’s aid package scheduled to end in June 2014. The nation sold 10-year bonds on May 7 for the first time in more than two years as a global decline in interest rates spurred demand for higher-yielding assets. Portugal had stopped selling bonds until this year after requesting the bailout in April 2011.

The country has started the pre-financing for 2014 and already has all of the funds it needs for this year, Gaspar said on May 7. The country’s debt is ranked below investment grade by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s.

“Ambiguity over the medium term financing plans is still something of a challenge,” Eurasia’s Rahman said.

A deeper recession and higher unemployment levels are “exacerbating social and political tensions and, in turn, testing the government’s resolve to continue with adjustment policies and reforms,” the IMF said June 13 in a staff report about the seventh review of the aid program.

Big Challenges

“The risks and challenges of the near future are enormous,” Gaspar wrote in his resignation letter dated July 1. “They demand government cohesion.”

The EU may consider extending the deadline for Portugal to meet its deficit targets if economic conditions worsen, Jeroen Dijsselbloem, head of the group of euro-area finance ministers, said on May 27. Dijsselbloem said the government hasn’t yet requested another change of timetables and targets.

The assumption is that “problems within the Portuguese coalition can be solved, and that the coalition remains committed to the program,” Dijsselbloem said today to lawmakers in The Hague.

Any new government is likely to accept the EU’s aid program as the opposition Socialist Party has voted with the governing coalition on key policy decisions including the European Stability Mechanism treaty, though Socialist leader Antonio Jose Seguro wants to renegotiate the existing aid package.

On March 15, the government announced less ambitious targets for narrowing the budget deficit as it forecast the economy will shrink twice as much as previously estimated this year. It targets a deficit of 5.5 percent of gross domestic product in 2013, 4 percent in 2014 and below the EU’s 3 percent limit in 2015, when it aims for a 2.5 percent gap. Portugal forecasts debt will peak at 123.7 percent of GDP in 2014.

Gaspar’s resignation shows the risk of reforms faltering, Organization for Economic Cooperation and Development Chief Economist Pier Carlo Padoan said yesterday at the Lisbon Council in Brussels. “Fatigue may suddenly erupt and the temptation to go backward may be very, very strong,” he said

NYSE body to run Libor as City attempts to put scandal behind it

Move follows decision to strip BBA of its association with benchmark rate, which will be run by a London-based subsidiary
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Jill Treanor

The Guardian, Tuesday 9 July 2013 16.10 BST



NYSE Euronext runs the New York Stock exchange and the London futures exchange. Photograph: Mark Lennihan/AP


Libor might stand for the London interbank offered rate, but from next year the scandal-hit benchmark rate will be set by the body that runs the New York Stock Exchange in the latest attempt to clean up the City.

Libor, which is used to price $300tn (£192tn) of financial products around the world, has been overseen until now by the British Bankers' Association (BBA). But its integrity has been questioned after banks and other financial firms were found to have rigged the rate.

The contract to run the process of setting the rate was put out to tender in April after Martin Wheatley, the boss of new City regulator the Financial Conduct Authority (FCA), concluded in a report that the BBA should be stripped of its long-running association with Libor. It is not clear if the Libor name will survive in the long term.

NYSE Euronext, which runs the New York Stock exchange and the London futures exchange and is itself in the throes of being taken over by a rival, is setting up a new London-based subsidiary to run Libor. NYSE Euronext Rate Administration Ltd will be regulated by the FCA, which is being given formal oversight of the rate amid the ongoing investigation into the way Libor was rigged in the past. It is thought to have paid £1 to take over the rate-setting function.

A year ago, Barclays became the first bank to be fined for Libor rigging by US and UK regulators, and forced to pay a total of £290m. Since then Swiss bank UBS and bailed-out Royal Bank of Scotland have been fined larger amounts. The FCA said it still had four other firms under investigation.

Wheatley said the selection of NYSE Euronext, which is thought to have seen off competition from data provider Thomson Reuters and the London Stock Exchange, was "an important step in enhancing the integrity of Libor".

NYSE Euronext runs stock market indices including the Cac 40 in France.

Certain changes to Libor have already been implemented. It was originally set by a panel of banks being asked the price at which they expect to borrow over 15 periods, from overnight to 12 months, in 10 currencies. The number of currencies has been reduced to five and rates published over seven borrowing periods. From this month the rates the banks submit are no longer published instantly but with a three-month delay. The data was collected by Thomson Reuters, which will no longer be involved, and published by the BBA.

The BBA will work with the new administrator, selected by a panel led by Lady Hogg, who chairs the Financial Reporting Council, until 2014 when the handover is expected to take place.

The government, which is under fire for watering down other aspects of banking reform, said the appointment of NYSE Euronext was part of its commitment to "developing a safer and strong banking sector".

"We want a financial sector that serves the interests of business and helps to drive economic growth. That is why since the Libor scandal last summer we have worked hard to reform this major international benchmark. For the first time it is under the scope of regulation and we have introduced a new criminal offence for the manipulation of Libor," said Greg Clark, financial secretary to the Treasury.

He was criticised on Monday by Andrew Tyrie, the Conservative MP who chaired the parliamentary commission on banking standards, also sparked by the Libor crisis, for introducing "virtually useless" reforms of the banking sector.





Article history


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Lloyds & RBS shares - what's next? (Hargreaves Lansdown)


=================================What a show up for Britain, once regarded as a Country of honest Bankers.!!!!!

RBS Exit Highlights Cost Challenge for Issuers













Declining profits and tightening regulation of structured products are prompting banks from Royal Bank of Scotland Group Plc to Rabobank Groep to quit the business.

RBS last week became the third European bank to close its structured products operation for retail investors since March, citing high capital costs and expenses for the securities. Dutch lender Rabobank Groep and Switzerland’s Basler Kantonalbank said they closed their businesses because new regulations for selling the products will increase costs and decrease demand.

