Bl***y Banks Again

LIBOR SCANDAL COULD COST BANKS £4BILLION

Badboy wrote:LIBOR SCANDAL COULD COST BANKS £4BILLION

Hi Badboy......and the rest!!!! This is why I am worried about the loan the BOE is making available to the Banks supposedly to lend to small Businesses
and Homeowners.

Panda wrote:

Badboy wrote:LIBOR SCANDAL COULD COST BANKS £4BILLION

Hi Badboy......and the rest!!!! This is why I am worried about the loan the BOE is making available to the Banks supposedly to lend to small Businesses
and Homeowners.

IT COULD BE BETTER SPEND GIVING £1,000 TO EVERYONE,WOULD BOOST THE ECONOMY IN MY OPINION

Badboy wrote:

Panda wrote:

Badboy wrote:LIBOR SCANDAL COULD COST BANKS £4BILLION

Hi Badboy......and the rest!!!! This is why I am worried about the loan the BOE is making available to the Banks supposedly to lend to small Businesses
and Homeowners.

IT COULD BE BETTER SPEND GIVING £1,000 TO EVERYONE,WOULD BOOST THE ECONOMY IN MY OPINION

Sorry Badboy, this is a LOAN and has to be paid back some time .

Barclays' Libor-rigging transgressions will be "put in perspective" by the fines handed out to other international banks, according to the first direct comments by the UK lender about the scandal's potential impact on the rest of the industry.

In a memo sent to staff yesterday evening and which has been leaked to me, the nine members of the bank's executive committee warned that the Libor crisis should not distract them from the core task of safeguarding Barclays' vast balance sheet.

"The macro-environment remains febrile, especially in Europe. We have to remain vigilant on balance sheet exposures and risk management. In short, our focus must remain on capital, funding and liquidity; improving returns; and driving income growth."

The memo, co-written by Marcus Agius, Barclays' outgoing chairman, apologised for the impact of the rate-fixing episode on the bank's staff, but hinted that its rivals were likely to be hit even harder than the £290m in fines imposed on Barclays.

"As other banks settle with authorities, and their details become public, and various governments' inquiries shed more light, our situation will eventually be put in perspective."

Approximately 15 other lenders, including Lloyds Banking Group and Royal Bank of Scotland, are under investigation by authorities probing a crisis which has also cast doubt on the competence of the Bank of England and Financial Services Authority. A string of inquiries has also been triggered, including one that will examine the business practices and culture of Barclays.

I understand that 90m emails and as many as 1m voicemails will be made available to the independent figure being drafted in to spearhead that probe, the details of which are being finalised this weekend.

"Last week, it was announced that Sir Mike Rake, our Deputy Chairman, would lead an external review of business practices across the bank," yesterday's memo said.

"That review will begin shortly, and the independent reviewer will have access to every resource, and all the co-operation, he or she requires in order to complete the work. This is an important intervention to ensure that appropriate values are applied consistently across Barclays, and the Executive Committee will support and drive implementation."

The executives also used the memo, headed ‘Restoring our reputation, building our business', to reject suggestions that Barclays was examining a full separation of its retail and investment banking operations.

"There has been much speculation in the media about potential changes in our strategy. This is inevitable in a situation such as this – but it is simply speculation. In the face of that, it is important that you hear from us, on behalf of the Board, an unequivocal statement: our strategy and business model were right for Barclays before recent events, and they remain right for Barclays now."

The bank would not be rushed in identifying successors to Mr Agius or Bob Diamond, who quit as its chief executive last week, the executives said.

Sir Mike Rake, the deputy chairman, is regarded by leading shareholders as the favoured candidate to replace Mr Agius, although he has not yet been formally invited to take the post or put his name forward for it.

Addressing the executive vacuum left by the departures of Mr Diamond and Jerry del Missier, chief operating officer, the executive committee said that Mr Kalaris would take charge of Barclays' execution and operations committee.

And they warned that the harm to Barclays could continue for a protracted period.

"We are also building an overarching brand recovery plan, which will engage all of our stakeholders, especially customers and clients, in a process to begin to rebuild the trust that has been so badly damaged," the memo said.

In addition to Mr Agius, the authors of the note to staff were Chris Lucas, finance director; Antony Jenkins, chief executive of retail and business banking; Rich Ricci, chief executive of corporate and investment banking; Maria Ramos, boss of Barclays' South African subsidiary, Absa; Tom Kalaris, chief executive of wealth and investment management and chairman of Barclays' Americas operations; Sally Bott, group human resources director; Robert Le Blanc, chief risk officer; and Mark Harding, group general counsel.

Barclays declined to comment.
Video:
US Warned UK Of Libor Fears In 2008
The Bank of England was warned about concerns over the interbanking Libor lending-rate by the then New York Federal Reserve president Timothy Geithner four years before the scandal at Barclays emerged. Sky's Alistair Bunkall reports.
Enlarge Article:
Exclusive: Push For Libor Deal Exclusive: Push For Libor Settlement
Updated: 2:08pm UK, Wednesday 11 July 2012

By Mark Kleinman, City Editor

Leading investors in large international banks are pushing for regulators to agree an industry-wide settlement in the Libor-fixing scandal amid concerns that a drip-feed of fines could prompt a Barclays-style purge of top executives.

