Bl***y Banks Again

RSB BRANCHES ARE TO BECOME WILLIAM AND GLYN'S,HOPE THEY DON'T HAVE SAME PROBLEMS AS ABOVE/TSB
HAS THE JP MORGAN FINE BEEN MENTIONED,A VERY BIG WHALE OF A FINE.

City Funds In Last-Ditch Bid For RBS BranchesA group of fund managers makes an eleventh-hour offer to win control of 315 RBS branches, Sky News learns.8:20pm UK, Saturday 21 September 2013 W&G Investments has tabled a revised offer within the last 48 hours
EmailBy Mark Kleinman, City Editor

A consortium of City investors has tabled a last-ditch bid to win control of 315 Royal Bank of Scotland (RBS) branches by pledging a substantially-higher payment to the taxpayer-backed lender.

Sky News understands that W&G Investments, a vehicle set up specifically to buy the branch network, tabled a revised offer within the last 48 hours even as RBS began leaning towards backing a rival bid involving the Church of England's pension fund.

The revised offer is not understood to include a substantial hike to the £1.1bn up-front cash payment promised by W&G in its original bid.

However, it is said to have altered its proposal to mean that RBS would receive additional payments on completion of a deal that would take the total value of its offer to well over £1.5bn.

Headed by Andrew Higginson, a former Tesco finance director (and non-executive director of BSkyB, the owner of Sky News), W&G's backers include leading fund managers such as Old Mutual, Schroders and Threadneedle.

RBS favours an alternative bid from a consortium led by Corsair Capital, an investment firm whose executives include Lord Davies, the former trade minister.

The branch network is being sold under the state aid deal that resulted from RBS's bail-out by British taxpayers in 2008, with the bank set a deadline of this autumn to offload it.

However, RBS is keen to retain a stake in the branches to share in a potential increase in value ahead of a flotation in what amounts to a bet on the recovery of the UK economy.

Unlike W&G's proposal, which would involve an outright takeover of the RBS branch network, the Corsair bid would entail buying just 49% with the remainder being listed on the stock exchange at an unspecified future date.

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets, 250,000 small business customers and approximately 5,000 staff.

W&G and RBS both declined to comment

Home»Finance»Personal Finance»Borrowing»MortgagesRedress for 40,000 Clydesdale customers over bungled mortgage bills
Clydesdale Bank miscalculated the repayments on more than 42,500 mortgages – and then tried to cover it up.

Thousands of customers made the wrong repayments due to an error Photo: ALAMY
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By Dan Hyde
10:27AM BST 26 Sep 2013
13 Comments
Tens of thousands of Clydesdale Bank mortgage customers will receive up to £18,000 in compensation for errors made by the lender.

Clydesdale, which is owned by National Australia Bank, miscalculated the repayments on more than 42,500 mortgages and failed to inform customers.

As a result, around 22,000 of people steadily paying off a home loan face a shortfall at the end of the typical 25-year mortgage term. This ranged from £20 to more than £18,000.

The City watchdog the Financial Conduct Authority today issued a damning criticism of the way Clydesdale handled the problem. It fined the bank £8.9 million for “failing to treat customers fairly” and ordered it to pay compensation and write to those affected.

It said the damaging implications of the calculation error, which was discovered in April 2009 but only corrected in 2010, were simply “passed on” to customers.

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In response to botching its calculations, Clydesdale simply tried to increase monthly repayments made by customers. The FCA said all 22,000 customers faced “unexpected increases” in monthly bills both to correct the error and to make up for their shortfalls.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “For most people mortgage payments are their biggest monthly outgoing and we all budget on the assumption that the information our mortgage lender gives us about what we need to pay is correct.

“Here Clydesdale failed in that basic duty and, when it discovered the problem, sought to pass all of the consequences on to its customers – expecting them to find the money to remedy mistakes which were entirely of Clydesdale's making.

“Firms must put the interests of customers at the heart of their business if we are to restore trust and confidence in financial services. Clydesdale is today paying the price for its decision to put its bottom line ahead of the need to ensure its customers were treated fairly.”

The letters sent to customers suggested that they had no alternative but to bring their repayments up to date, the FCA said.

By law, customers could have rejected these demands because the error was not theirs. This “lack of clarity” was exacerbated by “poor instructions” to Clydesdale’s call centre staff, who therefore failed to deal properly with complaints.

The FCA said the average shortfall faced by customers was £970.

The FCA has the power to require a firm to contact customers and provide redress to those who respond and can show they lost out.

However, it said the compensation scheme, which has been volunteered by Clydesdale itself, goes further. Customers who faced a shortfall as a result of the error will be automatically compensated. Those who overpaid can make a claim for compensation if they believe they suffered financially as a result of Clydesdale’s error.

The FCA said the £8.9 million fine "would have been higher" were it not for this voluntary action. Clydesdale also received a 30pc discount for settling at an early stage of the enforcement process.

The Australian-owned bank will now write to customers affected by the error who did not receive compensation following the bank’s original communication exercise. Mortgage-holders do not need to do anything until they are contacted by Clydesdale, the FCA said. Further information is online at www.cbonline.co.uk.

Home»Finance»Personal Finance»Consumer Tips»BankingLloyds pays up over TSB switch glitches
Complaints keep coming about the Lloyds break-up – but the bank is at least holding up its hands when customers lose out. Lynda Mitchell got back £225.

