Hail The Bankers in The UK Today
Almost four years have passed since Bob Diamond sat in the Commons and told MPs: “There was a period of remorse and apology for banks. I think that period needs to be over.”
That was in January 2011, and since then we’ve been subjected to scandal after scandal in his banking industry, several of them involving his former bank, Barclays.
Diamond was the king-pin of that bank but stood down when Barclays was found to have rigged the Libor rate. This week, Barclays is up to its neck again in shame, as one of the banks caught manipulating the foreign exchange markets.
Yet, as is being screamed loudly on newspaper front pages and by politicians, no banker has gone to jail in this country for anything – not for their greed that almost brought the entire economic system of the world to a grinding halt, not for mis-selling financial products to unsuspecting customers, not for fixing key benchmark interest rates and currency prices.
Diamond? His bonuses that easily totalled £100m during his reign are safely stashed away, he’s launched a new African banking venture, and his daughter’s recent wedding in the South of France was eye-popping in its opulence. Bob tweeted proudly “Father of the Bride” under a picture of Nell in her dress made from 35 meters of silk and comprising a 15-foot-long train.
On Libor, 13 traders have been charged and one has pleaded guilty to the charge of conspiracy to defraud. The judge has imposed a gagging order barring the name of that trader or their bank.
And that is it. That’s as far as we’ve got, after the taxpayer-funded bailouts, the losses running into billions the misery inflicted on millions either indirectly by the Government’s forced austerity measures or directly by mis-selling and fiddling the markets.
We’re right to be livid. It’s not as if banking malpractice has just crept up on us – the credit crunch occurred in 2008, Northern Rock ran into trouble in 2007.
At the heart of the lack of bankers in the dock is the simple fact that in this country we do not take white-collar crime seriously enough. It’s a question of attitude: in Dante’s Inferno, fraudsters were reserved for the inner-depths, worse than murderers and ordinary thieves; not in Britain.
I recently interviewed Denis MacShane, the former MP and Labour minister, who was jailed for falsely claiming Parliamentary expenses. MacShane argued without blinking and hesitating, that criminals such as himself should not be sent to prison. There was nothing to be gained from it.
That approach typifies a prevailing Establishment view which says that financial crime is not that bad. American prosecutors love to point out the gulf that exists between there and here. Both New York and London are of roughly the same size in terms of business but only in one are executives frequently led off in chains and handed long jail terms.
Our Serious Fraud Office says it has the resources it needs but in truth, it is fighting City law firms that pull every trick in the book to obstruct and obfuscate any attempt at prosecution. Credit to this government for responding positively to the SFO’s special pleading for more cash, for high-profile complex cases. But the SFO can only ask for so much, and a glance at its premises and their staffing levels says theirs is an unequal battle against the massed ranks of legal eagles seeking to harry and to delay.
Clegg call over 'criminal' bankers
The public is "seething with anger" at the banks and people should be brought to book for their actions, Deputy Prime Minister Nick Clegg has said
By Press Association, 13 November 2014 7.03pm
Five banks which employed traders who clubbed together to rig foreign exchange (forex) rates were fined more than £2 billion yesterday.
Mr Clegg said it had not yet been decided what the Government would do with the £1.1 billion of fines levied by the UK regulator.
Regulators discovered that some of the manipulation of the £3 trillion-a-day forex market was taking place even as the banks were being probed over a previous scandal over interbank lending rate Libor.
Royal Bank of Scotland, HSBC, Citibank, JP Morgan Chase and UBS were handed the £1.1 billion penalty by the UK's Financial Conduct Authority and fines totalling 1.5 billion US dollars (£927 million) by US authorities.
Mr Clegg told LBC Radio that the Serious Fraud Office was also investigating and he hoped that anyone involved in criminal activity would face justice.
He said: "The Serious Fraud Office ... need to look at this. And they are. And I hope they will bring people to book and I hope people will be brought to justice."
He added: "People are seething with anger that they're having to endure cuts and savings for year after year after year because of not only irresponsible, in some cases ... possibly criminal behaviour by bankers."
Asked what would be done with the fines, Mr Clegg said: "I think the figure is just over a billion pounds that comes to the Treasury because of these fines related to the foreign exchange scandal. And we will make a decision as a Government what to do with that money."
Paul Mason, a reporter for Channel 4 News in the UK, has become an online sensation, after railing against the greed and corruption of bankers.
A real news reporter’s on-screen meltdown has finally captured a generation’s anger at the banks and the bankers who hold our economic fortunes in their hands with such callous indifference
by Nico Hines on 13th November, 2014
When Paul Mason, the economics editor on Britain’s Channel 4 News, was asked to cover yet another massive fraud perpetrated by bankers against their own customers, he could keep his cool no longer. He bested Will McAvoy’s Newsroom rant with fewer rhetorical flourishes, but more furious indignation.
“I’m just sick of it,” he began; demanding that bank regulators and the police start catching the crooks who are allowed to thrive, virtually unchecked, in the rotten financial sector.
“All we ask, all we can ask, is that the regulators do their job proactively. That they actually get on the case,” he spluttered. “They get on the case and stop wrong doing – what’s so hard about it?”
The impassioned and impromptu rant was recorded on the street outside the London offices of the Royal Bank of Scotland hours after it was announced that six banks on both sides of the Atlantic had been fined more than $4 billion for rigging foreign currency exchanges without any sign of forthcoming prosecutions.
The two minute clip posted on Channel 4’s Facebook page has attracted well over a million views and hundreds of supportive comments ranging from “Good lad” to “What a bunch of shysters.”
It was recorded as a little online extra while Mason and his crew waited to film a stand-up for the broadcast news program. They had just been asked moved away from the main entrance by the bank’s security guards.
Meanwhile what about Australia?
Gail Kelly’s Westpac exit draws curtain on big banker pay
Jonathan Shapiro on 13 November 2014
The end of Gail Kelly's reign at Westpac also marks the end of the mega-pay packages that have enriched banking chiefs over the past decade, the bank's chairman has claimed.
Mrs Kelly was paid $12.8 million over the last financial year, making her the best paid banking chief in the country. Her successor, Brian Hartzer is unlikely to receive a package to match.
"There's an understanding in the investor community and the public generally that the levels of salaries within financial services did get out of kilter through that era and have been brought back," said Westpac's chairman, Lindsay Maxsted.
"[Executive] remuneration has moved so much since Gail was appointed in 2008," he said.
"So a good opportunity to reset executive remuneration is on the retirement of a chief executive. You would have seen that in lots of other places."
Mr Maxsted said the remuneration package for Mr Hartzer "fits nicely in terms of a step up in what Brian was paid as head of Australian financial services and in terms of comparisons within the sector".
Changes to executive pay structures were a key topic of discussion with major shareholders, Mr Maxsted said. Long term incentives being changed for a three-year base to four years was an example of a change that came from those discussions, he said.
Yet the evidence suggests that Mr Hartzer will still rake in millions of dollars and has in fact already earned more than $20 million in three years at the bank.
Hartzer will receive an initial base salary of $2.686 million but could earn an additional $4.02 million in short term incentives that is payable in share or cash. He will also initially be awarded up to $2.528 million in long term incentives, subject to meeting long term performance hurdles.
Since joining the bank in June 2012, Hartzer has received $9.687 million of cash payments, made up of fixed pay, cash bonuses and relocation expenses.
And more curiously from a governance perspective, Hartzer has sold a substantial amount of equity shares over the past two years.
Based on Westpac's average closing price in the financial year of 2013, Hartzer netted an estimated $4.55 million by dumping shares he was granted and $5.913 million in 2014 financial year.
Talking about outgoing chief Gail Kelly's $12.8 million pay packet, the Westpac chairman said he was "the first to acknowledge" it was a "big number."
But he defended the structure of the pay package, which he said was aligned with the interest of investors in the bank.
"In a way, while it is big in isolation, it fits well into the way we want to remunerate executives and how governance experts and shareholders come back to us," Mr Maxsted said.
Meanwhile what about America?
Banker walks free from $20bn tax evasion charges
Rory McDonough | 12/11/2014 | 0 Comments
Former head of UBS Raoul Weil has been acquitted by a US federal jury on all charges of conspiring with as many as 17,000 US taxpayers to abuse Swiss bank secrecy to hide $20 billion in secret offshore accounts. Jurors in a Fort Lauderdale, Florida, federal court reached their verdict after deliberating less than two hours. Prosecutors at the trial, which started on 14 October, had attempted unsuccessfully to convince jurors that the 54-year-old Swiss citizen was aware of and helped US clients with the concealment of $20bn of undeclared assets between 2002 and 2007, despite the testimony of former head of the wealth management division for the Americas at UB, Martin Liechti.