The fight against the cartels: The Brussels informers (1/2)



9 July 201

At the end of June, the European Commission accused 13 banks of running an illegal cartel on the derivatives market. It is having more success uncovering such scams, often thanks to whistleblowing by those involved, according to a special investigation by Les Echos.

Renaud Honoré

At times, the life of a businessman can resemble a spy movie – one of those films where the hero pulls out a camera concealed in a matchbox to snap photographs of secret plans, raising his head now and then to keep an eye out for the sinister KGB agent lurking in the shadows.

The executive of the Degussa Group of chemical companies must have had such scenes in mind on the day in April 2002 when he found himself in a beautiful old office building in Zurich, camera by hand, trying desperately to collect evidence that would let his company wriggle out from under the wrath of the European Commission.

Before him on the table lay documents summing up 30 years of secret collusion by several chemical firms – his employer, Degussa, its affiliate Peroxid-Chemie, AkzoNobel and Atofina – to carve up a highly specific market, the market for organic peroxides. From 1971 onwards, these groups had been meeting in secret to divvy up customer share and fix the prices.

The conspiracy held together for almost three decades – right up to the moment it was betrayed. That was in April 2000, when AkzoNobel executives decided to denounce to the European Commission the racketeering they were into up to the elbows. A fit of sudden remorse? Not really: the group only wanted to take advantage of what is called the clemency procedure, under which the first member of a cartel to denounce it will see the hefty fine that it should otherwise pay written off. Even the other participants have an interest in quickly singing along: the second to confess may see its fine reduced by 30 to 50 percent, the third by 20-30 percent, and so on. It’s the protection of the penitent borrowed from the fight against the mafia and adapted to business circles.

Getting the proof

After the confession of Akzo, panic broke out in the cartel, and Atofina very quickly came calling. A few months later Degussa expressed its desire to work with the Commission. Its directors, though, got a cool reception from the officials of the European executive: “It’s very good that you have come to see us, but to qualify for a discount on your penalty we’re going to have to see some evidence that we don't have yet.”

How to do that? All the documents proving the agreement were in Zurich, locked away in the safe of Treuhand, the Swiss company that coordinates the cartel. There was only one thing to be done: one of the Degussa directors hopped on a plane to Zurich, on the pretext of some request or other of Treuhand, in order to photograph the incriminating documents on the sly. A few days later, officials of the Commission had all the pictures on their desks, including the document that immortalised the founding agreement – a pink paper from 1971 setting out the structure of the cartel. A masterstroke, which allowed Brussels to wrap up its investigation. The sanctions were imposed in 2003. The €34m fine that Degussa would have had to pay was reduced by 25 per cent.

Officials from the all-powerful "DG Comp" – the European competition authority, or Directorate General for Competition – could recount dozens of lurid stories like this. For the last 10 years, there has been a brisk trade in denunciations of secret agreements, about 80 per cent of which are punished at the European level thanks to a “snitch”. “This programme is really what has allowed us to knock the system off the rails. All the companies caught up in a cartel will have to ask themselves sooner or later if it isn’t better to turn in their bedfellows before being turned in themselves”, Olivier Guersent explains.

‘Mani Pulite’ approach

The current head of the office of Michel Barnier, the Internal Market Commissioner, knows the story by heart, since he created this procedure, then profoundly overhauled the investigative methods of the Commission. At the start, the idea – modelled on what had been done a few years earlier in the United States – was far from being greeted with unanimity in the corridors of Brussels. Several officials expressed their distaste at this Mani Pulite [the 1990s Italian investigation into political corruption] approach that placed the cartels at the same level as violent crimes.

In fact, between 1995 and 1999, the Commission levied “only” €292m in fines to punish the cartels. Then everything changed: that sum went up to €3.4bn between 2000 and 2004, and €9.4bn between 2005 and 2009! Between 2010 and 2012, it was still at €5.4bn. Without the snitches, Brussels and the competition authorities would have a much weaker hand in enforcing the law.

COULD CO-OP BANK BE NATIONALISED,AS GUARDIAN ARTICLE SUGGESTS?

Badboy wrote:COULD CO-OP BANK BE NATIONALISED,AS GUARDIAN ARTICLE SUGGESTS?

It could Badboy, but Britain doesn't need any more debt, they are trying to get rid of ROB , want to privatise the Post Office and it has been said that although the Co-op Bank is in trouble the rest of their business is sound and they can support the Bank until things improve.

Pensioners 'misled’ by Co-op Bank
The Co-operative Bank reassured pensioners that their investments were safe a month before announcing plans to slash their savings as part of a last-ditch bail-out.

The Co-op’s £1.5bn capital hole virtually wiped out its entire £1.7bn equity base, leaving it almost insolvent.
By Philip Aldrick, and James Quinn
9:30PM BST 13 Jul 2013
33 Comments
In emails seen by The Sunday Telegraph, a manager at the Co-op Bank told a worried pensioner that “there is no need to be concerned” about a £50,000 investment. The email was sent on May 13, just three days after the ratings agency Moody’s downgraded the bank to “junk” .

The following month, the Co-op suspended interest payments to pensioners and told savers they faced losses of at least 40pc on their investments. The bank also said it had a £1.5bn capital shortfall.

The pensioner wrote: “I am a member of the Co-operative Group and my wife and I ... are extremely fearful that we are about to lose all of this very important retirement savings nest-egg, the income from which we rely upon. We are very, very worried.”

The manager replied: “There is no need for you to be concerned. We do acknowledge the need to strengthen our capital position ... and we have a clear plan to drive this forward. I hope this provides some reassurance.”

At that point, the bank was in discussions with the regulator about the size of its capital shortfall. A month later it revealed it needed £1.5bn, £500m of which was to come from enforcing losses on bondholders.

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Including large investors, the bondholders have £1.3bn of debt, £65m of which is with 15,000 pensioners and small savers.