Locked out: Nicola Parsons found there was no trace of her account on the TSB website
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By Richard Dyson
7:08PM BST 27 Sep 2013
5 Comments
Lloyds' seismic split into two banks earlier this month has left many customers battling to adjust to life without a nearby branch.

Many other customers have struggled with persistent technical glitches. But the bank appears ready to apologise – and even pay – to those people who have been inconvenienced, and where it is to blame.

Your Money warned earlier this year that the biggest likely impact of Lloyds' division – which was dictated by Brussels as a measure to try to promote banking competition – would be that customers could find themselves suddenly robbed of their local branch. Under the split Lloyds kept 1,300 branches and hived 631 off to TSB, the new entity.

The regional spread of the TSB branches and the numbers of customers attached to them have meant that access is more limited. Lloyds itself admits that while two-thirds of "new" Lloyds customers are within two miles of a branch, just 46pc of TSB customers enjoy the same proximity.

Nicola Parsons used to live in Morpeth, Northumberland, where 12 years ago she opened an account with Lloyds. Now she lives in Matlock, Derbyshire, where, happily, there is another branch of Lloyds which she uses for personal and business banking needs. But earlier this month came Lloyds TSB's split into two banks – Lloyds and TSB – and now Ms Parsons' accounts and her local branch have been forced to part company.

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The Morpeth branch, to which her accounts are still attached, is one of the Lloyds branches being spun away to TSB. But the Matlock branch of Lloyds is staying as it is. The upshot? Ms Parsons will have to drive eight miles to Chesterfield. "We have completely lost our local branch," she said. She is not sure how she and her business, Middle Mountains, which makes toasted muesli and energy bars, will adjust to the new distance. "I did ask whether we could have postage-paid envelopes for transactions such as paying in cheques," she said. "I know I'm not the only person affected by this."

Ms Parsons also suffered technical hitches in the changeover. From the first day of the supposed switch from Lloyds to TSB – September 8 – she was unable to log onto her personal account. "I entered the details as usual on the TSB site but there was no trace of my account," she explained. "It said it didn't recognise my ID."

For the following five days Ms Parsons was locked out. Each day she called TSB, only to speak to a different adviser – none of whom could help. After the fifth day Ms Parsons dug in. "I refused to hang up, and so for two hours was passed from adviser to adviser.

"I was firm but not rude. In the end I did get to speak to a helpful technician who finally identified the problem and fixed it. He was great – he went outside the box to help. But it took that long to sort out, which is very poor. The front line staff lacked information."

Lloyds credited Ms Parsons' account with £50.

Lynda Mitchell is another unhappy customer to contact Your Money. She opened an original TSB account in 1981 – long before TSB, which was then a customer-owned organisation, was taken over by bigger rival Lloyds. Ironically, this year she was among those customers identified as needing to be switched into the "new" TSB bank. But she and her husband did not want to go, largely because it suited them to use the Lloyds branch (which was remaining as Lloyds) near where they live in Kenilworth, Warwickshire.

Lloyds has said that just 4,000 of the millions of customers earmarked to move to TSB asked to stay were they were. In fact, the process of remaining with Lloyds was the same as switching to an entirely new bank – if not more cumbersome, as Ms Mitchell described. "Right from the start we told Lloyds we would remain with them. But nevertheless we kept getting letters telling us we were soon to be switched over."

After reminding Lloyds several times that they wanted to remain its customers, she and her husband were eventually told that the process might take an hour, as it effectively involved creating new accounts. This was because their old customer account numbers and IDs were being given over to TSB.

In fact Ms Mitchell spent over two hours on the phone to Lloyds trying to "open" accounts, something made more complex by the fact she had joint accounts with her husband and savings accounts, as well as accounts relating to her business. She is a self-employed careers adviser.

"I was appalled," she said. "It could hardly have been more difficult. After the call had gone on for over an hour, and I still seemed to be getting nowhere, I asked what compensation I might be entitled to. After all, I'd never so much as asked to move banks – this was all just trouble for me, and I value my time."

Lloyds infuriated her more by promising to "escalate her complaint" and call back, but failed to do so. Eventually an adviser did phone her – but said he could only deal with credit card complaints, rather than her problems regarding the botched switch.

The irony of the fact that all banks are currently engaged in a campaign to encourage customers to switch provider has not escaped Ms Mitchell. "It's classic," she said. "If you're a genuinely new customer I bet you'll get a great service when you sign up to a new account. If you're like me and you've banked with them for more than 30 years they couldn't care less. I've lost all confidence in Lloyds, and so has my husband."

A week ago Ms Mitchell sent an invoice (pictured below) to Lloyds' London HQ for £225 to cover her time and phone costs.




A Lloyds Banking Group spokesman said of the bank's split in general: "Customers have a choice about where they bank and may choose to opt for a bank where there is a branch on their local high street. To date more than 9,000 customers have successfully switched between Lloyds and TSB in either direction.

"Our customers are our first priority and we know they rely on us."

Just as Your Money went to print, the bank contacted us again to say it had paid Ms Mitchell £260.

A spokesman said: "In this case, the customer service we provided fell short of the usual high standard we strive for, and we apologise for the inconvenience caused."

Ms Mitchell said she was delighted and added: "I'm not sure whether it would have happened without the involvement of Your Money

Telegraph.co.uk Saturday 28 September 201
Royal Bank of Scotland is to create a new challenger brand under the revived 'Williams & Glyn’s’ brand after opting to take an £800m investment from a group led by private equity firm Corsair Capital.