Major shareholders tell me that they are keen to initiate discussions with financial regulators to highlight their fears that a repetition of events at Barclays could leave some of the world's biggest banks rudderless at a time of profound regulatory change and the ongoing crisis in the Eurozone.

It's unclear whether regulators would be responsive to such a request, or whether they even have the means to be, given that the multiple Libor-fixing probes being undertaken involve so many different national regulatory bodies in Europe, the US and Asia.

Following Barclays' £290m fine by regulators in the UK and US two weeks ago, the bank's chairman, chief executive and chief operating officer all resigned, leaving the British lender with a management vacuum that will almost certainly take months to fill.

Tracey McDermott, the acting head of enforcement at the Financial Services Authority, has said that Barclays will be followed by enforcement actions against other banks.

JP Morgan, Royal Bank of Scotland and UBS are among about 16 other banks which are being investigated for attempting to manipulate Libor, the principal interbank lending mechanism, in what is increasingly resembling a vast global conspiracy.

Barclays was among the banks which co-operated with authorities, resulting in reduced fines from regulators.

However, what it expected to be a first-mover advantage backfired spectacularly when its Libor settlement became a lightning for public and political anger about the market abuses endemic within the banking industry.

Investors believe that an industry-wide settlement will be necessary if other banks are to avoid a clear-out of their top executives, although one mitigating factor which might assist those who get fined for Libor-rigging is likely to be the fact that many of them have changed their top management since the periods under investigation.

"A drip-feed of Libor-related fines would be hugely damaging to investors with large exposures to international banks," one leading shareholder told me.

Of course, it's the view of many that banks which are found guilty of such an important offence as manipulating the rate of Libor should sack those responsible and that they should face further punishment under the law.

Investors believe that while that may be true, the dearth of senior candidates to run complex global businesses like major banks means the value of their investments will be severely depressed.

Barclays is at the center of an interest rate-fixing scandal.

As regulators ramp up their global investigation into the manipulation of interest rates, the Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal.

The department’s criminal division is building cases against several financial institutions and their employees, including traders at Barclays, the British bank, according to government officials close to the case who spoke on the condition of anonymity because the investigation is continuing. The authorities expect to file charges against at least one bank later this year, one of the officials said.

The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission. Collectively, the civil and criminal actions could cost the banking industry tens of billions of dollars.



.
Authorities around the globe are examining whether financial firms manipulated interest rates before and after the financial crisis to improve their profits and deflect scrutiny about their health. Investigators in Washington and London sent a warning shot to the industry last month, striking a $450 million settlement with Barclays in a rate-rigging case. The deal does not shield Barclays employees from criminal prosecution.

The multiyear investigation has ensnared more than 10 big banks in the United States and abroad. With the prospects of criminal action, several firms, including at least two European institutions, are scrambling to arrange deals, according to lawyers close to the case. In part, they are trying to avoid the public outcry that stemmed from the Barclays case, which prompted the resignation of top executives.

The criminal and civil investigations have focused on how banks set the London interbank offered rate, known as Libor. The benchmark, a measure of how much banks charge one another for loans, is used to determine the borrowing costs for trillions of dollars of financial products, including mortgages, credit cards and student loans. Cities, states and municipal agencies also are examining whether they suffered losses from the rate manipulation, and some have filed suits.

With civil actions, regulators can impose fines and force banks to overhaul their internal controls. But the Justice Department would wield an even more potent threat by bringing criminal fraud cases against traders and other employees. If found guilty, they could face jail time.

The criminal investigations come at a time when the public is still simmering over the dearth of prosecutions of prominent executives involved in the mortgage crisis. The continued trouble in the financial sector, including the multibillion-dollar trading losses at JPMorgan Chase, have only further fueled the anger of consumers and investors.

But the Libor case presents a potential opportunity for prosecutors. Given the scope of the problems and the number of institutions involved, the rate-rigging investigation could provide a signature moment to hold big banks accountable for their activities during the financial crisis.

“It’s hard to imagine a bigger case than Libor,” said one of the government officials involved in the case.

The Justice Department has jurisdiction over the London bank rate because the benchmark affects markets in the United States. It could not be learned which institutions the criminal division is chasing next.

According to people briefed on the matter, the Swiss bank UBS is among the next targets for regulatory action. The Commodity Futures Trading Commission is pursuing a potential civil case against the bank. Regulators at the agency have not yet decided to file an action against the bank, nor have settlement talks begun. UBS has already reached an immunity deal with one division of the Justice Department, which could protect the bank from criminal prosecution if certain conditions are met. The bank declined to comment.

The investigation into the global banks is unusually complex and it could continue for years, and ultimately end in settlements rather than indictments, said the officials close to the case. For now, regulators are building investigations piecemeal because the facts of the cases vary widely. That could make it difficult to compile a global settlement, although some banks would prefer an industrywide deal to avoid the harsh glare of the spotlight, said a lawyer involved in the case.

American authorities face another complication as they build cases. Investigators still lack access to certain documents from big banks.

Before gathering some e-mail and bank records from overseas firms, the Justice Department and American regulators need approval from British authorities, according to the people close to the case. But officials in London have been slow to act, the people said. At times, British authorities have hesitated to investigate.