Last Friday, the Co-op offered bondholders an olive branch by promising to roll up interest and pay it out if the rescue plan is successful.

Co-op sources claimed that, if bondholders refused to accept the terms, the bank would be put into “resolution” – potentially wiping them out.

Details of the deal will be published in October.

Vince Cable, the Business Secretary, told The Sunday Telegraph that MPs should investigate the crisis. “I am sure the Treasury Select Committee will be wanting to have a careful trawl through what has gone on,” he said.

The Co-op’s £1.5bn capital hole virtually wiped out its entire £1.7bn equity base, leaving it almost insolvent.

Many of the pensioners affected rely on the interest the bonds pay, which ranges from 5.55pc to 13pc.

One retired nurse, who has joined a 1,300-strong action group being run by private investor Mark Taber, said: “[The bonds] made up 50pc of my income. I don’t know what I am going to do now.”

Another, who has power of attorney for his sick uncle, said: “I need to generate income from his capital sufficient to pay the care home fees, which are substantial.

“I have only placed his funds in investments described as 'low risk’ and as part of that, the acquisition of these [bonds] at a cost of £56,000. I am disgusted at the way they are seeking to recover their losses from pensioners and other people like my uncle whilst the Co-op virtually washes their hands of it.”

As well as the private bondholders, the Co-op is facing resistance to its plans from activist hedge funds that have bought up the cut-price debt in an attempt to negotiate profitable terms. The Co-op needs 77pc take-up for its £1.5bn rescue to work.

The Co-op said: “'We accept that one aspect of this communication raises questions, which we are looking into.

“We would note that the member of staff referred the bondholder to the bondholder helpline and informed the bondholder that financial advice could be sought. We apologise if the customer feels he was misled.’
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Ailing Co-op Bank could seek billions from taxpayers
Taxpayers risk having to provide billions of pounds of emergency support to the stricken Co-operative Bank if the mutual’s rescue plan fails.

Taxpayers could be on the hook if the Co-operative Bank's rescue plan fails Photo: Alamy
By Philip Aldrick, Economics Editor
10:00PM BST 14 Jul 2013
82 Comments
To fill a £1.5bn capital hole in its banking subsidiary, the Co-operative Group has drawn up plans inject £1bn itself and force bondholders to bear a £500m loss on their £1.3bn investment. However, the rescue needs the approval of 77pc of bondholders and, if they reject the deal, the group has threatened to put the bank into “resolution” with the Bank of England.

Under resolution, bondholders would potentially lose everything, but sources close to the situation confirmed that taxpayers would also be “at risk”. They said that, although the Government would not have to inject capital as it did with Royal Bank of Scotland and Lloyds Banking Group, it might have to provide a bridging loan.

In the previous “resolutions” of Bradford & Bingley and Dunfermline Building Society, the taxpayer provided bridging finance under arrangements to move customer deposits to rival banks. About £11bn was loaned to B&B in 2008, £8bn of which was outstanding in March last year, according to the National Audit Office. Another £1.5bn was raised for Dunfermline in 2009.

Resolving the Co-op Bank threatens to be more expensive than either earlier case because it has £36bn of customer deposits, roughly £27bn of which are retail and £9bn are corporate. B&B had just £22bn, and Dunfermline was tiny by comparison. Some of the Co-op Bank's £9bn corporate deposits have been withdrawn since its six-notch rating downgrade to "junk" in May.

Although losses on a taxpayer loan would be unlikely, the Chancellor would have to agree to raise debt in the markets at a time when he is trying to reduce government borrowing. In the case of B&B, the loan was not expected to be repaid for 10-15 years.

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Sources said there were a number of “resolution” options and that it would be up to the Treasury to decide what was in the taxpayers’ best interests. One alternative would be for the Bank of England to seize the Co-op Bank, resolve its capital issues by wiping out bondholders, and reprivatise it immediately – potentially over the course of a weekend.

Under such a scenario, taxpayer risk would be minimal. Politically, though, it might prove difficult to endorse a rescue that would wipe out 15,000 savers with £65m invested in Co-op Bank bonds. Many of them are pensioners who depend on the investment income.

The Co-op Group could yet be forced to sell its funerals or pharmacy business if the current rescue plan fails. However, it faces a major obstacle in its eight-strong banking syndicate led by Barclays, which has extended loans totalling £2.25bn to the group – including £1bn in July last year as part of a debt refinancing.

Under its loan covenants, the Co-op must make a large pre-payment to the syndicate if any major assets - such as the funerals or pharmacy business - are sold. The covenants are already close to being breached following the recent downgrade of the group’s credit rating to BB-.

Suggesting that the financial position of the group could be imperilled if it tries to help the bank any further, one source said: “The £1bn [group contribution to the bank rescue] is close to what its banks can stomach.”

A separate party of Co-op Group bondholders are also holding out against any further contributions by the group to the bank rescue. They are reported to have retained the law firm Ashurst to protect their interests.

Hedge funds have also been building up a position in the Co-op Bank's bonds in what may be an attempt to block the rescue plan to extact better terms from the group. The Bank and Co-op declined to comment.

14.32 Meanwhile in neighbouring Greece, protests are in full flow as a 24-hour general strike keeps much of the country at a standstill. Here are some snaps from Athens, where protesters are marching on the parliament, as it prepares to debate wide-ranging public sector job cuts.


A protester holds a banner featuring a man hanging from a euro logo as he marches to the Greek Parliament during a protest in Athens on Tuesday. Photo: AP


A woman holds a banner reading "We are Humans - Not Numbers", during a protest in Athens on Tuesday. Photo: AP



A municipal police member wears a Greek flag, reading: "Not for Sale", suring a demonstration as part of a general strike in Athens on Tuesday. Photo: AFP


14.00 Back in April we reported that Cyprus may have to sell its gold reserves to pay down its debt as part of the conditions of the €10bn EU-IMF bail-out. The sale is still under intense discussion in the island, but Cypriot finance minister Harris Georgiades is anxious to make clear that a gold sale is not a fait accompli.