RBS has been forced to sell the Project Raindow branches by the European Commission as a condition of its taxpayer bailout. Photo: AFP
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By James Quinn, Financial Editor
2:50PM BST 27 Sep 2013
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The state-backed bank will receive an upfront investment of £600m and a later payment of as much as £200m as part of the deal.

The new bank, which will contain 314 branches mainly in the north-west of England, will be floated on the London market in late 2015.

Other members of the consortium include the Church Commissioners for England, Lord Jacob Rothschild’s RIT Capital Partners and US private equity investor Centerbridge Partners.

Standard Life is also in talks to join the group, along with a number of other domestic and overseas investors.

The business will be run by chief executive John Maltby, Lloyds former commercial banking chief, alongside chairman Philip Green, the former chief executive of United Utilities. Lord Davies, the former trade minister who is vice-chairman of Corsair, will be a non-executive director.

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But despite the presence of the Church of England - First Commissioner Andreas Whittam Smith said the new bank would uphold “the highest ethical standards” - the investment involves significant leverage to provide returns to the private equity investors involved.

The investment is based on a £600m bond, which will be issued by RBS, for a significant minority investment in Williams & Glyn’s, of no more than 49pc at the point of IPO. In essence, the consortium will act as a major cornerstone investor ahead of the eventual float.

On top of the £600m, the investors have agreed to pay up to an additional £200m dependant on Williams & Glyn’s share price performance in the 18 months following the IPO. But RBS is loaning the consortium £270m of vendor debt 'on commercial terms,’ meaning the investors themselves are putting in just £330m of equity. One source indicated the structure was necessary for the private equity firms involved - Centerbridge and Corsair - to make a leveraged return.

The Corsair group beat off competition from two other bidders.

One, a highly similar bid from Blackstone and AnaCap, which is understood to have lost out on strength of management. RBS and regulators are believed to have been particularly impressed with Mr Maltby and Lord Davies, the former Standard Chartered chairman.

The second unsuccessful bid came from W&G Investments, which was backed by some of the UK’s largest fund managers including Schroders and Threadneedle.

However despite claims its deal was worth as much as £1.75bn, sources indicated that it had taken into account profits from the Williams & Glyn’s business for the next two years into its assumptions, had not completed its due diligence and had failed to get firm commitments from all investors.

The Corsair consortium will now run the Williams & Glyn’s business with RBS, preparing its technology platform, separating accounts, and rebranding the unit. The pair must also establish a new trading company, and acquire a banking licence. It will be run as a division of RBS until separation, expected through an IPO in the second half of 2015.

In addition to its 314 branches, which serve almost 1.7m customers, the business has a sizeable SME and mid-corporate presence, with a £19.7bn loan book. It will have a 5pc share in the SME market, and 2pc of the current account market, and will be headquartered in Manchester.

Mr Maltby said Williams & Glyn’s would be an “active challenger” bank which would be “customer based….empowering local branch managers to serve customers.”

The moniker, formed from the 1970 merger of Williams Deacon’s Bank and Glyn, Mills & Co, has lain dormant for almost 30 years.

The disposal of the unit was forced on RBS by the European Commission as a condition of its £45.5bn bail-out by the Government in October 2008.

RBS had until the end of this year to sell the branches, and will now ask the EC for an extension of at least two years. Santander UK was chosen as the original preferred bidder for the business in 2010, with a £1.65bn bid, but it dropped out last October citing technical delays.

The Rainbow sales process was led by RBS finance director Bruce van Saun, who is standing down to take over the running of its Citizens bank in the US from next week. He will be replaced by Nathan Bostock, head of restructuring and risk.

The decision - which was approved by the Financial Conduct Authority ahead of the announcement being made - came ahead of Stephen Hester’s last day as chief executive after five years in the job. He is due to step down on Monday, to be replaced by Ross McEwan, RBS’s retail bank chief.

I SEE ICELANDIC BANK WILL HAVE TROUBLE PAYING IT BONDS

I SEE WILLIAM AND GLYN'S WILL RETURN TO THE HIGH STREET SO IT SEEMS.

Badboy wrote:I SEE ICELANDIC BANK  WILL HAVE TROUBLE PAYING IT BONDS

I SEE WILLIAM AND GLYN'S WILL RETURN TO THE HIGH STREET SO IT SEEMS.

Badboy, "Royal Bank of Scotland is to create a new challenger brand under the revived 'Williams & Glyn’s’ brand after opting to take an £800m investment from a group led by private equity firm Corsair Capital. "

I POSTED NOT REALIZING YOUR POST WAS ABOUT RBS.
USED TO BE WITH WILLIAM AND GLYN'S BEFORE RBS TOOK OVER.

Bank bailout legacy: five years later

Insiders and outsiders weigh in on the government program that bailed out Wall Street amid the 2008 crisis with taxpayer dollars
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Sheila Bair, Christy Romero, Neil Barofsky, Guy LeBas, Anat Admati,

theguardian.com, Wednesday 2 October 2013 13.00 BST

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The collapse of Lehman Brothers ushered in the deepest economic crisis since the 1930s and motivated the US government to buy into financial institutions. Photograph: Linda Nylind for the Guardian


This series looks back on the Troubled Asset Relief Program (Tarp) – the government intervention that sought to calm the financial crisis and restart the economy in 2008.