By contrast, the Justice Department and the Commodity Futures Trading Commission have spent two years building cases together. Lanny Breuer, head of the Justice department’s criminal division, has close ties with David Meister, the former federal prosecutor who runs the commission’s enforcement team.

In the Barclays case, the British bank was accused of reporting false rates to squeeze out extra trading profits and fend off concerns about its health. During the crisis, banks feared that reporting high rates would suggest a weak financial position.

Lawmakers in London and Washington are examining whether regulators looked the other way as banks artificially depressed the rates. On Friday, it was disclosed that a Barclays employee notified the Federal Reserve Bank of New York in April 2008 that the firm was underestimating its borrowing costs. Despite the warning signs, the illegal actions continued for another year.

But in April 2008, a senior enforcement official at the Commodity Futures Trading Commission, Vincent McGonagle, opened an investigation. He directed the case along with another longtime official, Gretchen Lowe.

At first the case stalled as the agency waited months to receive millions of pages of documents when Barclays pushed back against the American regulators, according to the officials close to the case. By the fall of 2009, the trading commission received a trove of information, providing a broad view into the wrongdoing.

A series of incriminating e-mail and instant messages, regulators say, laid bare the multiyear scheme. In one document, a Barclays employee said the bank was “being dishonest by definition.”

The case gained further traction in early 2010, when the agency’s enforcement team engaged the Justice Department. The department’s criminal division, led by Mr. Breuer, agreed that regulators had a strong case. The investigation continued until January 2012, when the trading commission notified Barclays lawyers that they were entering the final stages before deciding about an enforcement action.

As part of the deal, regulators pushed the bank to adopt new controls to prevent a repeat of the problems. Among other measures, the bank must now “implement firewalls” to prevent traders from improperly talking with employees who report rates.

The bank says that it provided extensive cooperation during the three inquiries, and has spent around $155 million on its own three-year investigation. Because it agreed to settle with British authorities, Barclays received a 30 percent fine reduction.

In the United States, Barclays offered to pay a fine of $200 million to the C.F.T.C., slightly below the initially proposed range, according to government officials close to the case. Mr. Meister’s team soon accepted the offer, securing the biggest fine in the commission’s history.

On June 27, British and American authorities announced the deal with Barclays, which agreed to pay more than $450 million total. “For this illegal conduct, Barclays is paying a significant price,” Mr. Breuer said then.


Susanne Craig contributed reporting.

Previous Article Once-Stodgy World of London Banking

Queen's Bankers Deny Breach In SecurityUpmarket bank Coutts has tried to reassure clients that their details are safe despite claims a CD containing names was sold.8:15pm UK, Saturday 14 July 2012 One of the oldest and most famous names in banking
EmailThe Queen's banker Coutts has been forced to issue a statement denying the confidentiality of hundreds of wealthy European customers has been put at risk.

It had been claimed that officials in the western German state of North Rhine-Westphalia paid £2.75m for a CD containing the names of 1,000 rich German clients of the private UK bank's Swiss unit.

Royal Bank of Scotland-owned Coutts, which has served as banker to the Royal Family since the 18th century, said it had no evidence that client confidentiality had been compromised.

In response to a report in the Financial Times Deutschland, a spokeswoman said: "We are aware of the continued media speculation regarding a potential breach of client data secrecy at Coutts.

"Following thorough investigation, we have no evidence to suggest any such breach has taken place.

"As we stated to media last year, we take the protection of client data extremely seriously."

Germany has irritated Switzerland by repeatedly buying stolen bank data in its pursuit of suspected German tax evaders.


Details were claimed to have been put on a CD

A deal between the two countries to end the tax row is being blocked by opposition-controlled German states such as North Rhine-Westphalia.

Earlier this year, Coutts was fined £8.75m by the banking watchdog over its anti-money laundering controls.

It received the fine from the Financial Services Authority following a probe into its management of high-risk money laundering situations.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, said at the time Coutts' failings had been "significant, widespread and unacceptable".

RBS Boss Stephen Hester has confirmed he won't take his bonus for 2012 in light of the IT scandal.

He also said that management at RBS would be accountable on bonuses because of the recent technical problems.

The IT glitch delayed payments to NatWest, Royal Bank of Scotland and Ulster Bank accounts, leaving some customers short of cash and even forcing one man to spend a weekend in prison when his bail money was not available.

A letter has revealed the problems originated in Edinburgh and not in India as previously thought.

Mr Hester said today that the problems were caused by issues dating back to before he arrived at RBS in 2008, but taking a bonus would be "inappropriate".

A spokeswoman for RBS Group said there was no figure for the bonus Mr Hester would have received, as it was more a case of him not being considered for one.

Mr Hester has previously been forced to waive his £963,000 all-shares bonus amid public outrage over bankers' pay.

RBS paid £785m in bonuses last year, including £390m for its 17,000 investment bankers. While the total pot is 43% lower than the previous year, it followed a period in which the bank announced thousands of job cuts.

Meanwhile, RBS is among several lenders being investigated by the Financial Services Authority over trying to influence the Libor (London interbank offered rate) and Euribor interbank lending rates to boost profits.