Weil, 54, who faced five years in prison, was indicted in 2008 on the charge and was arrested last year in Bologna, Italy, waiving extradition.
Weil, the former number three at UBS, jumped for joy and kissed his wife at the Florida court after jurors returned the not guilty verdict in 90 minutes, with the prosecution failing to show sufficient evidence that he had aided US citizens in hiding billions from authorities.
During the three week trial, Matthew Menchel, the defense attorney from Kobre & Kim, argued that Weil had no knowledge of the scheme to evade US taxes, noting that several US Government witnesses were testifying after receiving generous plea deals from the prosecution.
“There is no document to prove” any wrongdoing, Menchel, said during closing arguments. “There is no evidence in this case, none, zero, that Mr Weil knew about, much less participated or joined in, any criminal conspiracy in which low to mid-level bankers were violating the bank’s policies and laws and actively assisting customers in committing tax evasion.” He told reporters after the verdict: “This is a case that should never have been brought.”
EU banker bonus cap a ‘retrograde step’, says HSBC chairman
Crackdown by European regulators likely to increase tensions in Britain over Brussels’ influence over the financial sector
The Guardian, Tuesday 21 October 2014
European rules to cap bankers’ bonuses at twice fixed pay are “a retrograde step” that could add to difficulty in recruiting staff, according to the chairman of HSBC.
The crackdown by regulators is likely to increase tensions between the UK and EU over Brussels’ influence over the financial sector.
Douglas Flint, head of the UK’s biggest bank, added: “It’s terribly important that we have a balanced framework that protects the system from excessive risk taking, which deferral and clawback does, but at the same time isn’t so uncertain that we find it difficult to attract people into the industry.
“When you say to someone in the tech industry that you’d like them to join banks to help with cyber risk, and say your money will be paid in seven years time … it’s an easy conversation – they decline to consider it.”
The European Banking Authority said it would issue more comprehensive guidelines on remuneration practices next year.
Banker Pay Clampdown Could Mean Desertions from EU Firms
By Ambereen Choudhury and Ben Moshinsky Oct 16, 2014
The European Union’s largest securities firms may have to raise fixed pay for bankers or risk losing their highest-paid staff to U.S. competitors after the region’s banking regulator blocked efforts to sidestep limits on bonuses, according to analysts and recruiters.
The European Banking Authority yesterday gave firms until the end of the year to bring their practices into compliance with EU rules that ban bonuses of more than twice fixed pay after finding 39 banks got around the cap.
Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) are among the biggest European lenders with global investment banking operations that have sought to offer employees discretionary payments tied to the role the employee holds. At stake is the firms’ ability to retain staff in some of their most profitable businesses and compete with U.S. firms without boosting fixed costs. Unlike U.S. and Swiss firms that are only subject to the restrictions in the EU, European firms must implement the rules worldwide.
“This is the first time banks haven’t been able to circumvent the continuous pressure from Brussels to stop additional pay to bankers,” said Jason Kennedy, chief executive officer of London-based recruitment firm Kennedy Group. “This can be a total disaster for them. This is the final nail in the coffin for European banks vis-a-vis the battle to remain ahead of U.S. banks.”
European regulators have moved to tighten compensation regulations to prevent a repeat of the risk-taking that contributed to the 2008 global financial crisis.
Britain has challenged the rules at the bloc’s highest court in Luxembourg, arguing that they overstep the powers laid out in the bloc’s treaties. The British Bankers’ Association estimates the rules apply to about 35,000 employees globally.
“The EU bonus cap is a fundamentally flawed approach,” Andrew Tyrie, a British lawmaker and chairman of Parliament’s Treasury Committee, said in an e-mail. “It will encourage banks to increase fixed pay rather than embed incentive structures that improve standards.”
Salaries for senior bankers rose an average of 26 percent in 2012 as banks prepared for bonus caps, the EBA said in a June report, which surveyed 137 banks across the EU.
Officials at HSBC and Barclays in London, Paris-based BNP Paribas (BNP) and Deutsche Bank (DBK) AG declined to comment today. Stefan Krause, the Frankfurt-based company’s chief financial officer, estimated in April the bonus cap would cost the bank 300 million euros ($383 million) in 2014.
Banks pay out £166bn over six years: a history of banking misdeeds and fines
From Libor rigging and sanction busting to forex manipulation, a look back at the global banking industry’s offences and penalties
Julia Kollewe, Jill Treanor and Shane Hickey at The Guardian, Wednesday 12 November 2014 15.00 GMT
The global banking industry racked up more than £166bn in fines, settlement fees and provisions between 2009 and 2013, the CCP Research Foundation has found. Offences range from Libor rigging and currency market manipulation to breaching sanctions against Iran and Sudan, money laundering for Mexican drug barons and abusive mortgage practices in the US.
The latest penalties have seen five major banks being fined £2bn for rigging the £3.5tn-a-day foreign exchange markets.
Research led by academic Roger McCormick at the CCP Research Foundation shows 10 large banks, including RBS, Barclays, HSBC and Lloyds Banking Group, incurred £166.63bn in fines and provisions between 2009 and 2013.
This year is shaping up to be another big year for bank penalties. Bank of America’s $16bn (£10bn) settlement over allegations of mis-selling mortgage-backed securities took the total for the first eight months of 2014 to more than £31bn, surpassing the total for the whole of 2013. Some of this is already included in the CCP figure as provisions.
In 2012, five large US banks agreed to pay $25bn to settle charges over abusive methods to foreclose on homeowners. It was the largest US settlement since the tobacco industry agreed to pay more than $200bn compensation to victims of smoking-related diseases in 1998.
More was to come. A smaller, collective settlement of $8.5bn came in January 2013 when 10 big financial institutions settled claims of foreclosure abuses.
There have also been a number of individual settlements: Bank of America’s $16bn settlement in August was the biggest related to the sale of mortgage-backed securities.
Citigroup agreed to pay $7bn to settle a federal investigation into toxic mortgage products the bank sold in the runup to the crisis.
JP Morgan Chase agreed a $13bn settlement after a string of investigations into its risky mortgage deals.
Deutsche Bank settled for $1.9bn over the sale of mortgage-backed securities to US taxpayer-owned Fannie Mae and Freddie Mac.
Morgan Stanley agreed a £1.25bn settlement over the sale of faulty mortgage-backed securities.
UBS reached a $885m settlement over claims it mis-sold mortgage-backed bonds during the housing bubble. ... (and so it goes on)
Bankers caused crash and got away with it, says Carney: Bank of England chief
by Mail Foreign Service 13 Oct 2014
The Governor of the Bank of England last night launched a stinging attack on the bankers who caused the financial crisis and ‘got away without sanction’.
Mark Carney said the bosses of the banks behind the 2008 global financial crash should have paid a higher price for their errors.
Instead – despite facing limited social embarrassment – they were still on the ‘best golf courses’.
Speaking in Washington, Mr Carney said: ‘The individuals who ran the institutions got away with it. They got away with their compensation packages and without sanction.
‘Maybe they are no longer at the most esteemed table in society, but they are still on the best golf courses and that has got to change.’
During a panel discussion on financial ethics, Mr Carney made it clear he had no sympathy for board-level bankers who would not take personal responsibility for the actions of their organisations.
The Bank governor, who has been in Washington for a series of International Monetary Fund meetings, complained that the authorities had been unable to jail any of the bankers whose failings led to the global financial crisis.
Carney tells bankers to embrace new rules or quit
Governor of the Bank of England says top executives should be more responsible
by Szu Ping Chan 12 Oct, 2014
Senior bank executives unhappy with new rules to make them criminally liable for failures should resign, according to the Governor of the Bank of England.
Mark Carney said directors and top executives should be made more responsible for any reckless staff behaviour because reforms to curb bank pay were not enough to prevent another financial crisis.
“One of the legacies of the crisis in the US and by and large in the UK was that the individuals who ran the institutions got away. They got away with their compensation packages, they got away without sanction,” Mr Carney said at an event at the International Monetary Fund’s annual meeting. “Maybe they were not at the best tables in society after that, but they’re still at the best golf courses. That has to change.”