Sheila Bair: chair of the Systemic Risk Council and former FDIC chair

"I don't want anyone who's big to have a giant "put" on taxpayers. It's problematic for big financial firms think that they can profit by taking a lot of risks, and if they lose money they can put it on taxpayers. There's no more damaging and destabilizing message the government can send than this idea that if you're big, the government will get you out of trouble."

Read more here.

Christy Romero: special inspector general for Tarp

"When their risky gambling went south these bankers lied, plain and simple. They hid bad loans and bad balance sheets through illegal accounting trickery. Some sought taxpayer dollars to fill in the holes on the fraud-riddled books. Some criminally concealed that the bank itself was funding their luxury lifestyles, believing they were entitled to the best even while they foreclosed on homeowners."

Read more here.

Neil Barofsky: professor of law at New York University and first special inspector general of Tarp

"Here we find ourselves, five years later, with banks like giant Frankenstein monsters, roaming the earth and wreaking havoc. Ultimately these giants might be Tarp's biggest legacy … That's not free market capitalism, that's corporate socialism. Everyone's inner capitalist should be cheering to break up these institutions."

Read more here.

Guy LeBas: chief fixed income strategist for Janney Montgomery Scott

"Financial technology essentially forced the development of a new form of trust: institutional confidence. The failure and sale of Bear Stearns, the failure of Lehman, and the hint of similar risks elsewhere threatened that system of institutional confidence which the global markets required to function. Tarp was the first step in restoring that institutional confidence."

Read more here.

Anat Admati: professor of finance and economics at Stanford

"Tarp's legacy is disturbing. Most of those who got into financial trouble because of "troubled assets" suffered severe consequences, and many innocent people are still suffering the collateral damage. Those who aren't are the bankers who took excessive risks and the policymakers who did not control the system effectively. They would prefer us to think that everything is fine now, when in fact much too little has changed."

Osborne seeks EU clearance in case of RBS split
The Treasury has applied for EU approval to split up Royal Bank of Scotland (RBS), in a move that would smooth over the process of carving up the state-owned bank.

The move does not prejudge a review into splitting the bank
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By James Titcomb
10:36PM BST 06 Oct 2013
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George Osborne, the Chancellor sought clearance in July for the split of the bank, which is 83pc owned by the taxpayer, allowing the Government to avoid newly-introduced rules on state support for banks.

The early notification to Brussels, which came just before stricter new rules on executive pay and share ownership came into force, would make it easier to split RBS into a so-called “good bank” and “bad bank” should the Treasury decide to do so.

Mr Osborne has ordered a review into whether splitting the bank would boost lending, and the application to Brussels is understood not to prejudge this process.

The new EU laws could have seen private shareholders’ holdings wiped out in the event of a split.

A Treasury spokesman said the Government would not provide "a running commentary" of discussions with the EU.

Home»Finance»News by Sector»Banks and FinanceRBS chief Ross McEwan to review future direction of bank
Royal Bank of Scotland has begun work on a five-year plan that will likely see the taxpayer-backed lender exit markets where it is uncompetitive.

RBS has reduced the size of its balance sheet from about £1.6 trillion to less than £1 trillion Photo: Getty Images
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By Harry Wilson
6:03PM BST 04 Oct 2013
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Ross McEwan, who took over as chief executive of RBS this week, has put together a team to look at the future of the bank.

The review is expected to highlight the businesses where RBS has a competitive advantage, as well as assessing the bank’s allocation of resources.

On top of this, RBS will look at its current technology and the need for an overhaul of its IT infrastructure.

Mr McEwan will unveil the results of the review in the first quarter of next year.

The work comes as RBS awaits the release of a report by Rothschild and Blackrock into the potential split of the lender into a “good bank” and a “bad bank”.

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The report was commissioned by the Treasury in response to a recommendation by a parliamentary commission into the banking industry.

Early indications suggest Rothschild could recommend the creation of a relatively small bad bank.

Analysts at UBS, RBS’s corporate broker, warned against such a move last month and said the separation would be a case of “fighting yesterday’s battles”.

RBS has reduced the size of its balance sheet from about £1.6 trillion to less than £1 trillion. At the same time, the bank has cut its exposure to toxic assets and today the non-core business has assets of just over £50bn.

George Osborne, the Chancellor, has pushed RBS to cut back the size of its investment banking arm and has made it clear the business should be more focused on the UK market.

Mr McEwan is known to support this approach, though it is likely he would resist further attempts to shrink the bank’s markets division, which houses what remains of its investment banking services.

BANKS COULd BE HEADING FOR another bust

Badboy wrote:BANKS COULd BE HEADING FOR another bust

Not just Banks Badboy, Countries.

Another concession on taxes’



10 October 2013

Presseurop
Neue Zürcher Zeitung
Neue Zürcher Zeitung, 10 October 2013

The Swiss Federal Council on October 9 authorised Switzerland’s signature of the convention between OECD countries and members of the Council of Europe on mutual assistance on tax matters, reports NZZ.

Signed by 56 countries, among other measures the convention allows for the exchange of banking information in response to a request or the spontaneous transfer of information in the event of suspicions that an account is being used for tax evasion in another jurisdiction.

Until now, Bern only shared banking information with countries that are Switzerland’s most important economic partners.