The watchdog said that it has found "serious failings" in the sale of complex interest rate hedging products to some SMEs and has reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate compensation where mis-selling occurred.


** so even the Queens Banker has been at it,!!!!

I READ IN NEWS SCIENTIST THAT THERE IS SOFTWARE THAT CAN DETECT BANKING WRONG DOING.
HP ANOMONIOUS(SP?)

Mark Kleinman Sky News

City Editor

More from Mark | Follow Mark on Twitter

Barclays' Libor-rigging transgressions will be "put in perspective" by the fines handed out to other international banks, according to the first direct comments by the UK lender about the scandal's potential impact on the rest of the industry.

In a memo sent to staff yesterday evening and which has been leaked to me, the nine members of the bank's executive committee warned that the Libor crisis should not distract them from the core task of safeguarding Barclays' vast balance sheet.

"The macro-environment remains febrile, especially in Europe. We have to remain vigilant on balance sheet exposures and risk management. In short, our focus must remain on capital, funding and liquidity; improving returns; and driving income growth."

The memo, co-written by Marcus Agius, Barclays' outgoing chairman, apologised for the impact of the rate-fixing episode on the bank's staff, but hinted that its rivals were likely to be hit even harder than the £290m in fines imposed on Barclays.

"As other banks settle with authorities, and their details become public, and various governments' inquiries shed more light, our situation will eventually be put in perspective."

Approximately 15 other lenders, including Lloyds Banking Group and Royal Bank of Scotland, are under investigation by authorities probing a crisis which has also cast doubt on the competence of the Bank of England and Financial Services Authority. A string of inquiries has also been triggered, including one that will examine the business practices and culture of Barclays.

I understand that 90m emails and as many as 1m voicemails will be made available to the independent figure being drafted in to spearhead that probe, the details of which are being finalised this weekend.

"Last week, it was announced that Sir Mike Rake, our Deputy Chairman, would lead an external review of business practices across the bank," yesterday's memo said.

"That review will begin shortly, and the independent reviewer will have access to every resource, and all the co-operation, he or she requires in order to complete the work. This is an important intervention to ensure that appropriate values are applied consistently across Barclays, and the Executive Committee will support and drive implementation."

The executives also used the memo, headed ‘Restoring our reputation, building our business', to reject suggestions that Barclays was examining a full separation of its retail and investment banking operations.

"There has been much speculation in the media about potential changes in our strategy. This is inevitable in a situation such as this – but it is simply speculation. In the face of that, it is important that you hear from us, on behalf of the Board, an unequivocal statement: our strategy and business model were right for Barclays before recent events, and they remain right for Barclays now."

The bank would not be rushed in identifying successors to Mr Agius or Bob Diamond, who quit as its chief executive last week, the executives said.

Sir Mike Rake, the deputy chairman, is regarded by leading shareholders as the favoured candidate to replace Mr Agius, although he has not yet been formally invited to take the post or put his name forward for it.

Addressing the executive vacuum left by the departures of Mr Diamond and Jerry del Missier, chief operating officer, the executive committee said that Mr Kalaris would take charge of Barclays' execution and operations committee.

And they warned that the harm to Barclays could continue for a protracted period.

"We are also building an overarching brand recovery plan, which will engage all of our stakeholders, especially customers and clients, in a process to begin to rebuild the trust that has been so badly damaged," the memo said.

In addition to Mr Agius, the authors of the note to staff were Chris Lucas, finance director; Antony Jenkins, chief executive of retail and business banking; Rich Ricci, chief executive of corporate and investment banking; Maria Ramos, boss of Barclays' South African subsidiary, Absa; Tom Kalaris, chief executive of wealth and investment management and chairman of Barclays' Americas operations; Sally Bott, group human resources director; Robert Le Blanc, chief risk officer; and Mark Harding, group general counsel.

Barclays declined to comment.

By Mark Kleinman, City Editor

Leading investors in large international banks are pushing for regulators to agree an industry-wide settlement in the Libor-fixing scandal amid concerns that a drip-feed of fines could prompt a Barclays-style purge of top executives.

Major shareholders tell me that they are keen to initiate discussions with financial regulators to highlight their fears that a repetition of events at Barclays could leave some of the world's biggest banks rudderless at a time of profound regulatory change and the ongoing crisis in the Eurozone.

It's unclear whether regulators would be responsive to such a request, or whether they even have the means to be, given that the multiple Libor-fixing probes being undertaken involve so many different national regulatory bodies in Europe, the US and Asia.

Following Barclays' £290m fine by regulators in the UK and US two weeks ago, the bank's chairman, chief executive and chief operating officer all resigned, leaving the British lender with a management vacuum that will almost certainly take months to fill.

Tracey McDermott, the acting head of enforcement at the Financial Services Authority, has said that Barclays will be followed by enforcement actions against other banks.

JP Morgan, Royal Bank of Scotland and UBS are among about 16 other banks which are being investigated for attempting to manipulate Libor, the principal interbank lending mechanism, in what is increasingly resembling a vast global conspiracy.

Barclays was among the banks which co-operated with authorities, resulting in reduced fines from regulators.

However, what it expected to be a first-mover advantage backfired spectacularly when its Libor settlement became a lightning for public and political anger about the market abuses endemic within the banking industry.