The possibility of selling gold is known, but only as an option.

It will be considered, when the time comes, with options, or rather, all other options.



13.39 Brussels plans on asking the US and Japan to adopt its cost-cutting approach to dealing with the economic slowdown and to be mindful about how their monetary policy impacts on the rest of the world, according to Reuters, citing an EU document.

It will make the call during a summit of central bankers and finance ministers from the G20 this weekend in Moscow.

In a document setting out the position of the 27-nation European Union (EU) for the meeting, EU finance ministers say that the lack of an agreement on a credible medium-term fiscal consolidation plan in the US was a risk to the global economy.

The EU believes that US indecision over its government borrowing limit, and Japan's huge public debt with no clear plan on how to bring it down, undermines investor confidence and poses a wider risk to the global economy, according to Reuters.

BARCLAYS HAVE BEEN FINED FOR FIXING ELECTRICITY IN USA,SAID THEY DIDN'T DO ANYTHING WRONG

Fed Reviews Rule on Big Banks’ Commodity Trades After Complaints

By Bob Ivry - Jul 21, 2013 2:38 AM



..


Stephen Morton/Bloomberg

Warehouse companies don't own the aluminum in their facilities; they store it on behalf of the ultimate owners.

When the Federal Reserve gave JPMorgan (JPM) Chase & Co. approval in 2005 for hands-on involvement in commodity markets, it prohibited the bank from expanding into the storage business because of the risk.





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Aluminum stockpiles in warehouses have surged. Photographer: Stephen Morton/Bloomberg
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Five years later, JPMorgan bought one of the world’s biggest metal warehouse companies.

While the Fed has never explained why it let that happen, the central bank announced July 19 that it’s reviewing a 2003 precedent that let deposit-taking banks trade physical commodities. Reversing that policy would mark the Fed’s biggest ejection of banks from a market since Congress lifted the Depression-era law against them running securities firms in 1999.

“The Federal Reserve regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies,” said Barbara Hagenbaugh, a Fed spokeswoman. She declined to elaborate.

That reconsideration comes as a Senate subcommittee prepares for a July 23 hearing to explore whether financial firms such as Goldman Sachs Group Inc. and Morgan Stanley (MS) should continue to be allowed to store metal, operate mines and ship oil. At a time when JPMorgan faces a potential fine for alleged manipulation of U.S. energy prices, the panel will discuss possible conflicts of interest in the business model, said its chairman, U.S. Senator Sherrod Brown, an Ohio Democrat.

Potential Manipulation

“When Wall Street banks control the supply of both commodities and financial products, there’s a potential for anti-competitive behavior and manipulation,” Brown said in an e-mailed statement. Goldman Sachs, Morgan Stanley and JPMorgan are the biggest Wall Street players in physical commodities.

The 10 largest banks generated about $6 billion in revenue from commodities, including dealings in physical materials as well as related financial products, according to a Feb. 15 report from analytics company Coalition. Goldman Sachs ranked No. 1, followed by JPMorgan.

While banks generally don’t specify their earnings from physical materials, Goldman Sachs wrote in a quarterly financial report that it held $7.7 billion of commodities at fair value as of March 31. Morgan Stanley had $6.7 billion.

On June 27, four Democratic members of Congress wrote a letter asking Fed Chairman Ben S. Bernanke, among other things, how Fed examiners would account for possible bank runs caused by a bank-owned tanker spilling oil, and how the Fed would resolve a systemically important financial institution’s commodities activities if it were to collapse.

Hearing Critics

Given such attention, the Fed’s re-examination of its policy shows the central bank isn’t tone deaf to criticism, said Joshua Rosner, managing director at New York-based research firm Graham Fisher & Co. and a witness scheduled to testify at the hearing of a subcommittee of the Senate Banking, Housing and Urban Affairs Committee.

“Given the inconsistencies on its oversight on these issues, the Fed seems to be trying to cover its backside,” Rosner said.

For more than 50 years, the Bank Holding Company Act prevented federally guaranteed banks, such as JPMorgan, from direct participation in commodity markets. The prohibition didn’t pertain to Goldman Sachs and Morgan Stanley, which were investment banks, until they became bank holding companies in 2008. After that, the Fed gave both banks a five-year grace period, which expires in September, while regulators decided whether to curtail their activities related to metals, fuels and other goods.

‘Virtually Impossible’

Now, “it is virtually impossible to glean even a broad overall picture of Goldman Sachs’s, Morgan Stanley’s, or JPMorgan’s physical commodities and energy activities from their public filings with the Securities and Exchange Commission and federal bank regulators,” Saule T. Omarova, a University of North Carolina-Chapel Hill law professor, wrote in a November 2012 academic paper, “Merchants of Wall Street: Banking, Commerce and Commodities.”

The added complexity makes the financial system less stable and more difficult to supervise, she said in an interview.

“It stretches regulatory capacity beyond its limits,” said Omarova, who is slated to be a witness at the Senate hearing. “No regulator in the financial world can realistically, effectively manage all the risks of an enterprise of financial activities, but also the marketing of gas, oil, electricity and metals. How can one banking regulator develop the expertise to know what’s going on?”

Colombian Coal

Goldman Sachs owns coal mines in Colombia, a stake in the railroad that transports the coal to port, part of an oil field off the coast of Angola and one of the largest metals warehouse networks in the world, among other investments. Morgan Stanley’s involvement includes Denver-based TransMontaigne Inc. (TLP), a petroleum and chemical transportation and storage company, and Heidmar Inc., based in Norwalk, Connecticut, which manages more than 100 oil tankers, according to its website.