From now on, the Swiss state can also help in the fight against tax evasion in other countries, like Moldova and Ghana, which have signed the convention. According to estimates, some €360bn of undeclared money from developing countries is deposited in Swiss accounts.

By Rebecca Clancy

12:47PM BST 11 Oct 2013



19 Comments





JPMorgan Chase has reported a rare quarterly loss after incurring legal fees of $9.2bn (£5.8bn), including money set aside for future settlements, due to "escalating demands and penalties from multiple government agencies".


The biggest US bank by assets posted a net loss of $380m in the third quarter, compared with a $5.71bn profit a year earlier.


Revenues were also down, falling to $23.9bn in the three months to September 30, compared to $25.9bn in the same timeframe last year.


In Friday's third-quarter results JPMorgan chief executive Jamie Dimon said that the company had felt it "prudent to significantly strengthen" its legal reserves, due to a "highly charged and unpredictable environment, with escalating demands and penalties from multiple government agencies".


"While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters," he said.



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The prospect of additional legal expenses have been weighing on JPMorgan and Mr Dimon for more than a year as the company has come under intense scrutiny from regulators following the disclosure of derivatives loss in May 2012.

Mr Dimon was locked in talks with the US Attorney General at the end of last month to hammer out a settlement for criminal and civil charges related to sub-prime mortgages that could cost the bank billions. He said the board "continues to seek a fair and reasonable settlement with the government".

JP Morgan has offered the Department of Justice $3bn to settle multiple charges, but US Attorney General Eric Mr Holder has rejected the offer.

The potential price tag has since ballooned, as negotiations have widened to encompass at least seven different legal disputes with different regulators.

Mr Dimon and Mr Holder are now discussing the prospect of an $11bn settlement, which would rank as the biggest financial penalty ever handed out to a bank but would draw a line under many of the legal battles that have been hanging over JP Morgan for years.

JPMorgan Chase also said it had sold all of its exposure to short-term US government bonds to safeguard against a Government default.

While the bank says it believes the probability of a default is low, it's taking precautionary measures to protect investors. JP Morgan's money market funds no longer held any US Treasurys that mature or have payments scheduled between October 16 and November 6 and it has increased its liquidity position in the funds.

BANKS MAY HAVE DONE CURRENCY RATES MANIPULATION.

Bondholders poised to seize control of Co-operative Bank

Co-operative Group admits plans to rescue banking arm will be "materially different" to original proposals, with bondholders, including two hedge funds, reportedly poised to take control of the lender





Co-operative Bank's creditors have reportedly managed to wrestle control of the lender from its parent group, after its proposals to meet a £1.5bn shortfall in its banking arm were rejected by bondholders.

Under the Co-op Group’s original plan, the broader mutual would have injected £500m of capital into the lender, sold the group’s £500m of insurance assets, and forced £500m of losses on the £1.3bn of subordinated bondholders. It would then be floated on the stock exchange, with the parent group retaining a 70pc controlling stake. Photo: LifeStyle / Alamy



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By Szu Ping Chan

8:02AM BST 21 Oct 2013

Comments15 Comments





Co-operative Bank's creditors have reportedly managed to wrestle control of the lender from its parent group, after its proposals to meet a £1.5bn shortfall in its banking arm were rejected by bondholders.


According to the BBC, the Co-operative Group has bowed to pressure from creditors, led by two hedge funds, and agreed to change its plans for rescuing the bank.


Under the Co-op Group’s original plan, the broader mutual would have injected £500m of capital into the lender, sold the group’s £500m of insurance assets, and forced £500m of losses on the £1.3bn of subordinated bondholders.


It would then be floated on the stock exchange, with the parent group retaining a 70pc controlling stake.


However, bondholders and owners of preference shares in the lender rejected this proposal. Hedge funds, which account for about £400m of the Co-op Bank’s subordinated debt, or “43pc of the lower tier 2 bonds”, demanded in September that the mutual tear up its complex £1.5bn rescue plan and replace it with a simple debt-for-equity swap.


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Under this alternative plan, the bank would still be listed on the London Stock Exchange, though the BBC reported that the parent group's share in the listed lender would be less than the 50pc required to retain a majority stake, leaving the bondholders - which include pension funds - in control.

The BBC stressed that any revised plan had not been formally agreed, but said an official announcement was likely to come next Monday

A spokesman for the Co-op declined to comment on the reported restructuring details, but in a statement, the group said the final restructuring plan would likely be "materially different" to original proposals.

"We have been engaging with different bondholder constituencies and seeking to balance the requirements and expectations of these parties. We currently expect that many elements of any recapitalisation plan will be materially different to the outline provided on 17 June 2013, whilst still meeting the additional £1.5bn Common Equity Tier 1 capital requirement," it said.

In a separate announcement, the Co-operative Group said it faced £100m of extra costs due to provisions for PPI and other charges.

Despite the increase in provisions, the Co-op said the Prudential Regulation Authority had confirmed to its banking arm that that the capital injection needed by the bank to fill a black hole in its balance sheet would not need to be increased from the current level of £1.5bn.

Last month, the group bowed to pressure from bondholders to consider alternative ways to meet a £1.5bn shortfall in its banking arm

Niall Booker, the chief executive of Co-op Bank, along with the lender’s chairman Richard Pym had led a group of non-executive directors charged with exploring alternatives to the current capital raising plan.