Investors believe that an industry-wide settlement will be necessary if other banks are to avoid a clear-out of their top executives, although one mitigating factor which might assist those who get fined for Libor-rigging is likely to be the fact that many of them have changed their top management since the periods under investigation.

"A drip-feed of Libor-related fines would be hugely damaging to investors with large exposures to international banks," one leading shareholder told me.

Of course, it's the view of many that banks which are found guilty of such an important offence as manipulating the rate of Libor should sack those responsible and that they should face further punishment under the law.

Investors believe that while that may be true, the dearth of senior candidates to run complex global businesses like major banks means the value of their investments will be severely depressed.

As long ago as June 2008, New York Federal Reserve President Timothy F. Geithner was warning the Bank of England that letting bankers set the benchmark interest rate for global finance was open to abuse.

Governor Mervyn King’s failure then to take greater responsibility for Libor now poses a new threat to London’s drive to rival New York in the battle for a larger share of a shrinking international financial industry.









Timothy F. Geithner, U.S. treasury secretary. Photographer: Andrew Harrer/Bloomberg
.
“As a company, we now avoid London,” said David Kotok, who manages about $2 billion as chief investment officer at Cumberland Advisors Inc. in Sarasota, Florida. “It’s tarnished. Passing the buck to others, shirking responsibility and avoiding accountability characterizes the people at work there.”

Not only has the scandal dealt another blow to the self- regulatory model that was the hallmark of Britain’s longest stretch of growth for 200 years, it is throwing into question Prime Minister David Cameron’s plan to put the Bank of England in primary charge of banking regulation.

The financial-services industry faces “a crisis of trust and reputation” after years of light-touch oversight created a culture of “cynical greed” laid bare by the Libor crisis, Adair Turner, current chairman of the U.K. Financial Services Authority, said July 3.

Second Week

Bank of England officials may now face a second week of grilling by lawmakers on whether they did enough to stamp out manipulation of the London interbank offered rate, the benchmark for $360 trillion of securities. About a dozen banks are under investigation for rigging the rate, with Barclays Plc (BARC) already paying a record fine and ousting its top three executives. Turner and deputy governor Paul Tucker will tomorrow join King to testify on the bank’s latest Financial Stability report.

The U.K. central bank has so far defended itself by saying it thought the system was dysfunctional rather than dishonest and that it lacked the powers to effect change. Geithner, now the U.S. Treasury secretary, nevertheless put its officials back on the defensive at the end of last week with the release of a 2008 memo listing ways to make Libor more transparent.

Among the advice given, Geithner sought new procedures to “prevent accidental or deliberate misreporting” of Libor. While King called the recommendations “sensible,’ he left it to the British Bankers’ Association, which compiles Libor and was reviewing Libor at the time, to decide on whether they should be implemented. The Bank of England said in a statement last week that it didn’t have “any regulatory responsibilities in this area.”

Sleeping on Job?

“It looks like the Bank of England was sleeping on the job,” said Kent Matthews, a finance professor at Cardiff University Business School and former researcher at the central bank. “They may be capable of taking on the regulatory powers, but the question is whether they have the credibility. They weren’t looking at the right thing.”

Andrew Tyrie, chairman of the U.K. parliament’s Treasury committee, told Tucker on July 9 that the bank’s handling of Libor during 2008 “doesn’t look good.” Tucker asked to testify to lawmakers two weeks ago after Barclays released e-mails suggesting he had hinted the lender should lower its Libor submissions.

The controversy is the latest episode to reverberate through London after a year in which the city played host to JPMorgan Chase & Co. (JPM)’s $4.4 billion trading loss and the alleged $2.3 billion fraud at UBS AG. (UBSN) London was also where American International Group Inc. (AIG) and Lehman Brothers Holdings Inc. booked transactions that helped lead to their 2008 downfall.

London’s Fate

While research firm Z/Yen Group Ltd. ranks the U.K. capital as the world’s No. 1 financial hub, the Libor case “has an adverse effect on London as a financial centre and decisive steps need to be taken,” said Jon Moulton, founder of venture- capital firm Better Capital LLP.

The government is already moving to prevent a rerun of the regulatory missteps that were laid bare by the financial crisis. In 2010, Chancellor of the Exchequer George Osborne announced that he wanted to abolish the FSA, the financial watchdog set up in 1997 by the previous Labour government, and give most of its powers to the Bank of England.

The plan, which still needs parliamentary approval, would kill the regulatory regime whose light-touch approach has been blamed for failing to prevent the near-collapse of Royal Bank of Scotland Group Plc (RBS) and Lloyds Banking Group as well as the run on Northern Rock Plc.

Failed Model

Another nail may be hammered into the self-regulation model when Martin Wheatley, head of the FSA’s financial conduct division, publishes a review of Libor next month. His inquiry will look into whether setting the rate should be regulated, whether actual trade data can be used to set the benchmark, and whether officials have enough power to punish financial misconduct, Osborne said this month.

Spurred on by officials such as Geithner, the U.S. is moving faster than the U.K. to build a post-crisis financial framework. President Barack Obama in July 2010 signed the 2,300- page Dodd-Frank law. Regulators are also working to complete rules including a ban on proprietary trading by banks -- the so- called Volcker rule -- and requirements that most over-the- counter derivatives be guaranteed by central clearinghouses and traded on transparent platforms.