However, Mr Carney conceded it was not possible to prevent risky behaviour through new remuneration measures alone, such as a limit to cash bonuses and clawbacks. “It’s very hard to design compensation for systemic outcomes, to internalise financial stability risks. So you need something more.”
Mr Carney’s broadside comes after it was reported that two of HSBC’s most senior executives were poised to quit as part of a pushback against new misconduct rules that mean reckless bankers face a maximum jail sentence of seven years. While Mr Carney did not address the resignations directly, he said regulators would not back down.
“If you’re chair of an audit committee, you have responsibility for the activities of an institution. And if you don’t think you can discharge that responsibility, you shouldn’t be on that board.”
He said bankers who abused the Libor inter-bank lending rate had become “detached” from reality in their search for profits. “These are individuals who were totally detached from what the ultimate purpose of what that benchmark really is. It [became] a game between people within a square mile.”
But Philipp Hildebrand, vice-chairman of Blackrock who joined Mr Carney on the panel, warned that creating a “cops and robbers” situation where onerous regulation and hefty fines prevented banks from conducting day-to-day activities would also be counterproductive.
The Archbishop of Canterbury, the Most Rev Justin Welby, added: “It will be very difficult and painful to change, but failure to change the leadership and culture over the next five years … means that we will end up with a financial services industry that is over-regulated, that is risk averse, and therefore can’t oil the economy.” All agreed that a simple regulatory framework should be put in place to ensure rules were clear and simple.
In a separate speech on Sunday, Mr Carney said global regulators had reached a “watershed” moment in ending “too big to fail” that would be presented at next month’s G20 summit in Brisbane, Australia.
The world’s most powerful nations will agree a minimum capital buffer limit for the biggest banks that Mr Carney said would establish a “level playing field” that would help to stop taxpayer-funded bail-outs.
“Operating in a heads-I-win-tails-you lose bubble, the world’s largest banks threatened the stability of the global financial system. Their bail-out using public funds undermines market discipline and goes to the heart of fairness in our societies,” he said. “This cannot be allowed to continue
Carney: bankers 'got away with it'
by Press Association 13 Oct 2014
Bank of England governor Mark Carney has taken a swipe at reckless bankers who despite causing the financial crisis got away with big pay packages and are "still at the best golf courses".
Mr Carney also indicated that board members unhappy with new rules meaning they could face jail sentences for banks' wrongdoing ought to resign.
His remarks came amid reports that two senior HSBC executives are to quit because of the new misconduct rules.
Mr Carney was speaking at an event at the International Monetary Fund's annual meeting in Washington.
He reportedly said: "One of the legacies of the crisis in the US and by and large in the UK was that the individuals who ran the institutions got away.
"They got away with their compensation packages, they got away without sanction.
"Maybe they were not at the best tables in society after that, but they're still at the best golf courses. That has to change."
Mr Carney did not directly address the matter of the HSBC bankers quitting.
But he said: "If you're chair of an audit committee, you have responsibility for the activities of an institution. And if you don't think you can discharge that responsibility, you shouldn't be on that board."
In a separate speech, Mr Carney said aims to end "too big to fail" - which saw taxpayers have to bail out large banks to prevent economic chaos during the crisis - would reach a "watershed" at next month's G20 summit in Brisbane.
He said: "Operating in a heads-you-win-tails-you lose bubble, the world's largest banks threatened the stability of the global financial system.
"Their bail-out using public funds undermines market discipline and goes to the heart of fairness in our societies. This cannot be allowed to continue."
There will be a price to pay for banker-bashing
By Ken Fisher October 3, 2014 6:33 pm
Ever-changing rules hinder investment
Politicians live for today. If the public demands a pound of flesh, they’ll get them five. They’ll create straw men and fuel fervour, so they can knock the straw men to pieces. All for a few poll points. “First, do no harm,” should really be the oath of every government official, as it is for every doctor. But in their zeal for popularity, the unintended messages their actions send often go unnoticed.
Take the $15m fine against Barclays for not enhancing its compliance department after buying Lehman Brothers’ investment banking unit in 2008, which essentially penalised them for Lehman’s shoddy systems. This is how the US government “thanks” banks who helped during the crisis.
Barclays got off lightly compared to JPMorgan and Bank of America, which paid over $100bn, mostly to settle charges and lawsuits against companies they bought in 2008.
This breaks with more than a century of history and tradition. Healthy big banks have long saved the day during financial crises, buying failing banks and guaranteeing their customers’ deposits. In 1907, JPMorgan rode to the rescue. In the savings and loan crisis, Bank of America was the white knight. In 2008, both stepped in: JPMorgan bought the ashes of Bear Stearns and Washington Mutual, while BofA bought failing mortgage lender Countrywide and brokerage Merrill Lynch. In the UK, Lloyds stepped in to save HBOS from the abyss.
Without this, worse chaos might have ensued. Healthy banks buying weak averted additional taxpayer bailouts. They also saved deposit insurers (the FDIC in the US, the FSCS in the UK) the huge expense of paying on insured deposits. They kept things running seamlessly, kept customers relatively secure and likely prevented deeper panic.
But after the dust settled, the government turned on them. Government agencies sued BofA for the mortgage-backed securities that Countrywide allegedly dumped on Fannie Mae and Freddie Mac. JPMorgan was charged and fined for fraud alleged against Bear and WaMu. The public blamed banks, so politicians bashed them. All for political gain.
This is the height of cutting off your nose to spite your face. The banks that held their hands up in 2008 and said, “I’m not touching this filth. I won’t help,” didn’t get hurt much by the Feds at all. The government hurt the helpers and sent a powerful signal: “Don’t go in and help us bail anyone out ever.” They won’t.
Imagine you’re JPMorgan chief executive Jamie Dimon, or BofA boss Brian Moynihan. Why would you ever help the government again? Why buy failing banks to help them avoid disaster, bailouts and embarrassment, if they’ll just bleed you for it? Why not just sit idly, watch other banks fail, and then welcome their old customers? Much better – you get the business without the fines.
Next time a big bank goes under, governments may well find themselves isolated. We’ll then pay the price for politicians’ popularity quest.
Archbishop: young bankers must learn to pray
by Anna Roberts 12 Oct 2014
The leader of the Church of England has spoken of his plan for Britain’s “ambitious” young bankers to give up work for a year and join a “quasi-monastic community” so they can learn about ethics ahead of entering the City.
Archbishop of Canterbury Justin Welby has called on some of the UK’s brightest and most ambitious young bankers to quit work temporarily so they can pray and serve the poor.
He said he believed their natural ambition would encourage them to join his Godly community.
Although full details of the venture have not been released, he has said he will set aside a corner of Lambeth Palace for the initiative, aimed at 20 to 35-year-old bankers and young leaders, as he believes people will take him up on his offer and it will help Britain’s banking future and help prevent a future global recession.
He said he believes it will lead to a more stable, fairer industry and help establish bankers people can trust.
The community would operate under the name Canterbury, St Anselm and his recruits would spend 12 months studying ethics and philosophy and would pray and serve the poor, before heading back to the cut-throat world of banking.
Mr Welby, 58, and married to Caroline, said he planned to outline his ambitious proposals at the International Monetary Fund, which is taking place in Washington, USA.
He was invited to sit on the IMF panel by Bank of England governor Mark Carney, and he said he immediately agreed.
He has always had an interest in business ethics, studying it as part of his theology degree at Durham University.
Ahead of the conference Mr Welby told the Financial Times if something did not change there would be further problems in the banking industry.
He told the best way to combat lack of trust was to teach younger bankers about God, ethics and the poor.
Bankers fear new UK rules will scare off talent
by Sam Fleming and Martin Arnold 8 Oct 2014
Could the boardrooms of British banks be denuded of top talent by an overly punitive regulatory regime?
That was the claim in some parts of the City after it emerged this week that Alan Thomson and John Trueman, who are non-executive board members of HSBC’s UK unit, were preparing to quit, in part because of new rules governing senior bankers
The regime, which is under consultation, will create a presumption that senior managers are guilty of misconduct if they fail to show they took adequate steps to prevent a serious regulatory breach. Bankers who recklessly drive their firm out of business could find themselves behind bars.
The regulations are meant to prevent a re-run of the banking fiascos of 2007 and 2008, when taxpayers found themselves bailing out big institutions while top directors walked away unscathed.
Leading UK bankers are planning to raise objections to the proposed Senior Managers Regime before consultation on the rules ends this month. There are particular concerns that people could be deterred by the tough framework from joining bank boards as non-executives.