Painful steps to deliver the RBS we need

The problems facing Mr Osborne as he decides what to do are twofold





The problems facing Mr Osborne as he decides what to do are twofold

Former Bank of England Governor Lord King of Lothbury was one of the most vocal critics of the RBS situation and spent much of his final months in office lobbying for a reappraisal of the bank's position. Photo: Getty Images



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By Telegraph View

10:00PM BST 18 Oct 2013

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Is it better to do the right thing too late, or to leave a past mistake uncorrected so as not to risk losing hard-won stability?


This is the question George Osborne has to wrestle with for the next couple of weeks as he weighs up whether to order a break-up of Royal Bank of Scotland, or a less radical restructuring.


Most observers admit with hindsight that the rushed bail-out and partial nationalisation of RBS was probably not the best way to have rescued the bank. At a cost of £45.5bn it was not the cheapest move, either.


The Chancellor has been clear he does not blame those in charge at the time, given the blizzard of storms that were hitting the UK banking system in the autumn of 2008.


However, not blaming is not the same as not regretting and regret has been gnawing away at some members of Britain's financial establishment.


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Former Bank of England Governor Lord King of Lothbury was one of the most vocal critics of the RBS situation and spent much of his final months in office lobbying for a reappraisal of the bank's position.

With the support of the Parliamentary Commission on Banking Standards, Lord King's wishes were translated into a direct call for action that proved irresistible for Mr Osborne, who ordered a review into the possibility of splitting RBS into a "good bank" and a "bad bank".

The problems facing Mr Osborne as he decides what to do are twofold. First, having ordered a review, he knows he must do something more than merely tweak the bank's structure, thus risking several months of upset at what is still one of the country's largest and most important banks.

Secondly, having decided that something radical is needed, he must persuade the bank's minority investors to back his plans. If his decision is to create a new state-backed bad bank and transfer assets, the Government would actually be barred from voting its shares under UK corporate governance rules.

This means that any separation will have to be done in such a way as to offer enough of an incentive to existing investors in RBS that they feel any changes, however disruptive in the short term, will ultimately enhance the value of the bank.

Though this may seem a difficult balancing act, it is far from impossible. As analysts at RBS's own broker, UBS, pointed out in a recent note, stripped of all its toxic assets, the bank would likely be rated at a higher valuation than it is today.

To achieve this the authorities must be bold and this means delivering a solution that deals once and for all with any lingering issues they and the market have with the bank. Simply taking the bank's £54bn of non-core assets and placing them into a separate holding company is not the sort of change that is likely to achieve this aim.

Rather, RBS must take some painful steps. For instance, the bank's Irish arm, Ulster Bank, should probably be placed in its entirety into the bad bank, along with its US banking operations.

If these radical actions are taken then RBS may finally be on the road to becoming the "good bank" the country needs.

Rescue Plan Leaves Co-op With 30% Bank Stake

1:08pm UK, Monday 21 October 2013













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The Co-operative Group is to lose overall control of its banking arm amid a funding struggle, Sky sources have confirmed.

The Co-op will only be left with a 30% stake in the bank, according to Sky News City Editor Mark Kleinman.

An announcement is expected to confirm the deal next Monday, with City investors and bondholders filling the funding shortfall.

The Co-op banking division operates as a mutual and currently has 4.7m customers. It includes an insurance arm for home, motor and pet cover.

In June, the bank announced it needed to raise £1.5bn to plug the capital black hole.

The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims.

The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.

The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.

The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.

Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.

The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".

This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.

The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.

Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.

The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.

Hedge funds represented by investment banks had earlier demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.
Co-op Rescue

Mark Carney: City must shrink if era of 'too big to fail’ doesn't end

Britain will have to give up its leading position in financial services unless the UK’s “too big to fail” banks can go bust without putting the taxpayer at risk, the Governor of the Bank of England has said.





The Governor of the Bank of England, Mark Carney talking during his address to business leaders at East Midlands Conference Centre in Nottingham.

By 2050, banks assets could be nine times the size of UK GDP if 'UK-owned banks' share of global banking activity remains the same', Mark Carney said Photo: PA



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Philiip Aldrick
By Philip Aldrick

8:48PM BST 24 Oct 2013



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Mark Carney has warned that the City would have to shrink if the Government were to come to the rescue of banks in a future crisis.


“If we don’t end 'too big to fail’, we can’t support a financial sector of this size,” he said.


UK banks have assets equivalent to about four times the size of the economy, while the financial services industry accounts for 10pc of national output, employing around 1m people.


By 2050, banks assets could be nine times the size of UK GDP if “UK-owned banks’ share of global banking activity remains the same”, Mr Carney said.


“Some would react to this prospect with horror... but, if organised properly, a vibrant financial sector brings substantial benefits. The UK’s financial sector can be both a global good and a national asset – if it is resilient.”


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To get there, he called for greater co-operation between national supervisors to prevent “regulatory Balkanisation” caused as countries put their own interests first. Failure to strike an international accord on financial regulation would threaten London’s competitiveness as a global financial centre, he warned.

The Governor also revealed that the Bank had overhauled its liquidity rules to ensure the real economy was never again starved of lending in a financial crisis. He pledged that banks and building societies would have cheap and plentiful access to liquidity even if markets seized up, as they did during the 2008 credit crunch.