Still, the U.S. has little room to lecture the world given its subprime mortgage woes set in train a crisis that tipped the world into recession, said Robert Skidelsky, professor emeritus at Warwick University.

U.S. Bank Collapse

“The Americans are wrong in saying London was in some sense the cause of everything,” said Skidelsky. “The big collapse is in the American banking system.”

Harvard University professor Niall Ferguson also warns the U.K. should also be wary of imposing too many curbs on business. Financial services are the U.K.’s largest export and pay 12 percent of the country’s tax receipts.

“Banks are on the receiving end of a raft of financial regulation that is killing their business model,” Ferguson said at a conference in London on June 27.

The irony is that the Bank of England is being given more powers just as its track record for monitoring the City is being criticized.

“Everyone has said it’s too much for one man or woman,” said Dan Conaghan, author of the book, “The Bank: Inside the Bank of England.” “The job description is a huge amount more than the current governor has to do.”

Play Safe

The Libor turmoil may encourage Osborne to look beyond London’s financial district when King retires next June and appoint someone seen as untainted by the woes to rock the City since 2007, said Conaghan.

Leading candidates include Turner of the FSA, Gus O’Donnell, the former head of the U.K. civil service, Bank of Canada Governor Mark Carney and Osborne adviser James Sassoon.

“They’re going to play it exceptionally safe,” said Conaghan. Tucker, the BOE’s top internal candidate, may now have a “black mark” against his name.

London can still recover from the raft of scandals, and the central bank may be able to defend its actions by pointing to their context. The Bank of England was trying to fight the worst financial crisis since the Depression within a regulatory environment that deprived it of the legal power to force change.

King has recently also shown a greater willingness to take on a more muscular attitude to errant banks. King told Barclays Chairman Marcus Agius on July 2 that then-Chief Executive Officer Robert Diamond had lost the support of regulators. Diamond’s departure was announced the next morning.

“London as a financial center is far bigger than Libor,” said Jim Irvine, head of fixed-income at Henderson Global Investors in London. “We shouldn’t lose sight of the fact that, at the time, the thing we were losing sleep over was the potential implosion of the financial sector. The U.S. got through subprime, and London can get through Libor.”

Le Tessier is to give evidence before the enquiry today. He is the Guy who Bob Diamond claimed misunderstood what was said......should be interesting.

BANKS MAY HAVE BEEN INVOLVED IN PETROL PRICE RIGGING.
JUST WHEN IT THOUGHT IT COULDN'T GET ANY WORSE WITH THE BANKS,SOMETHING ELSE COMES UP.
I HAVE HAD A THOUGHT ABOUT ABOUT NEXT SCANDAL MIGHT BE.

The U.S. is far more pro-active than the U.K. and several Banks , not just in the U.S., are to be called to give account. It is felt that by Barclays
settling on a fine it implies that other Banks are guilty and this scandal will take a long time to unravel. It appears Bob Diamond will appear before the
Committee again.

King, the Head of the Bank of England should fall on his sword now it has been established that Geithner warned him in 2008 but he is due to retire in
2013 so will hang on. They have no conscience do they ?

Panda

I saw Jerry del Missier ( I think it was him anyhow) at the Inquiry in a clip on the Channel 4 News. He was asked over and over whether the libor rigging was illegal and he wouldn't answer. He kept trying to give excuses. The excuses they are giving is that it was all a misunderstanding. How can one misunderstand what the Governor of the Bank of England is saying? Example - If your Bank says you have no money - you have no money! If the BoE says the libor rate is too high then this was to infer they should lower it!

http://uk.reuters.com/article/2012/07/17/uk-banking-libor-king-idUKBRE86G00C20120717

Angelique wrote:Panda

I saw Jerry del Missier ( I think it was him anyhow) at the Inquiry in a clip on the Channel 4 News. He was asked over and over whether the libor rigging was illegal and he wouldn't answer. He kept trying to give excuses. The excuses they are giving is that it was all a misunderstanding. How can one misunderstand what the Governor of the Bank of England is saying? Example - If your Bank says you have no money - you have no money! If the BoE says the libor rate is too high then this was to infer they should lower it!

http://uk.reuters.com/article/2012/07/17/uk-banking-libor-king-idUKBRE86G00C20120717

Angelique.......when is any Government going to a take a Bank's Licence away?????? The latest about HSBC is not too hard to believe, I worked at HSBC many years ago.

A US report has found that lax controls at HSBC, Europe's largest bank, meant Mexican drug cartels were able to launder billions of dollars for seven years.

The investigation by the Senate also says US regulator knew HSBC Holdings PLC had a poor system to detect problems but failed to take action.

The report by the Senate Permanent Subcommittee also found that some bank affiliates skirted US government bans on financial transactions with Iran and other countries.

And HSBC's US division provided money and banking services to some banks in Saudi Arabia and Bangladesh believed to have helped fund al Qaeda and other terrorist groups.

HSBC released a statement saying its executives will offer a formal apology at a hearing into the matter on Tuesday.

"We will apologise, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong," the bank said in a statement.

The US Justice Department said it is conducting a criminal investigation into HSBC's operations but declined to confirm that the bank is in settlement talks.