Mark Lake, a spokesman for New York-based Morgan Stanley, referred to company regulatory filings that said the bank didn’t expect to have to divest any of its activities after the grace period ends. He declined to elaborate or to comment on the Fed’s announced rule review.

Brian Marchiony, a spokesman for JPMorgan, also declined to comment on the review, as did Michael DuVally, a Goldman Sachs spokesman.

Citigroup’s Creation

To gain Fed approval, bank holding companies must show that their involvement in physical commodities would relate to a financial activity of the bank, according to the law.

Citigroup Inc. (C)’s creation through mergers required Congress in 1999 to repeal the Depression-era Glass-Steagall Act, which had forced deposit-taking companies backed by government insurance to be separate from investment banks.

In a landmark decision in 2003, the Fed allowed Citigroup to continue making transactions in physical commodities after finding them complementary to the firm’s trading and investing in financial instruments. The New York-based bank otherwise would have been forced to divest its Phibro energy-trading unit. Citigroup agreed to sell Phibro to Occidental Petroleum Corp. in 2009.

JPMorgan, the biggest U.S. bank, inherited electricity sales arrangements in California and the Midwestern U.S. in 2008 when it bought failing investment bank Bear Stearns Cos. Its February 2010 purchase of RBS Sempra Commodities LLP’s worldwide oil and metal investments and European power and gas assets was also a distressed transaction. The European Union ordered Royal Bank of Scotland Group Plc to sell its controlling stake in the firm after a taxpayer bailout.

New Competition

Part of that deal was Liverpool, England-based Henry Bath & Son Ltd., a founding member of the London Metal Exchange in 1877 and the operator of 76 exchange-licensed warehouses in eight countries, according to LME data.

In a November 2005 order allowing JPMorgan to expand into trading physical commodities, the Fed mentioned such possible adverse effects as “undue concentration of resources, decreased or unfair competition, conflicts of interests or unsound banking practices.” All of them would probably be outweighed by the public benefit of introducing new competition to markets for physical commodities and commodity derivatives, according to the order. Derivatives are financial instruments used for speculation or to hedge risks and can derive their value from the prices of commodities.

No Storage

The 2005 order also directed JPMorgan to stay out of the business of extracting, storing or transporting commodities to minimize its exposure “to additional risks.”

The 2003 ruling now being reconsidered by the Fed marked “a radical departure” from bank holding companies’ past practices, said Karen Shaw Petrou, managing partner of Washington-based Federal Financial Analytics, in an interview.

The Fed is “certainly going out of its way to send a signal,” she said. While it’s hard to predict whether officials will reverse the ruling, “it sounds like it is a real dialing back.”

The central bank has not made public any order showing that it changed its mind. The Fed’s Hagenbaugh declined to comment, saying that supervisory information on an individual bank was confidential. Marchiony, the JPMorgan spokesman, declined to comment. Neither Stephanie Allen, a Commodity Futures Trading Commission spokeswoman, nor Bryan Hubbard, her counterpart at the Office of the Comptroller of the Currency, which oversees retail banks, said they had any knowledge of a waiver.

Detroit Warehouses

In February 2010, Goldman Sachs bought Romulus, Michigan-based Metro International Trade Services LLC, which as of July 11 operates 34 out of 39 storage facilities licensed by the London Metal Exchange in the Detroit area, according to LME data. Since then, aluminum stockpiles in Detroit-area warehouses surged 66 percent and now account for 80 percent of U.S. aluminum inventory monitored by the LME and 27 percent of total LME aluminum stockpiles, exchange data from July 18 show.

“The warehouse companies, which store both LME and non-LME metals, do not own metal in their facilities, but merely store it on behalf of the ultimate owners,” said DuVally, the Goldman Sachs spokesman. “In fact, LME warehouses are actually prohibited from trading all LME products.”

Traders employed by the bank can steer metal owned by others into Metro facilities, creating a stockpile, said Robert Bernstein, an attorney with Eaton & Van Winkle LLC in New York. He represents consumers who have complained to the LME about what they call artificial shortages of the metal.

Supply Accumulates

With so much metal already in storage, the warehouses can afford to offer incentives to owners of the metal to store even more, earning additional rent through volume. The LME requires a daily minimum amount of metal to leave the warehouses; it doesn’t specify how much can enter. As supply accumulates, traders can finance the metal, Bernstein said.

Financing typically involves the purchase of metal for nearby delivery and a promise to sell it at a later date to take advantage of a market in contango, where prices rise into the future, Bernstein said. The transactions are made easier by record-low borrowing costs after central banks cut interest rates to boost economic growth.

“Users who need the metal can’t get it, and the money they make is coming at the expense of the American consumer,” Bernstein said.

Since 2010, the additional cost to aluminum users is about $3 billion annually, according to the Beer Institute, a Washington-based trade group that represents brewers.

Glut Premiums

Buyers have to pay premiums over the LME benchmark prices even with a glut of aluminum being produced. Premiums in the U.S. surged to a record 12 cents to 13 cents a pound in June, almost doubling from 6.5 cents in summer 2010, according to the most recent data available from Austin, Texas-based researcher Harbor Intelligence.

Warehouses are creating logjams, said Chris Thorne, a Beer Institute spokesman.

“Restrictive and outdated warehousing rules are interfering with normal supply-and-demand dynamics, creating supply-chain bottlenecks, and preventing brewers and other aluminum users from getting aluminum in time and at fair market prices,” Thorne said.

The LME has proposed new guidelines, slated to take effect in April, that would link the amount of metal leaving a warehouse to the amount going in. The proposal would affect warehouses with waiting times longer than 100 days. The queue in Detroit is more than 400 days, according to a July 9 report by Barclays Plc analysts led by Gayle Berry. If rents stay where they are, the rule change would cut Detroit-area warehouse fees by as much as 70 percent, the analysts said.