“Five simple words describe our approach – we are open for business,” he said. The Bank has reformed Britain’s “sterling monetary framework” to prevent banks from hoarding unproductive cash and gilts that could otherwise be released for lending to households and businesses.

“We are changing how we backstop private firms’ liquidity management,” Mr Carney said, after giving a speech in London. “These efforts will help set the stage to improve further the supply of credit within the UK.”

A shortage of liquidity in 2008 forced banks into emergency asset sales that worsened the crisis by triggering a downward spiral in prices. Since then, regulators have brought in tough liquidity rules but banks have built up even larger buffers – tying up funds.

In June, the Bank relaxed its regulations to release as much as £70bn of liquidity to help boost lending and drive economic growth. The latest change will ensure lenders can be confident that they will always be able to access cash and gilts.

To make the new arrangements attractive to lenders, the Bank has removed the “stigma” of liquidity assistance by slashing the fees and agreeing to accept lower quality loans as collateral.

JPMorgan has agreed to pay $5.1bn (£3.2bn) to resolve claims it misled mortgage lenders before the housing crash.

The deal settles a lawsuit brought by American regulators over the quality of mortgages sold to US loan giants Fannie Mae and Freddie Mac between 2005 and 2007.

The Federal Housing Finance Agency accused America's biggest bank of causing "billions of dollars" in losses to the two mortgage finance companies.

The two settlements - one of $4bn and another of $1.1bn - is less than half the amount JPMorgan is expected to pay for mortgage-related violations.

The $4bn fine relates to $33.8bn in residential mortgage-backed securities sold by JPMorgan to Fannie and Freddie between 2005 and 2007.

The remaining $1.1bn concerns claims JPMorgan made about single-family mortgages it sold Fannie and Freddie between 2000 and 2008.

US-POLITICS-ECONOMY-BUDGET
JPMorgan CEO Jamie Dimon has been in talks with the US Justice Department

JPMorgan "falsely" told Freddie and Fannie the mortgages met the two agencies' standards for quality.

In reality, the assets were much lower quality than claimed. Many loans that were billed as safe later defaulted or were foreclosed.

The FHFA said JPMorgan's conduct "constitutes negligent misrepresentation, common law fraud and aiding and abetting fraud".

The securities were sold to Fannie and Freddie by JPMorgan and also by Bear Stearns and Washington Mutual, which were bought by the bank in 2008.

FHFA Acting Director Edward J DeMarco said: "This is a significant step as the government and JPMorgan Chase move to address outstanding mortgage-related issues."

JPMorgan is expected to pay a total of $13bn for mis-selling mortgage-backed securities in the run up to the 2008 financial crisis, say US reports.

A tentative deal has reportedly been reached between JPMorgan and the US Justice Department.

If the deal is finalised, it would be the biggest settlement of its kind ever paid by a US company

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It won't affect the Board, it will be savers and shareholders who will be affected

SOME CO-OP BANK CUSTOMER HAVE DEFECTED TO OTHER BANKS INCLUDING RELIANCE BANK.

Badboy wrote:SOME CO-OP BANK CUSTOMER HAVE DEFECTED TO OTHER BANKS INCLUDING RELIANCE BANK.

I'm not surprised Badboy, I think the 30% stakeholders will buy the Cop-op Bank out .

Lloyds PPI Bill Tops £8bn But Profits Rise

The part-nationalised lender continues to feel the effects of past mistakes but makes further progress in returning to health.

7:12am UK, Tuesday 29 October 2013

Lloyds TSB in the City of London
Lloyds says its customers are increasingly seeing the benefits of recovery












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Lloyds Banking Group has set aside another £750m to cover the costs of the payment protection insurance (PPI) scandal, taking its total provision past £8bn.

The part-nationalised lender confirmed the news - broken by Sky's City Editor Mark Kleinman on Monday night - when it announced its third quarter results.

Its statutory profit before tax of £1.694bn for the nine months to September 30 reflected the additional PPI writedown and compared to a loss of £607m for the same period last year.

But the group, which is 33% owned by the taxpayer, recorded pre-tax losses of £440m in the quarter compared with a £151m loss in the same period last year - a result of PPI claims.

The results were the first since the Treasury began the process of returning its stake in Lloyds to the private sector, selling a 6% chunk for £3.2bn to institutional investors last month.

Antonio Horta-Osorio, the bank's chief executive, said of the performance: "The third quarter was a significant one for the Group.

We returned the TSB brand to the high street, launched a revitalised Lloyds Bank, and I am pleased that the progress we have made enabled the UK government to begin the process of returning the Group to full private ownership and getting taxpayer’s money back at a profit.

These are key milestones for Lloyds Banking Group and UK banking," he said.

The continuing nature of the PPI scandal underlines how one of the banking sector's most profitable products in the years after 2000 has become a giant millstone around its neck.

The British Bankers' Association has been holding talks with the Financial Conduct Authority about the imposition of a time limit on PPI claims, although these discussions have so far been fruitless.

The rest of the major high street banks are likely to have to increase their own PPI provisions, with Barclays and Royal Bank of Scotland also reporting third-quarter results later this week.

In February, the Financial Times quoted one unnamed Lloyds shareholder as saying that it would review its investment in the bank if PPI costs continued to rise.

"If PPI costs rise further, then that could tip the balance in our decision on whether to hold or sell our shares in the company," they are reported to have said.

That sentiment has not held back the Lloyds share price despite the fact that its PPI bill has escalated further.