HSBC's net income last year was £10.7bn ($16.8bn). It operates in about 80 countries around the world. Its US division is among the top 10 banks operating in the United States. It has assets of roughly £134bn ($210bn) in its US operations.

Money laundering takes profits from the trafficking of drugs, arms or other illicit activities and passes them through bank accounts to disguise the illegal activity.

The bank used its US operation as a "gateway" into the country's financial system for other HSBC affiliates, Senator Carl Levin, the subcommittee's chairman said.

Because of lax controls against money laundering, HSBC Bank USA "exposed the United States to Mexican drug money" and other suspicious funds, Mr Levin said.

The report says the drug cartels laundered money through the bank's US division from 2002 through 2009.

"In an age of international terrorism, drug violence in our streets and on our borders, and organised crime, stopping illicit money flows that support those atrocities is a national security imperative," Mr Levin said.

The bank said in its statement that it changed its senior management last year and has made changes to strengthen its compliance with rules to prevent money laundering.

"We...recognise that our controls could and should have been stronger and more effective in order to spot and deal with unacceptable behaviour," the statement said.

King is taking a hammering from the Enquiry he keep denying any liablility for the reason he did not act on Geithner's emails . He and Paul Tucker, Deputy Governor of the BOE saw no reason to investigate. King says it was not his responsibility it was the job of the FSA but now the FSA is to be
merged again with the BOE the BOE will have more Powers. If I remember rightly it was Gordon Brown who split them up but to my mind, common sense
would have made King warn the FSA at the timeand the matter could have been investigated fully in 2008. To think, these are the people running the
Economy of Britain.!!!

The Chairman of the FSA is suggesting that it was right for Bob Diamond to go and it's right to bring back regulation of the FSA to the BOE. Always
good to be wise after the event.

The U.S. Attorney General is to probe the Libor cris in 5 U.S. States. This is going to be the never ending story but there is a lot of criticism from
U.S. Companies about Barclays in particular and the BOE Chairman , King. It is felt he should have done something in 2008 when he was first advised, not shrug it off as not his responsibility .Bernanke is to appear before a Committee.

Panda wrote:

King is taking a hammering from the Enquiry he keep denying any liablility for the reason he did not act on Geithner's emails . He and Paul Tucker, Deputy Governor of the BOE saw no reason to investigate. King says it was not his responsibility it was the job of the FSA but now the FSA is to be
merged again with the BOE the BOE will have more Powers. If I remember rightly it was Gordon Brown who split them up but to my mind, common sense
would have made King warn the FSA at the timeand the matter could have been investigated fully in 2008. To think, these are the people running the
Economy of Britain.!!!

Panda

Yes I remember this very well and it was much discussed on a forum I used to post on. It was certainly a bad move by Gordon Brown and everyone said it would lead to problems.

HSBC Holdings Plc (HSBA) executives apologized for opening their U.S. affiliate to a river of Mexican drug lords’ cash, and the U.S. regulator that failed to stem the flow vowed to prevent a repeat.

“I deeply regret we did not act sooner and more decisively,” Comptroller of the Currency Thomas Curry said at a day-long hearing yesterday of the Senate Permanent Subcommittee on Investigations. He said his agency, which regulates HSBC’s U.S. arm, is partially responsible for letting Europe’s largest bank give terrorists, drug cartels and criminals access to the U.S. financial system and will take “a much more aggressive posture.”















Thomas Curry, comptroller of the U.S. currency. Photographer: Jonathan Ernst/Bloomberg













David Bagley, head of group compliance for HSBC Holdings Plc, left, and Paul Thurston, chief executive officer of retail banking and wealth management for HSBC, are sworn in to testify at a hearing of the U.S. Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations in Washington, D.C. Photographer: Jonathan Ernst/Bloomberg








The HSBC Holdings Plc bank in Hong Kong. Photographer: Jerome Favre/Bloomberg
.
Calling the Office of the Comptroller of the Currency a “lapdog not a watchdog,” Senator Tom Coburn of Oklahoma, the senior Republican on the panel, accused the agency of seeing weaknesses in the bank’s money-laundering safeguards and being “at a loss” to act. Curry, who took office in April, said the OCC will step in when a bank accumulates deficiencies, and has changed its policy to count repeated compliance failures against a bank’s safety-and-soundness rating.

Six current and former executives of London-based HSBC displayed a united front of contrition at the hearing, with compliance chief David Bagley announcing in front of the senators that he will step down from his post. Bagley said his bank “has fallen short of our own expectations.”

Shares Fall

HSBC shares fell 2.4 percent to HK$66.35 at 12:18 p.m. in Hong Kong, bringing their decline for the year to 12 percent. Credit-default swaps on HSBC Bank Plc were little changed from the beginning of the year at about 142 basis points in New York, according to prices compiled by data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

“Some international banks abuse their U.S. access,” said Senator Carl Levin, the Michigan Democrat who heads the subcommittee, saying these transgressions were bad enough to warrant a reconsideration of the bank’s charter. “The end result is that the U.S. affiliate can become a sinkhole of risk for an entire network of bank affiliates and their clients around the world playing fast and loose with U.S. rules.”