Risky Forays

It’s difficult to say how expansive the central bank’s review of banks’ commodities activities might be, said Rosner.

“Even if the Fed forces the sale of the warehouses, it’s unclear if they are serious about addressing our systemically risky banks’ forays into critical non-financial businesses,” he said.

Already, tougher regulations and lower profits have persuaded JPMorgan and Goldman Sachs to look for buyers for their warehouse networks, the Financial Times said on July 14, without citing a source.

Pressures on banks to curtail commodities businesses include stiffening capital rules, a regulatory crackdown on trading practices and an industry slump. Commodities revenue at the 10 largest firms slid 24 percent in 2012, and was down 54 percent in the first quarter from a year earlier amid low volatility and fewer client trades, according to Coalition.

Different Structures

Morgan Stanley is cutting 10 percent of its workforce in commodities, a person briefed on the matter said last month. Chief Executive Officer James Gorman said in an interview last week that he’s open to different structures in that business.

“We have no compulsion to act rashly,” he said. Morgan Stanley held talks last year with Qatar’s sovereign-wealth fund about selling a stake in the business. The deal could have added capital.

JPMorgan is nearing an agreement with the Federal Energy Regulatory Commission to settle allegations that the bank manipulated electricity prices in California and the U.S. Midwest, the Wall Street Journal reported. A deal could cost the bank $500 million, the New York Times said, citing people briefed on the matter. JPMorgan’s Marchiony declined to comment.

The negotiations come after FERC ordered London-based Barclays and Deutsche Bank AG, Germany’s biggest bank, to pay fines for allegedly manipulating energy markets. Deutsche Bank agreed in January to pay $1.6 million with no admission of wrongdoing. Barclays said this month it would “vigorously” fight the $487.9 million in combined fines and penalties.

Financial regulators face an increasingly complex task at the largest U.S. banks. In 1990, the four biggest bank holding companies had, combined, about 3,000 subsidiaries, according to researchers at the Federal Reserve Bank of New York. By 2011, the top four had more than 11,000.

Barclays to Raise 5.8 Billion Pounds in Rights Offering
Q


Barclays Plc, the U.K.’s second- largest bank by assets, said it will raise 5.8 billion pounds ($8.9 billion) in a rights offering to bolster capital as it booked its biggest charge to date for customer compensation.
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Deutsche Bank Profit Unexpectedly Falls on Legal Costs
Q


Deutsche Bank AG, continental Europe’s biggest bank, said second-quarter profit fell 49 percent as it set aside 630 million euros ($796 million) for legal costs. The shares slumped.
..





Stocks From Asia to Europe Advance as Aussie Weakens
Q


Asian shares rose for the first time in five days and European equities increased as Japanese stocks rebounded. Australia’s dollar slid the most in a month as the central bank governor signaled lower interest rates if required. The yen fell.
..





UBS Posts Higher Net, Plans to Buy Back Fund From SNB
Q


UBS AG plans to buy back the fund set up by the Swiss central bank in 2008 to help it shed toxic assets, as Switzerland’s biggest bank seeks to boost capital.
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Several Banks are feeling the effects of the massive Fines they have to pay, mostly to the Federal Reserve, had the BOE and the Ftse been more on the Ball, Britain would have profited.!!

Free trade versus single market



30 July 2013
Ekonom Prague



The EU-US trade deal will bring benefits to both sides, but will pose challenges to the internal trade for both sides, plus harm the economies of other countries, writes a Czech commentator following the publication of a report by the Bertelsmann Foundation.

Martin Tlapa

The European Union and the United States are currently the largest trade and investment partners in the world, accounting for almost half of the global gross domestic product and almost a third of the volume of all world trade. If they do manage to work out an ambitious free trade agreement, commercial activities in all the EU’s member countries that deal with the US will see a sharp increase in business. Some traditional business ties within the EU, will, however, be almost sure to weaken. As a result, some states will become economically less dependent on the EU’s internal market, which will be one of the greatest achievements and most important benefits of European integration.

The EU’s single market, built on four basic building blocks – the free movement of people, services, goods and capital – is the largest economic zone in the world. Its creation eliminated scores of administrative and technical barriers between the markets taking part. Removing regulatory barriers to mutual trade with the US brings a certain risk of the diversification of trade links that would be caused by the loss of some of the current benefits that come from preferential treatment within the internal market.

If the agreement is signed, trade between Germany and the US could almost double. Similarly, total turnover in international trade between the US and Italy, Greece and Portugal is also predicted to increase. However, trading among the EU’s states themselves would suffer significant declines. Mutual trade between Germany and France, according to the estimates, would drop by up to 23 per cent, and between Germany and the United Kingdom by up to 40 per cent. Economic ties among the European states nevertheless play an important role, and to a large extent they are reflected in policy decisions taken in the context of European integration. It is the internal market’s benefits that can often be thought of as the glue that holds the community together. Naturally, the question of whether the drop-off in economic cooperation will have an effect on the unity of the union as a whole arises.

Boosting trade and cutting costs

In this context, we must be aware that no matter how ambitious the agreement to dismantle a significant amount of regulatory barriers, it will probably not bring with it a degree of harmonisation as extensive as that which currently exists among the member states of the European Union. Talk about the possible emergence of a Euro-American Union or Euro-American United States is misplaced. The transatlantic free trade area may also help advance the project to complete the internal market and liberalise areas where certain partial barriers to mutual trade are still in place and over-regulation lingers on.

Making mutual trade between the EU and the US easier will not only bring an increase in trade, but also reduce production costs and purchase prices, which will be reflected in greater economic growth. Those who will benefit most from the agreement will be states that have traditionally strong trade ties to the United States, such as the United Kingdom and Ireland. Considerable economic growth, however, will also be felt in Spain and Italy, which to some extent will replace more expensive imports from the European Union with less expensive products from the United States. One intriguing outcome of the study is that the transatlantic partnership will not lead to a further entrenching of the economic differences between the traditionally strong northern states and those in the south, which has been hit hard by the crisis, but rather the contrary.