“This does bring a risk of diluting the quality of boards,” said Sir Philip Hampton, chairman of Royal Bank of Scotland, who is due to leave the banking industry next year to become chairman of GlaxoSmithKline.
“We all know bank boards have to improve, but it’s a fairly small pool of people who are qualified for the role, ready for the greater time commitment of a bank board, and also the extra personal exposures.”
A director of another big bank said: “People will be considered ‘guilty unless proven otherwise’.”
The new regime is markedly tougher than the one that preceded it. Yet the idea that the UK’s Senior Managers Regime will drive away significant numbers of bankers is questioned by some in the sector.
The risk of being jailed for crashing a large bank is widely seen to be remote. Angela Hayes, a partner at the law firm King & Spalding, said non-executives who
Banker admits rate rigging - but you can't know where he works
Unnamed City worker now faces ten years in jail
First banker in UK to plead guilty after 'Libor' inter-bank lending scandal
Gagging order prevents naming of man and 'leading bank' he worked for
One of 12 people charged by SFO for 'manipulating Libor interest rates'
By James Salmon And Vanessa Allen For The Daily Mail and Martin Robinson for MailOnline Published: 12:19, 7 October 2014 | Updated: 12:00, 8 October 2014
A senior employee at a leading British bank could face up to ten years in prison after admitting conspiracy to defraud in connection with rigging interest rates.
The individual, whose identity is protected by a court order, yesterday became the first banker in the UK to plead guilty in court following the ‘Libor’ inter-bank lending scandal.
He is also the first senior worker at a British bank to be convicted of criminal wrongdoing since the financial crash of 2008.
Details of the guilty plea can be reported for the first time following court proceedings yesterday
But the gagging order regarding the individual’s name, served by Judge Leonard QC at Southwark Crown Court, also prevented the ‘leading bank’ he worked for being identified.
The banker is one of 12 people charged by the Serious Fraud Office (SFO) for allegedly manipulating Libor interest rates, which are used to set the price of mortgages and are linked to trillions of pounds worth of financial contracts.
Eleven of the accused are currently awaiting trial. Many have yet to enter formal pleas.
Yesterday’s guilty plea was the first criminal conviction arising from the SFO’s Libor investigation, which began in July 2012.
The Treasury said those found guilty of playing a part in the scandal should feel the ‘full force of the law’.
Bank of England governor Mark Carney has also led calls for bankers to be held to account. In July, he said staff at another bank involved in a scam to defraud taxpayers during the financial crisis could be guilty of ‘criminal conduct’.
The fact that bankers live in another world – immune from the economic chaos that they created – is being highlighted by this year’s round of City bonuses. While the government threatens to decimate public services and scrap hundreds of thousands of public service jobs, individual bankers are being rewarded with millions of pounds
More corrupt than ever: Thought the bankers who wrecked Britain's economy had reformed?
In an excoriating book, the Mail's City Editor reveals they're greedier than ever
By Alex Brummer Published: 02:00, 19 July 2014 | Updated: 02:01, 19 July 2014
The deeply sombre memorandum sent to Barclays’ 140,000 staff last month came straight from the top. In it, the Oxford-educated chief executive Antony Jenkins, who had got the job two years ago promising an ethical revolution, admitted that the Quaker-founded bank had, once again, been misbehaving.
This time, the malpractice centred on the appropriately named but little understood ‘dark pools’ - a secretive marketplace where big-league investors conducted share deals far from public view, boosting the bank’s profits at the expense of ordinary customers.
‘These are serious charges that allege a grave failure to live up to the culture at Barclays we are trying to create,’ Jenkins asserted. ‘I will not tolerate any circumstances in which our clients are lied to or misled, and any instances I discover will be dealt with severely.’
Strong words - but very familiar ones.
When Jenkins took over as boss from his disgraced American predecessor Bob Diamond in the summer of 2012, amid an earlier scandal over fixing the rates at which banks lend money to each other (the so-called Libor rate), he publicly vowed that Barclays would commit to five values of ‘respect, integrity, service, excellence and stewardship’.
To underline that commitment, giant Perspex signs were erected in the towering glass and steel entrance of the company’s Canary Wharf headquarters.
The credo was even etched on the lift doors, while inside the lifts, visitors were shown videos of the wonderful charitable deeds of Barclays and its staff.
To oversee this cultural revolution, a former Financial Services Authority chief executive, Sir Hector Sants, was hired on a £3 million pay package. Fast-forward to today, and what has happened since has made a mockery of those pious promises, raising questions as to whether Barclays’ bonus-fuelled, get rich quick approach to banking can ever be erased - either from its own Augean stables, or from Britain’s banking sector as a whole.
For what makes all this so disturbing is that the alleged swindles at Barclays stretch all the way to the boardroom.
At least eight of its current and former top executives, including the charismatic Bob Diamond, have been interviewed under caution by the Serious Fraud Office over alleged commissions paid to Middle East backers when the bank went in search of new capital in the autumn of 2008, to avoid it falling into the hands of the British government.
Elsewhere, it has faced or is facing disciplinary action and penalties for a vast range of rotten trading activities, from cheating clients on the gold bullion market to rigging energy prices in California.
Along the way, Jenkins’ efforts at a cultural revolution seem to have melted away.
His chosen reformer, Sir Hector Sants, stepped down citing personal stress. And at the bank’s annual general meeting earlier this year, Jenkins and the board faced an unprecedented challenge by leading shareholder Standard Life over a ‘fat cat’ pay policy that had created 400 new millionaire bankers at a stroke and paid out £2.38 billion overall in bonuses against a background of shrinking profits and diminished dividends for shareholders.
This, then, is the reality - a bank that gives all the appearances of being run in the interests of its top executives and ruthless traders rather than its customers or the shareholders who ultimately own it.
In that sense, it epitomises the culture of ‘bad banks’ that brought the global economy to the brink of collapse some seven years ago.
Since then, the British people have been promised time and again that practices have been changed, checks and safeguards put in place, rogue traders weeded out, legislation tightened.
At Barclays, traders allegedly routed almost all of the bank’s client orders through dark pools instead of passing them through official exchanges. By doing so, they would have boosted their own commission on the trades, and thus their potential bonus pots.
Goldman Sachs has been fined for failing to protect 395,000 of its clients who lost out because of trades placed through dark pools. Other major banks with dark pool operations, including Credit Suisse, Deutsche Bank and UBS, are now expected to come under scrutiny.
What we all need to grasp is that the ultimate victim of dark pool trades is not just the small-scale investor who dabbles in a little share-dealing. It’s every single one of us who has an ISA or pension
Why? Because honest fund managers who buy or sell millions of shares on our behalf are not competing on a level playing field with the dodgy dark pool dealers. Yet again, the bankers are gorging themselves on fat profits while ordinary families suffer.
Nor is this the only recent manifestation of banking’s toxic culture and unchanging contempt for fair play.
In the past few months, some 30 foreign exchange traders - working for banks in London and other major financial markets - have been fired or suspended for alleged corrupt behaviour on the currency markets.
They are currently being investigated by enforcers on three continents.
This particular scandal reaches so deeply into the system that even the Bank of England itself has suspended its top foreign exchange dealer and called in a QC to probe alleged wrongdoing in its own trading department.
So how could these dealers have manipulated the exchange rates? As you’ll know by going to a bank or bureau de change, there’s one rate for buying foreign currency and another for selling.
The problem is that both rates can be artificially manipulated by a ‘cartel’ of traders if they agree to shift the rate by a tiny increment all at once.
In London’s foreign exchange (Forex) markets, the prices of currencies are fixed at 4pm each day, based on trades conducted in the 30 seconds or so before. It’s in this vital half-minute that manipulation is alleged to have taken place in recent years.
Obviously, the rate will affect anyone about to go on holiday. But it also affects most hard-working people in the UK.
Why? Because much foreign exchange dealing is done on behalf of big investors, such as pension funds. That means the financial future of millions of people is directly affected by any unfair shifts in the exchange rates.
How London bankers at Goldman Sachs and Nomura made millions from taxpayers
An interest rate swap arrangement has ended up costing a Portuguese state-owned transport company a fortune!
Jim Armitage deputy business editor Friday 18 July 2014
If you suspected that we British taxpayers have been fleeced at every turn by the bulge-bracket banks, you should see some of the deals the public sector was suckered into over in Italy, France and Portugal, not only in the run-up to the financial crisis, but also afterwards.