Senate investigators focused on New York-based HSBC Bank USA NA as a “nexus” for U.S. dollar services and transfers. Coburn pointed out that HSBC isn’t alone and that “similar problems exist at other banks.”

Paul Thurston, head of HSBC’s retail banking and wealth management unit and former chief of the Mexico unit, said the company is closing the unit’s U.S. dollar accounts in the Cayman Islands, a jurisdiction that Levin said is “known for secrecy and money laundering.”

Mexican Acquisition

HSBC bolstered its presence in Mexico in 2002 by buying the nation’s fifth-largest bank, Grupo Financiero Bital SA, better known as Bital. Senate investigators found that Bital had a history of deficiencies in anti-money-laundering controls. Thurston described the business side in the Mexican bank “overriding” its compliance side.

From 2000 to 2009, HSBC gave its lowest risk rating to Mexico despite “overwhelming information” that it posed a high risk for drug trafficking and money laundering, investigators wrote in a 335-page report accompanied by 529 pages of HSBC e- mails and other documents. Mexican clients included casas de cambio, or currency-exchange firms, which U.S. authorities say often launder money.

Wachovia Probe

Wells Fargo & Co. (WFC)’s Wachovia Bank unit paid $160 million in 2010 to resolve a criminal probe that cartels were using such exchange houses to launder cash.

HSBC’s Mexican bank shipped $7 billion in bulk cash to the firm’s U.S. bank in 2007 and 2008, leaving U.S. and Mexican authorities concerned cartels were the source, the report said.

In 2007, the head of Latin America compliance sent an e- mail to a colleague condemning the Mexican affiliate for “rubber-stamping unacceptable risks,” according to the report.

“What is this, the School of Low Expectations Banking?” the executive, John Root, wrote in the e-mail.

Leopoldo Barroso, a former HSBC anti-money-laundering director, told company officials in an exit interview that he was concerned about “allegations of 60 percent to 70 percent of laundered proceeds in Mexico” going to affiliates, investigators wrote.

In 2008, the Mexican unit carried a years-old backlog of 3,659 accounts meant to be closed, according to a 2008 e-mail from Warren Leaming, who was an HSBC legal adviser. He said 675 of those accounts were suspected of money-laundering activity.

Some of HSBC’s alleged dealings with state sponsors of terror and Mexican drug dealers were reported in July 2005 by Bloomberg Markets magazine, which documented bank ties to Iran, Libya, Sudan and Syria.

Terrorist ‘Gateway’

HSBC’s U.S. unit “offers a gateway for terrorists to gain access to U.S. dollars and the U.S. financial system,” according to the subcommittee’s report.

The lender ignored links to terrorist financing among its customer banks, including Riyadh, Saudi Arabia-based Al Rajhi Bank (RJHI), which had ties to terror groups through its owners, the report said. Mohammad Al Yami, an Al Rajhi spokesman, didn’t respond to an e-mail requesting comment.

Iran Sanctions

The report also cited HSBC’s violations of Treasury Department sanctions on dealings with Iran. The U.S. is seeking to isolate Iran from the global banking system through sanctions enforced by the Office of Foreign Assets Control, or OFAC.

HSBC executives discussed those sanctions in e-mails cited in the report. Bagley wrote after the Sept. 11, 2001 terror attacks that the bank should pay attention to proposed legislation to extend U.S. reach over foreign banks, “particularly if we are unfortunate enough to process a payment which turns out to be connected to terrorism.”

He wrote: “Some of the routes traditionally used to avoid the impact of U.S. OFAC sanctions may no longer be acceptable.”

An outside audit by Deloitte LLP showed that 25,000 transactions totaling more than $19.4 billion involved Iran, according to the report. Of those, as many as 90 percent passed through the bank’s U.S. accounts with no disclosure of ties to Iran, the report shows. Senate investigators documented similar transactions involving North Korea, Cuba, Sudan and Burma.

Bank documents also showed HSBC’s U.S. unit cleared transactions through at least six Iranian banks.

Since 2009, the U.S. Justice Department entered deferred- prosecutions agreements with six banks over OFAC violations, including ING Groep NV (ING), Barclays Plc (BARC), ABN Amro Holding NV, Credit Suisse Group AG (CSGN) and Lloyds Banking Group Plc. (LLOY) Most violations involved stripping information from wire-transfer documentation to hide the role of a banned person or country.

HSBC has said that it’s cooperating with investigations by the Justice Department and other agencies into possible Iran sanctions violations. It’s also cooperating in unrelated probes by the Justice Department and Internal Revenue Service into whether it helped Americans evade taxes through HSBC India.

I would say that the staff in our local banks,Nat West and Barclays are always very polite and helpfull its like they've all been to charm school actually.

Lioned wrote:I would say that the staff in our local banks,Nat West and Barclays are always very polite and helpfull its like they've all been to charm school actually.

I was talking to someone at Santander a couple of weeks ago about the banking scandals and said basically the same thing. The Santander man said that ordinary bank staff are usually friendly and polite and that they have nothing to do with important decisions: it's not their fault! So, yes, they can face the customers with a clear conscience.

I attended a Bank Seminar when I was working for a Bank and the Speaker told us the Traders at Banks work at such fever pitch that they are played out by the time they are 31 yrs old.