Successful negotiations on the partnership will open up new business opportunities for small, medium and large enterprises on both shores of the Atlantic, and so significantly boost the creation of new jobs. Increasing the volume of trade between the parties can, under the best scenario, give rise to more than one million new jobs across the EU. The most to benefit from those jobs will be the citizens of the United Kingdom, Germany, Spain, Italy and France. In times of crisis and rising unemployment, the agreement can become a relatively low-cost stimulus package to spur economic growth and boost employment.

‘Most important’ deal in history

The partnership between the European Union and the United States will become the most important bilateral trade agreement in history, not only in terms of the volume of international trade that would be subject to its rules, but, above all, in how it will influence international trade as a whole. The agreement between the two main drivers of the global economy will send a clear signal that both partners have enough clout to influence and to create new rules and standards of the global trade markets of the 21st Century.

According to the results of the study, the profits to the signatories to the agreement will, in essence, come out of the pockets of other countries. The biggest losses will probably be suffered by the “BRICs”countries (Brazil, Russia, India, China), whose exports to the European Union will on average be reduced by up to 10 per cent and to the United States by up to even 30 per cent. The weakening of their trade links with the EU and the United States can lead to significant economic losses in those other countries, linked to a rise in unemployment and a fall in real income.

Last but not least, the timetable has to be looked at realistically. The ambition to close the deal on the transatlantic partnership within two years is probably out of step with the complexity of the agreement. The direction and the dynamics of the negotiations we will soon discover. The United States are betting on the need for Brussels to bring some visible boost to the sagging economy of the EU. The EU’s negotiators, however, must bear in mind that the “open window of opportunity” to negotiate the agreement will shut with the end of the current American presidency. On both sides of the Atlantic, everyone knows that elections are not won by liberalising international trade.

On the web
Original article at Ekonom cs
Bertelsmann Foundation report en

Related
EU-US trade negotiations: Talking terms on the deal of the century
The Daily Telegraph London

Transatlantic trade agreement: A good deal for Cameron and Obama

RBS Sees Profit Of £1.37bn In First Half
Last Updated: 7:35AM 02/08/2013


The taxpayer-backed Royal Bank of Scotland has reported a half-year pretax profit of £1.37bn, compared to a £1.68bn loss in the same period last year.

The bank also confirmed the news, first revealed by Sky News City Editor Mark Kleinman on July 23, that Ross McEwan will replace current chief executive Stephen Hester.

RBS, 81% owned by the taxpayer, said in a statement that Mr McEwan would take on his new role from October 1, ahead of the bank's return to the private sector.

Mr McEwan, 56, will receive an annual salary of £1m and will also receive a cash allowance in lieu of a pension totalling 35% of his salary.

While he is eligible to receive a long term incentive award in 2014, Mr McEwan does not wish to be considered for an annual bonus in 2014 or for the remainder of 2013, a statement from the bank said.

RBS has also set aside another £185m in the second-quarter for insurance mis-selling of payment protection insurance (PPI), along with £385m for unspecified legal provisions.

The bank has now set aside a total of £2.4bn over the mis-selling of PPI.

Last Updated: 9:51AM 02/08/2013





Am ex-Goldman Sachs trader who earned the nickname "Fabulous Fab" has been found liable in a fraud case linked to the 2007 mortgage crisis that helped push the country into recession.


Fabrice Tourre, a French-born Stanford graduate, became the face of Wall Street greed after he once joked about selling toxic mortgage assets to "widows and orphans".

He was accused of misleading institutional investors about subprime mortgage securities that he knew were doomed to fail.

This set the stage for a valued Goldman hedge fund client, Paulson & Co. Inc., to secretly bet against the investment.

The manoeuvre ended up making $1bn for the hedge fund and its wealthy president, John A Paulson, and millions of dollars in fees for Goldman.

Thursday’s verdict at the civil trial in Manhattan federal court represents the most high-profile legal action by the Securities and Exchange Commission (SEC) related to the subprime meltdown.

The 34-year-old was found liable in six of seven SEC fraud and other claims and faces potential fines and a possible ban from the financial industry.

The SEC also sought to show that it helped earn Tourre a bonus that boosted his salary to $1.7m in 2007.

In closing arguments, Martens called Tourre's testimony "surreal, imaginary, unreal, dream-like" and told jurors that the defendant wanted them "to live in his imaginary land ... to live in a fantasy world."

"Only if you close your eyes to the facts, you can find Mr Tourre not liable for his actions," the SEC lawyer said.

Tourre's lawyer, John Coffey, countered that the government had "unjustly accused him of wrongdoing".

Mr Coffey urged jurors to put the investment's failure in perspective, noting that all similarly packaged securities "went off the cliff as well" after 2007.

Some of the evidence focused on a personal email Tourre sent to his girlfriend in France.

The SEC lawyers said it proved the hubris of a man at the centre of a massive fraud, while the defence claimed it was "an old-fashioned love letter" penned by a young trader who was full of self-doubt and angst over upheaval in the financial world.

Writing in French, Tourre said of the financial markets: "The whole building is about to collapse any time now."

"Only potential survivor, the fabulous Fab ... Standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

Pressed by Marten on what he meant, Tourre said, "I didn't create any monstrosities."

Goldman settled with the SEC in 2010 by paying a $550m fine without admitting or denying wrongdoing.

Tourre left the firm in 2012 and is studying for his doctorate in economics at the University of Chicago.

A former SEC enforcement lawyer, Jacob Frenkel said that although Tourre was a "small player", the outcome marked an important victory for federal regulators.

He said: "The SEC had a lot at stake in this case. This validates the SEC's high-risk gambit to take on Goldman Sachs in connection with this transaction."