Documents filtering out of a parliamentary inquiry in Portugal have found their way to The Independent, with a particularly shocking example of what one financial expert describes as “possibly the most stupidly complicated financial transaction ever sold”. The trades were all perfectly legal, but provide a salutary lesson in why you should never buy something you don’t understand – particularly from a London investment banker in a thousand-dollar suit.
The paperwork describing them consists of page after page of algebra, representing an ever-growing, unpredictable combination of impenetrable risks, the impact of each moving part multiplying like a virus. As the career banker Moorad Choudhry, of Brunel University’s Department of Mathematical Sciences, said when we showed him: “It made me laugh and cry in equal measure. What on earth were they thinking? I’ve seen some bad products in my time but this is something else. This is the Apocalypse Now point of the banking industry, when everyone and everything is descending into madness.”
The sucker that bought the product was a Portuguese state-owned train and subway company, Metro do Porto. It was sold by a team of London-based bankers at Goldman Sachs at the start of 2008.
In effect, it was an attempt by Metro do Porto to offset and lower the amount of interest it was paying on a portion of its debt – €126m (£100m) of debt, to be precise.
Nothing wrong with that – a prudent effort to save the Portuguese taxpayer millions of euros.
However, the deal it agreed with Goldman was so toxic that, far from saving millions of euros, in less than a year Metro do Porto ended up owing the bank millions.
The documentation explaining the product is so fiendishly complicated, with so many moving parts, that according to a specialist banker The Independent showed it to, the extent of the risk would have been impossible for anybody but the most experienced of experts in the field to gauge. Sources close to Goldman say Metro do Porto knew what it was buying and that it was the result of a “request for proposals” – in effect, a tender inviting banks to pitch.
RBS Boss Ross McEwan Confronted Over Controversial GRG Bankers
Asa Bennett 18th July 2014
Royal Bank of Scotland boss Ross McEwan has refused to rule out paying bonuses to staff at the bank's business support unit, which has been accused of causing "huge financial harm" to small business owners.
The state-owned bank's Global Restructuring Group (GRG) unit has faced a maelstrom of controversy after entrepreneur Lawrence Tomlinson accused the bank in a report for the government of "killing off" small firms managed through its business turnaround unit by adding on fees or pulling lines of credit. Another report by former Bank of England deputy Sir Andrew Large found that the GRG unit was being run to make profit, something that the Bank denies.
McEwan was confronted about the turnaround division as he hosted a phone-in on LBC radio for the first time, and was forced to deny that GRG had been "malicious or fraudulent".
The caller, who gave her name as Sarah, asked how staff working at the bank's GRG unit could "morally" get bonuses "after causing so much emotional and financial harm".
She told McEwan of how the small property firm she worked for "had to repay millions on loans with RBS" and had to pay "a considerable amount of fees" despite never defaulting on any loans, and was on the verge of being put into administration.
In response, the RBS boss defended the controversial turnaround team as a "pretty good unit" that was "under a huge amount of pressure', adding that: "I have not seen malicious or fraudulent activity going on in the business."
Following Tomlinson's allegations, the bank commissioned lawyers from Clifford Chance to investigate the claims and later welcomed the report for claiming it of trying to "systematically defraud" small firms, something that Tomlinson had never claimed.
Clifford Chance's report, which interviewed 138 small businesses managed by the bank's support unit, found that the bank's fees "lacked clarity" in "some cases". RBS is still under investigation by the City watchdog, the Financial Conduct Authority.
In response to Clifford Chance's report, RBS admitted that the process which allowed the bank to bid for ailing businesses’ property that it was auctioning off in order to help get on top of their debts led to a "damaging perception" of a conflict of interest. As a result, the bank decided to wind down West Register, the vehicle through which it would bid on property, and sell all of the assets it has on its books
Barclays Bank counter staff to become iPad-toting 'community bankers'
By Simon Rockman, 15 Jul 2014
Barclays Bank is following the lead of London Underground and replacing counter staff with machines and people loitering around to show customers how to use them.
The move will affect all 6,500 cashiers, who will be renamed “community bankers” and will be armed with iPads. Barclays already has 37 counterless branches, but the plan is to roll out the process amongst its 1,600 other branches. It has not yet decided how many branches this will affect – that will come once the trial is complete, although no date has been set for that either.
Barclays says that staff numbers will not fall as a result of the change and cashiers who become community bankers will get a pay rise, typically of 2.8 per cent, through a promotion.
Barclays, like the London Underground, argues that with more customers moving to mobile and online banking, there is less need for counter staff. In many branches counters will still exist and a customer requiring a service will be taken to a self-serve machine – with a staffer on hand to explain how to operate it – or a counter as appropriate.
The “community bankers” will use iPads from the pool of 10,000 devices Barclays bought a couple of years ago. At the time, the roll-out was not that smooth and Barclays found that staff struggled to use the fondleslabs.
It countered this with a team of evangelists, known as "Digital Eagles", a team of 18 people that went from branch to branch training others who then peer-trained up other "Digital Eagles". Today the, er, eagles number 7,000.
Steven Cooper, CEO of Barclays Personal Banking, said:
"We know that really helping customers requires a lot of valuable people skills and this change is about investing in our colleagues and recognising their talents.”
One does rather assume he will not be required to stand on his feet all day to do his job, however.
MP condemns London bankers at Goldman Sachs and Nomura
Jim Armitage Deputy business editor Friday 18 July 2014
A senior MP on the Treasury select committee has condemned the behaviour of some City bankers after The Independent revealed they had made tens of millions of euros of profit selling extremely complicated financial products known as swaps to public organisations in Portugal.
John Mann called for curbs to be placed on how much banks can charge taxpayer-funded entities for financial products.
He added: “These deals may not be illegal, but they are immoral.”
The Independent's investigation found that Goldman Sachs and Nomura had made huge profits selling the state-owned Metro do Porto bets known as “swaps” which the Portuguese civil servants had hoped would reduce the interest charges on a €126m loan. The swaps went so badly for the Portuguese that the Metro soon ended up owing more on the swap than the total loan itself.
Both banks declined to comment.
Mr Mann said: “The Financial Conduct Authority has placed limits on the total amount of interest and charges that consumers can be liable to owe payday lenders. It is time to look at similar regulations for the City - especially where taxpayers' money is concerned.”
Santander is in the middle of a High Court case in London over swaps it sold Metro do Porto that also ended up costing the state-owned transport group dearly. Santander is demanding to be paid what it is owed. Other banks agreed to a combined settlement last year with the Portuguese government for derivatives contracts including the one highlighted by The Independent. The government paid out approximately €1.5bn in the deal.
BNP Paribas to pay $9bn record fine but bankers will still get their bonuses
Nick Goodway Tuesday 01 July 2014
France’s BNP Paribas has agreed to pay a record $8.9 billion fine for working with countries subject to US sanctions, but most of its bankers will get their bonuses.
The bank’s finance director, Lars Machenil, speaking for the first time since last night’s deal with the four US regulators, said that staff bonuses would be based “on this year’s performance” and would “exclude the impact of the US fines”.
But the bank declined to respond to questions about whether or not its directors and senior executives would have their bonuses cut this year.
BNP will pay the fines and settlement to the US Department of Justice, Office of Foreign Assets Control, Manhattan’s district attorney and the New York Department of Financial Services.
It pleaded guilty in a New York court to falsifying records last night and will enter guilty pleas in a federal court next week on charges including trading with the enemy.
Mr Machenil said BNP would pay the fine from “existing cash” resources but told investors that plans to raise the dividend this year from €1.5 a share to around €2 would not happen. However, he promised a €1.5 cash pay-out for the year.
“We deeply regret the past misconduct that led to this settlement,” Jean-Laurent Bonnafe, chief executive of BNP, said.
“The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate.”
On top of the fines BNP will be barred from clearing certain US dollar transactions for the whole of 2015. It was also told to fire 13 individuals and not rehire them.
Sources said several dozen bankers who worked in the key areas like oil and gas financing, which broke sanctions against Sudan, Iran and Cuba, were likely to be demoted and have their bonuses cut and previous payments potentially clawed back.
Bankers are to blame for economic crash
Letters in Chad 19 July 2014 ( Mark Fretwell B.A.(Hons), DipPFS, CeMAP )
I read with incredulity Coun Stephen Garner’s letter in the Chad of the 9th July 2014. I respond as someone who has worked in the financial services industry for over 20 years and been a director of my own firm for nearly 10 years.