On Monday, the owner of Halifax saw its share price close at 79.62p, a near-doubling during the last 12 months.

As Sky News revealed at the weekend, Mr Horta-Osorio has a vested interest in seeing the shares remain above 73.6p until the second half of November. If they do, the performance over 30 consecutive trading days would crystallise a bonus that on paper is currently worth just under £2.5m.
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No wonder savers get such a low interest rate on their savings:What: 

Osborne To Stop Short Of Full RBS Break-Up

The Chancellor will recommend the creation of an internal "bad bank" that avoids a shareholder vote, Sky News understands.

5:22pm UK, Saturday 26 October 2013

A Royal Bank of Scotland (RBS) sign is p
The Chancellor will next week finalise a blueprint for the future of RBS












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By By Mark Kleinman, City Editor

George Osborne will stop short of ordering a full break-up of Royal Bank of Scotland (RBS) following a review that will aim to redeploy billions of pounds of capital for lending into the British economy.

Sky News understands that the Chancellor and senior Treasury officials will next week finalise a blueprint for the future of RBS, in which UK taxpayers hold an 82% stake, which avoids the need for a formal vote by independent City shareholders.

The key recommendations of a four-month review led by Rothschild, the investment bank, and BlackRock, the world's largest asset manager, are understood to focus on "internal surgery" rather than a wholesale break-up of the RBS group.

They will include the creation of a more formal internal "bad bank", a further reduction in the size of RBS's investment banking operations, a more aggressive strategy to resolve the future of impaired loans, and a number of other asset sales.

An announcement about the outcome of the review, launched by the Chancellor in June, could be made as soon as next Friday, when RBS publishes its third-quarter results.

"He will want to present it as a break-up, but it won't quite be at the most radical end of the spectrum of options," said a source close to the situation.

Treasury and RBS officials cautioned that final decisions had not yet been taken and that the shape of the proposals could yet shift significantly.

The announcement of the restructuring is expected to be made by the bank itself, rather than Mr Osborne.

Under the currently-envisaged plans, the shake-up would involve in the region of £40bn of RBS's bad assets being held within a rebranded non-core asset division, or "bad bank". That figure is at the lower end of a range considered during the review, according to insiders, and roughly corresponds to the size of RBS’s existing non-core unit.

It will not require the separation of those loans from RBS by injecting them into an independent taxpayer-owned vehicle, and so will not trigger a vote from which the Government would be excluded under stock market rules.

That will enable Mr Osborne to present decisions about RBS’s future as a fait accompli - presuming that he has the agreement of RBS's negating the risk of an embarrassing defeat at the hands of institutional investors.

As Sky News revealed in June, many big RBS shareholders are opposed to a full break-up, arguing that it would be costly, time-consuming and further delay - possibly by years - the sale of the Government's shareholding in the bank.

The bad assets identified by the review largely comprise loans within RBS's Ulster Bank and property lending portfolios, and will be more aggressively run off in the coming months by the bank's executives.

The commitment to accelerate this process may trigger further writedowns to their value, with the bank raising additional capital by selling other assets.

Citizens, the US retail bank, is likely to be floated earlier than a previous target date of 2015, while the international arm of Coutts, the wealth manager owned by RBS, is also a candidate for sale.

It was unclear this weekend whether Rory Cullinan, the executive who has overseen the massive shrinkage of RBS's portfolio of bad assets during the five years since it was bailed out, will continue to run the unit.

One challenge facing Mr Osborne will be the scrutiny of Andrew Tyrie, the MP who chaired the Parliamentary Commission on Banking Standards. In its report earlier this year, it called for radical action to transform RBS into a bank that could support the UK economy.

The resolution of the dispute over the future of RBS, whose shares languish well below the level at which taxpayers injected £45.5bn of equity in the autumn of 2008, will bring relief to RBS managers tired of repeated conflicts between the Chancellor and Stephen Hester, who stepped down as RBS chief executive last month.

Mr Osborne said in June that he would only proceed with a major shake-up at RBS if it delivered clear benefits to taxpayers and the UK economy through increased lending capacity and appetite.

A Treasury official said on Saturday that the Chancellor had been keen to identify a “headline number” that would demonstrate that inflated capacity.

He added that the structural review would be linked to a separate piece of work led by Sir Andrew Large, former deputy governor of the Bank of England, which has been examining the flow of credit from RBS to small and medium-sized businesses (SMEs).

The views of UK Financial Investments (UKFI), which manages the taxpayer's stake in RBS, will also be important.

James Leigh-Pemberton, the investment banker who on Monday takes the helm of the Treasury agency, was asked by Mr Osborne last year to conduct a review of RBS's structure.

Mr Leigh-Pemberton argued in favour of a more radical break-up of RBS than the Chancellor is expected to favour.

Since becoming RBS's chief executive several weeks ago, Mr McEwan has been working with the management consultancy Bain & Co on a review of RBS's operations and an examination of core client services.

In a memo to staff earlier this month, he said that the location of RBS’s bad assets was less important than the bank's need to focus on improving service to customers.

"The future of this company will not be about whether we operate in particular areas or where our problem assets sit," he wrote.

"The future of this company is about how good a job we do for our customers, including those who are having difficulty repaying their loans. And it will be about how well we live up to all our responsibilities, particularly those we have to the UK."

RBS and the Treasury declined to comment