Home»Finance»News by Sector»Banks and FinanceRBS and Lloyds: A tale of two state-owned banks
The contrast between state-backed lenders Royal Bank of Scotland and Lloyds Banking Group was looking starker than ever.

Despite reporting its first two consecutive quarters of profitability in five years and the appointment of a new chief executive, shares in RBS were down sharply on Friday. Photo: Getty Images
By Harry Wilson
10:29AM BST 02 Aug 2013
2 Comments
After Thursday's triumphalism at Lloyds Banking Group where executives did everything bar unfurl a giant 'Mission Accomplished' banner as the lender reported a strong set of first half results, Royal Bank of Scotland was always going to find it a hard act to follow.

Despite reporting its first two consecutive quarters of profitability in five years and the appointment of a new chief executive, shares in RBS were down more than 5pc on Friday morning compared to a 6pc jump at Lloyds on Thursday.

The contrast between the two banks is even more stark if you look at their market values.

Lloyds boss Antonio Horta-Osorio could not resist pointing out that his bank's capitalisation is now two and a half times that of RBS.


He could have also pointed out, but chose not to, that while Lloyds shares are well above where they need to be for the government to begin selling at a profit, RBS stock is still a long way from just breaking even.

The diverging fortunes of the two banks are a reflection of the shifting attitude of the authorities towards the different business models applied by the lenders.

In the first couple of years after the financial crisis, RBS was able to successfully argue that its universal model based on maintaining large operations in retail, commercial and investment banking represented the most profitable and secure way to run its business.

The Bank of England, and in particular its former Governor Lord King of Lothbury, were never comfortable with this approach and over time convinced the government that more radical reform was needed.

At the same time, Lloyds' UK-focused retail and commercial banking business has increasingly become the template for what government ministers have decided a future RBS should become.

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For RBS the cost of transforming itself has been immense and continues to be a huge drag on its earnings. Take the bank's markets business which today reported a 22pc year-on-year fall in revenues as it continues to be "right-sized".

With retail banking head, Ross McEwan, set to replace Stephen Hester as chief executive at the end of next month this restructuring is likely to intensify.

It is also likely that Mr McEwan will want to take a hard look at all the bank's operations and in the parlance of the City "kitchen sink" a few businesses, which is likely to cause a further dip in short-term earnings.

The most important question, though, is whether at the end of this process there will be a bank left that is capable of making the amounts of money needed to justify a profitable return to the private sector.

The answer to this probably yes, but is likely to be well behind the privatisation trajectory for Lloyds, which could be out of the government's hands within 18 months if the Treasury were minded to sell.

By Harry Wilson, Banking Editor
6:58AM BST 02 Aug 2013
16 Comments
Mr McEwan, the head of the state-backed lender's retail banking business had been widely tipped for the job in recent weeks after two of the main external candidates ruled themselves out of the race to replace Stephen Hester.


He will take on the top job on a £1m salary - less than the £1.2m Mr Hester received - and get a £350,000 cash payment in lieu of pension.

Mr McEwan, a 56-year-old New Zealander, will not take an annual bonus for this year, in an effort to head up for the frequent criticism that has come with the high levels of pay at a bank that is 81pc owned by the taxpayer.

He has deferred awards under his current role until 2017, but will be eligible for a long term incentive award next year.

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RBS also said that Mr Hester will step down earlier than expected. He was to stay at the bank until the end of the year but following Mr McEwan's appointment on Friday he said he would now leave at the end of next month.

Sir Philip Hampton, chairman of RBS, said McEwan was the only individual the bank had offered the job to and that his appointment followed a "full international search".

Mark McCombe, the head of BlackRock’s Asian operations and a former senior executive at HSBC, last week said he had decided against taking the job, while David Roberts, deputy chairman of Lloyds, is also understood to have been approached to replace Mr Hester, but turned down the role.

The first half results on Friday mark the first time the bank has made a profit in two consecutive quarters since 2008.

Mr Hester hailed the achievement as "highly symbolic" and said it showed the success of the bank's restructuring plans.

Net attributable pre-tax profits at the lender were £535m, compared to a loss of more than £2bn in the same period in 2012. The lender also took an extra £185m provision to compensate customers for the mis-selling of payment protection insurance, taking its total bill to £2.4bn.

"RBS's journey from "bust bank" to "normal bank" is largely done," Mr Hester said. He said the bank's capital strength continues to improve and expects it to reach a core capital ratio under full Basel rules of more than 9pc by the end of this year.

However, Mr Hester said "no small task remains" at the lender as he welcomed the appointment of Mr McEwan, whom he said had made a "very positive impact since joining RBS last year and has a track record of strong accomplishment in customer focused banking".

The New Zealander joined RBS a year ago this month from Commonwealth Bank of Australia, where he had led its retail banking arm for five years.

He will be expected to stay in post until the privatisation of RBS, which is 81pc owned by the state, is complete. This is expected to take at least five years, although Mr Hester recently said he thought the full return of RBS to the private sector could take a decade.

George Osborne, the Chancellor, said on Friday that Mr McEwan had impressed him with "his vision of RBS as a strong, UK-centred corporate bank that is focused on supporting the British economy" as he welcomed the appointment.

"He's committed to a new culture at the bank that puts the customer first, whether it's the family or small business or large company. I think he'll provide the leadership RBS needs as the bank puts the mistakes of the past behind it, and the government seeks to get the best value for the taxpayer from the money the last government put into the bank," he said.

Investment bank Rothschild is currently studying options for a potential separation of the lender into a “good bank” and a “bad bank”. The move follows a recommendation by a cross-party commission for the Treasury to investigate whether there would be any advantages in splitting up RBS.

Sir Philip said that any decision on the break up would require the full support of the bank's minority shareholders and that the government was likely to be blocked from voting its shares.

RBS shares fell more than 4pc in early trading on Friday - the biggest faller on the FTSE 100.