Coun Garner, who is a county as well as district Councillor, declares himself “to be an avid reader of financial strategies and business plans” I find his lack of even basic knowledge of economics, recent history and public finances very worrying.
Coun Garner repeats the Tory lie that “Labour mismanagement caused the crash of the British economy and the austerity which we suffer today.”
Firstly, I must inform Coun Garner that it is widely acknowledged among respected economists and financial commentators that the crash was caused by the reckless behaviour of banks and bankers, culminating into the collapse and rescue of banks in the US. This then spread throughout the global banking sector as more reckless banking behaviour was discovered especially in the UK. What has the Tory-led government done to resolve the underlying problem of the reckless “too big to fail” banks? Very little; hardly surprising given that the sector is a big funder of the Tory Party. In fact government policy has made another crash more likely. The recent government’s “Help to Buy” scheme is creating another property speculation bubble, especially in the South East, a bust or downturn in the property market is therefore more likely to follow.
Secondly, Coun Garner must surely be aware that austerity is a policy choice of the Tory-led government. Government has a role in raising and collecting taxes not just in prioritising and spending the money it collects. By cutting taxes for millionaires whilst seeing queues growing at food banks, this government has shown where its true priorities lie. “We are all in this together” is a Tory lie. The poorest and most vulnerable in our society are being made victims and scapegoats by those who could afford to contribute more but refuse to do so. I find such policies sickening.
It’s about time Coun Garner and his colleagues in the “Mansfield Independent Forum” come clean and declare openly that they are right wing Thatcherites rather than pretending that they are all things to all voters just to get elected.
It seems the big beasts of banking really are too big to jail after all
by James Moore 1 July 2014
US Attorneys certainly have a neat line in soundbites. "A Tour de Fraud," is how Preet Bharara described the conduct of French bank BNP as he and his colleagues confirmed what we all knew: BNP will pay a record $9bn for its alleged involvement in sanctions busting.
It was a neat little sideswipe at the old rival from across the Atlantic. But the assertion that "no bank is too big to jail", a play on "too big to fail", doesn't so easily stand up to scrutiny.
BNP as an institution is getting hammered as the "worst offender" when it comes to sanctions busting. The American authorities alleged some extremely cynical conduct on its part and will ban it from cleaning dollar-based transactions for a time in addition to the fine.
But despite claiming that the misconduct was known about at very senior levels we aren't going to see any senior BNP people donning orange jumpsuits ahead of uncomfortable stays at Riker's Island Penitentiary.
Some 45 employees have been disciplined – and 13 are out of the door, including chief operating officer Georges Chodron de Courcel – but that's as far as it goes.
The penalty meted out to BNP is certainly substantial enough for the bank – and its peers – to take seriously.
It might even encourage BNP's shareholders to consider whether they could have done more to avert it by exercising proper oversight.
But if the misconduct at BNP was as serious as prosecutors have alleged, if laws were wilfully broken, why are individuals not being called to account as well as the institution?
Of course we've been here before. This latest affair will simply reinforce the perception that individual bankers, thanks to their wealth and power, have been allowed to "get away with it" despite all the chest thumping from the various authorities in the US.
It's true charges have been pressed against a number of those alleged to have been involved in some of the other recent high-profile scandals, but they are largely relative small fry in terms of banking hierarchies.
The senior executives responsible for setting policies, and culture – the men who run the show – as ever have successfully hidden behind committee-based decision-making and the repeated assertions that they didn't know what was going on under their own noses.
Prosecutors have lacked either the wherewithal, or the will (or both) to bring cases against them. It appears that the big beasts of banking really are too big to jail.
Banking crisis would have devastated an independent Scotland, report says
Outsized banking sector 12 times bigger than economy would pose significant stability risk, the Banker magazine warns
Jennifer Rankin The Guardian, Monday 30 June 2014 12.43 BST
An independent Scotland would face significant risks to its economy from its disproportionately large banking sector, according to a report that draws parallels with Iceland.
If Scotland had been independent during the financial crisis it would have been forced to turn to the International Monetary Fund, according to the specialist magazine the Banker.
An independent Scotland, with responsibility for RBS, HBOS and Clydesdale Bank, would have a banking sector 12 times larger than the size of its economy, the magazine said on Monday in its annual survey of the world's 1,000 biggest banks. "This would be even larger than the 10:1 ratio that proved so ruinous for Iceland and presents a significant risk for the country's economic stability," it added.
Brian Caplen, the Banker's editor, said: "Had it been independent during the financial crisis, there is little doubt that an independent Scotland would have been devastated and forced to turn to the IMF for help.
"The temptation in future under independence would be to give Edinburgh light touch regulation to make it more competitive as a financial centre. This might have serious consequences."
The prospect of an independent government in Edinburgh relying on outside support to prop up its banks, echoes a warning from the Standard & Poor's ratings agency that an independent Scotland would have to turn to the Bank of England and the Treasury to protect its savers. S&P also drew parallels with Iceland, noting that its national bank-deposit scheme was overwhelmed when the country's huge banking sector collapsed.
The banker's calculations are based on the assumption that banks currently headquartered in Scotland would remain there in the event of independence. Mark Carney, the governor of the Bank of England, told MPs in March there was "a distinct possibility" that RBS could move to London.
The pro-independence campaign believes it can create a currency union with the rest of the UK that would preserve the Bank of England as lender of last resort. But the Conservatives, Labour and the Liberal Democrats insist in official statements that an independent Scotland would not be allowed to keep the pound.
Responding to the Banker's report, a Scottish government spokesman said: "These figures are outdated and do not reflect the reality of Scotland's financial sector. Financial services accounts for a lower share of our overall economy at around 7% than they do for the UK as a whole.
"The figures quoted in this report artificially inflate Scotland's financial assets by assigning investment banking activity which takes place almost exclusively in London to Scotland, and by failing to take account of both the recent reforms to the financial services sector and the deleveraging of institutions following the UK financial crisis."
He added: "Independence would create the opportunity for Scotland to pursue a more productive, resilient and fairer economic model that delivered long-term sustainability and economic opportunity for all."
The warning on independence featured in the Banker's annual survey of the world's biggest banks, which lays bare how far British banks have fallen down the rankings since the global financial crisis. HSBC, the only British bank left in the global top 10, slipped to 5th place from 4th in 2013. RBS, on paper the world's third most-profitable bank in 2008, has dropped out of the top 10 entirely.
Retired banker at Coutts 'laundered fraud proceeds'
Daily Telegraph 25 June 2014
Roger Noad, who spent 30 years at Coutts, the Queen's banker, is accused of allowing his son Matthew Noad, 29, to funnel £655,000 through his bank accounts
A retired banker laundered £655,000 of the proceeds from a multi-million pound fraud run by his son, a court heard.
Roger Noad, who spent 30 years at Coutts, the bank used by the royal family, allegedly allowed conman Matthew Noad, 29, to funnel £655,000 through his bank accounts over six years.
The 60 year-old and his wife Linda Noad, 58, also went on a luxury holiday to Dubai with their son and witnessed his extravagant spending on wines, a new Mercedes and £18,000 worth of jewellery, it is claimed.
Matthew Noad was aged 23 and living at home when he launched a cold-calling investment scam with fellow fraudster Clive Griston, now 52.
The pair used glossy brochures to persuade elderly victims to buy land on the basis they would get high returns if it was developed, the court heard
Matthew Noad made around £2.1m from the scam and transferred a total of £655,000 to his parents in a series of transfers to their Coutts account, jurors were told.
Prosecutor Mark Fenhalls said Roger Noad had introduced his son to Griston and must have suspected where the money was coming from.
'Roger Noad worked for Coutts bank for 30 years,' the prosecutor told jurors. 'You may consider a man who works for a bank must be better informed and more likely to ask questions, particularly when the sums are spectacularly eye-watering.'
'You will have to consider the lifestyle he was enjoying while living with his parents.'
Mr Fenhalls said that when the Noads all went to Dubai they were 'no doubt enjoying with Matthew the fruits of the fraud.'
Griston laundered a total of £996,000 through the account of his partner Kerry Golesworthy, 48, at a time he was facing bankruptcy, it is claimed.
The money was used to put a deposit on a £790,000 home in Orpington and splash out on a new £109,000 Bentley, £40,000 of furniture and a £10,000 pearl necklace, jurors were told.
Mr Fenhalls said: 'They can only have been seeking to buy this house because they knew there was going to be a lot of money coming in to finance it.
'Given there was a petition for his bankruptcy it is hardly surprising they chose to put it into their home.'
Banker who stole €450,000 has half of sentence suspended
Kevin Jarlath Mitchell robbed money from friends and customers to pay off property debts
Brian Kavanagh 30 June 2014
A bank manager who was jailed for four years after he stole nearly €450,000 from customers to pay off debts arising from unsuccessful investments in the property market has had half his sentence suspended on appeal.
In April last year Kevin Jarlath Mitchell (55) was jailed for four years by Judge Martin Nolan at Dublin Circuit Criminal Court after pleading guilty to ten sample counts of charges relating to stealing money from clients while he was a senior official at ACC Bank in Kilrush, Co Clare.
Mr Mitchell, with a last address at Drimnagh Road, Drimnagh, pleaded guilty to charges of theft, obtaining cash and a cheque under false pretenses and falsifying a DIRT compliance certificate on dates between January 1993 and February 2012.
The court heard evidence that father-of-five Mr Mitchell stole €197,000 from pensioner John Patrick Ryan after leading the man to believe that he had been depositing his cash in a high-interest account.
Mr Mitchell also stole €250,000 from long-term friends and customers, Patrick and Susan Flanagan.
The court heard evidence that ACC bank fully reimbursed Mr Ryan and the Flanagans, while Mr Mitchell surrendered effectively his entire pension fund, valued at €600,000, by way of recompense to the bank.
Returning judgement today, presiding judge Mr Justice Donal O’Donnell said the appeal court found these were very serious offences, and in relation to Mr Ryan the matter was a repeated breach of trust not just of a client but of a friend, involving “considerable dishonesty”.
He said the court thought it important to observe that Mr Mitchell’s surrendered pension entitlement could be considered near perfect restitution but not near perfect mitigation.
Mr Justice O’Donnell said payment back of what was stolen could never be considered perfect mitigation as it was simply giving back what was taken. He said this could give rise to the perception that all that was necessary was to pay back the money
Banker Sues Goldman Sachs Because His $8.25 Million Bonus Wasn’t Big Enough
by Kia Makarechi 20 June 2014
Here’s an instant classic for the Out-of-Touch Banker genre: a former Goldman Sachs mortgage bond trader clears $30 million in the decade following his college graduation, racks up an $8.25 million bonus in a single year, and sues because he thinks he deserves another $5 million.
Meet Deeb Salem, the G.S. alum who now works at the hedge fund GoldenTree Asset Management but once helped Goldman shed its toxic assets by betting against its clients and, as his lawyer boasted to the New York Post, shorting the mortgage market in 2006. Salem is suing his former employer, alleging that he had every right to expect a $13 million bonus in 2010.
Much of the drama focuses on Salem’s 2007 self-evaluation, which eventually made its way into the public record thanks to a 2011 Senate investigation into the bank’s habit of betting against its own clients. Salem alleges that he was punished for his honesty (the bank, perhaps upset that his review provided Congress with ammunition, warned him in 2010 for “extremely poor judgment”). But it also rewarded him with an $8.25 million bonus. The previous year, he had received a $15 million bonus—more than Goldman Sachs C.E.O. Lloyd Blankfein.
Don’t get the wrong idea about Salem, though. It’s not just the money that bothers him—it’s the filial shame he faced after telling his mother that he would be taking home a full $13 million in 2010.
The Financial Industry Regulatory Authority tossed out Salem’s case (one panelist called his claims “bullshit”), and he has since asked the New York State Supreme Court to intervene. The judge in the case has sealed the documents pending a hearing in the fall, according to Bloomberg News.
Salem believes he could have made much more had he left the firm earlier, and the scary thing is, he’s probably right—his group at Goldman brought in more than $1 billion a year during the period between 2007 and 2010. He was something of a star in a world where moving crappy products faster and more ruthlessly than your competitors yields billions of dollars of profits. But, as Goldman’s lawyer, Andrew Frackman of O’Melveny & Myers, said at a February arbitration hearing, Salem “made a ton of money.”
“He’s not entitled to more money simple because he would like to have been paid more,” Frackman said. “If that were the case, you’d have traders and bankers in here every day of the week.”
“Let’s be very clear: I was one of the most sought-after investment professionals in the mortgage industry,” Salem told the panel at the same hearing. He also compared himself to Michael Jordan in self-evaluations, writing, “I am as competitive
British banker David Higgs fined for hiding $100m losses|
by Daily Telegraph 24 June 2014
A British investment banker has been sentenced in New York for hiding $100m in losses on sub-prime mortgage bonds in the 2007 US housing market collapse.
David Higgs, 44, had already pleaded guilty in 2012 to charges of falsifying Credit Suisse's records, and agreed to cooperate in the probe of several officials at the Swiss bank, and so was sentenced to time served, the US Justice Department said.
Higgs, formerly a managing director in the investment banking division of Credit Suisse Group, was also ordered to pay nearly $1m in fines and forfeiture of gains.
According to the Justice Department, Higgs and his supervisor Kareem Serageldin sought to hide steep losses on the values of mortgage-backed securities their unit held as the US housing market tanked in 2007.
They marked the bonds for gains on their books, a discrepancy eventually discovered in 2008 by Credit Suisse internal auditors.
R.B.S. Chairman Says High Banker Pay Contributed to Financial Crisis
by Chad Bray 25 June 2014
EDINBURGH – Like its rivals in Britain, the Royal Bank of Scotland has been unable to escape criticism from shareholders over the amount of compensation that bankers are paid.
Earlier this year, United Kingdom Financial Investments, which oversees the British government’s 81 percent stake in the bank, forced R.B.S. to drop a proposal to pay bankers bonuses of up to two times their annual salaries.
That came after shareholders at Barclays and other British competitors begrudgingly approved similar pay proposals, which allow those banks to pay the maximum level of bonuses available under European Union rules.
On Wednesday, Philip Hampton, the chairman of the Royal Bank of Scotland, didn’t disagree with concerns raised by shareholders over banker pay, saying that “the structure of pay and bonuses contributed to the financial crisis.”
In response to a question from a shareholder at the bank’s annual meeting in Edinburgh, Mr. Hampton said that compensation in the financial industry “got out of line with the underlying performance of the business.”
But, he added, “I think we’ve done more structurally to address the wrong ways of paying people,” noting that bonuses have declined 60 percent in the past four years at R.B.S. and are down 75 percent in its investment banking business.
Salaries and bonuses at R.B.S. have been a politically charged issue after the bank received 45 billion pounds, or about $75.6 billion, from the British government during the financial crisis. Lloyds Banking Group also received a bailout at the time.
A European Union law passed last year limits the pay of certain bankers and risk takers at financial institutions to the equivalent of their annual salaries, or to two times their salaries if approved by shareholders. The new rules went into effect in January, but won’t apply to pay for performance in 2013.
As a result, banks across Europe have asked their shareholders to approve measures that would allow them to pay bonuses on a 2-to-1 ratio, arguing they needed to be able to do so to remain competitive on pay to attract and retain top talent.
Banks also have adopted various measures to sidestep the recently implemented bonus rules, including so-called role-based pay and increased fixed pay.
Mr. Hampton said that R.B.S. had made efforts to reduce its compensation to more appropriate levels but had to remain “competitive” on pay.
Santander Boss: Hoards of Applicants Despite Years of Banker Bashing
By Ian Silvera June 26, 2014 15:41 BST
Banker bashing has not deterred young people from applying to work at Santander UK, according to the retail bank's HR chief.
Simon Lloyd, human resources director of Santander UK, told IBTimes UK that he has not witnessed a drop in applications from young people despite the financial crisis of 2008 and the subsequent unpopularity surrounding the financial services sector.
"In our business, we are still getting a very large number of applications of good quality people who want to come to work for us. In the retail banking sector, we're not seeing a difference," Lloyd said.
"[That may be] because we've still got a purpose of helping people with their financial needs."
But the HR chief, who oversees a workforce of 25,000 employees, said that the retail bank has gone through a "cultural transformation programme", which started three years ago.
"We've put a lot of focus on being an organisation which is simple, personal and fair," Lloyd said.
"Part of our general recruitment plan is to look to people with customer empathy. I can teach people how to use a computer, I can teach people how to follow our processes. It's very difficult to teach them to be nice to customers, it almost comes from within.
"Therefore, we have put more focus on recruiting people who have that customer feel. We started doing that three years ago, when we moved from a product focus strategy to a customer focused one."
The comments come after a poll by YouGov for the Chartered Institute for Securities & Investment revealed that more than half (53%) of young respondents said they thought working in financial services would be "boring".
The research also revealed that only 24% of young people felt they had any understanding of jobs in the financial services.
In addition the study found that less than one in ten young people said they would be interested in working in financial services.
Peak banker hatred has passed, but people still don’t trust them|
by The Conversation 26 June 2014
One explanation is found in a new set of rules recently introduced to enhance transparency and fairness in the UK investment industry, as a result of which financial advisers have to agree fees with their clients upfront and can no longer earn commissions from fund companies in return for selling or recommending their products. The advent of more explicit charging seems to have encouraged customers to re-evaluate the levels of service they receive relative to what they pay, sparking a spell of retrospective resentment that may or may not endure as the longer term impact of the rule changes becomes clear.
Bankers still bashed
The picture for banks is even worse. Their trust index score is the lowest since data collection began. This suggests any attempts the banking sector has made to repair its battered image in the aftermath of the financial crisis have failed and that banks continue to assume – quite wrongly – that their own indifference is matched by that of their customers.
Failings like these are often rooted in apathy and arrogance. What’s becoming ever clearer is that they’re no longer easily forgiven now that customers are keenly aware of deliberately complex fees, hidden charges and providers’ ingrained assumptions of unwavering client loyalty.
What many consumers would really like to see is a unilateral commitment to building trust and ensuring fairness. They need to know that the people and organisations they deal with are making their own efforts to understand what these principles mean from a customer perspective. They need to feel they have a direct connection with their providers rather than one filtered through the paternalistic prism of a regulatory authority.
At present the phenomenon of “forced trust” prevails. This stems from a conviction among disaffected customers that they have no choice but to trust their providers, even though that trust hasn’t been earned in any meaningful way. Such a “fingers crossed”
Banker apology over complex loan mis-selling
Herald Scotland 18 June 2014
A SENIOR banker has apologised after admitting staff may have overstepped the mark when selling complex loan products to small businesses
David Thorburn, chief executive of Clydesdale Bank, said with the "benefit of hindsight" a number of customers got something which they did not fully understand.
But one customer said they felt the apology was a smokescreen.
While Mr Thorburn acknowledged the bank put an emphasis on the sale of products it felt were unique in the market, customers should not have felt pressured into taking on that type of borrowing.
He said: "Sometimes staff overstepped the mark and when we find evidence of that we will fix it."
Jim McGrory, a St Andrews hotelier whose complaint against Clydesdale has been upheld by the financial ombudsman but is waiting on redress, said: "None of the customers want to work with [Clydesdale] anymore. They want away. The main problem most of us have is our credit records will be damaged so when we go to refinance the chances of us rebanking [with someone else] are very slim.
"I don't think they will ever recover the trust of customers."
Giulio Girasoli, who runs the Little Flowers Nursery at Renfrew, has left Clydesdale after waiting for a loan to expire as he could not afford the break fee but complained to the ombudsman. He felt the regret expressed by the bank was not genuine and said: "It is a smokescreen for the TV. They have done nothing to recompense myself."
Mr Thorburn was giving evidence in front of the Treasury Select Committee yesterday as part of its inquiry into lending to small and medium enterprises.
The Glasgow-based financier said Clydesdale, which is owned by National Australia Bank (NAB) had regret around a number of the most complex loans, which were meant to protect customers if interest rates went up, it had sold and it was "very sorry".
Allegations of mis-selling were first reported in The Herald in July 2012. According to Mr Thorburn's evidence, the proportion of cases where customers were sold products which were unsuitable is very small. He said: "What we have found as we have gone through several thousand files is there are some exceptions but that kind of behaviour is not widespread."
The NAB Customer Support Group, made up of SMEs in dispute with Clydesdale, said: "The banks now realise that the mis-selling of fixed-rate business loans embedding derivatives is no longer being ignored by Parliament and that there will soon be government
Ex-Credit Suisse Banker Pleads Guilty To Conspiracy
RENEE MONTAGNE, HOST: 25 June 2014
NPR's Business News starts with more banking fines.
The former Credit Suisse banker David Higgs has been handed $950,000 in fines and penalties by New York court.
Higgs pled guilty to conspiracy for his part in hiding subprime mortgage bond losses, back in 2012, worth $100 million.
Last year, his former boss was sentenced to two and a half years in prison in the same case.
This is one of the few criminal prosecutions to come out of the 2008 financial crisis.
UK Bankers Do Not Think They Are Paid Enough
Ian Silvera 12 June 2014
Forget the financial crisis of 2008, forget the libor scandal and forget the fact that real wages in the UK are shrinking. Why? Because bankers do not think they are getting paid enough.
According to Hays Bonus Satisfaction Survey, which questioned more than 1,000 financial service staff, bankers feel they are "underpaid and undervalued".
But considering the average annual banking salary in the UK is £46,856 ($78,890, €58,263) (according to jobs site Reed.co.uk) and the average annual salary in country is £24,856 (according to the Office for National Statistics), it is doubtful the bankers will garner much sympathy from the general public.
The research also revealed that more than six in ten (68%) respondents were not satisfied with the level of their bonus pay-outs in 2014 and three quarters (75%) felt they should be paid more overall
Seeing Through ‘The Banker’s New Clothes’
June 12, 2014 by Neha Tara Mehta
This week, Bill speaks with Anat Admati, an economist at Stanford University, about how our banks are actually larger now than they were before the 2008 crash — and still living dangerously.
In this TEDx Stanford talk she delivered earlier this year, Admati explains how she fell into a “rabbit hole” when she started studying banking around the time of the financial crisis. She likens Wall Street executives and financial analysts to the emperor in the memorable children’s fairy tale. “In banking, there are lots of people who say lots of things,” she says, pointing at bankers, policymakers, regulators, experts, academics and politicians. “A disturbing proportion of what they say has as much substance as the emperor’s new clothes.”
The average size of the “too big to fail banks,” says Admati, was $1.3 trillion in 2006 and has now grown to $1.7 trillion. “There are no such corporations in the world…No corporation is as big as these “monstrous institutions.”
Describing the financial system as reckless, out of control and “very dangerous,” Admati says that “not much has changed” since the crash. She says we can only have a better system if we the people demand one, “and that’s why I need you to help me scream.”
Ex-UBS banker loses appeal of UK jail term
The Local 4 June 2014
Former UBS trader Kweku Adoboli, jailed for seven years for gambling away $2.3 billion in Britain's biggest ever fraud, lost a bid on Wednesday to appeal against his conviction.
Adoboli, 34, had his application for permission to challenge his 2012 conviction rejected at the Court of Appeal in London.
"The case was in truth overwhelming and the applicant can have no complaint," judge Brian Leveson said in announcing the decision of three judges.
"We have no doubt that his convictions are unassailable."
The Ghanaian-born banker was jailed for seven years for fraud by abuse of position for losing the Swiss bank's money, and four years for a second count of the same offence, to run concurrently.
The Court of Appeal judges also rejected his application to appeal against what he claimed was his "manifestly excessive" jail sentence.
During Adoboli's trial, he claimed senior managers were fully aware of his activities and encouraged him to take risks to make profits for UBS.
But prosecutors said that in a bid to boost his bonuses and chances of promotion, Adoboli exceeded his trading limits, failed to hedge trades and faked records to cover his tracks.
The tactics initially paid off, but as the financial crisis took hold, Adoboli's deals went bad.
The court heard had that at one point the privately-educated son of a former United Nations official was at risk of causing UBS, Switzerland's largest bank, losses of $12 billion.
Former banker Goodwin's home vanishes from Street View
Herald Scotland 19 June 2014
Shamed banker Fred Goodwin's home has disappeared from Google Street View.
It is believed Goodwin, 55, asked for his Edinburgh house to be removed amid ongoing fears about vandalism. Close-up images of the property in Oswald Road can no longer be accessed by users.
Several windows at the address were smashed in 2009 - the year after the near-collapse of RBS.
Google Street View no longer gives internet users the option to mouse click outside the property, although other addresses in the street remain visible.
There is also no way to see his home from above as the small orange symbol used to move into Street View from Google Maps cannot be placed near his house.
When on his street the white hand using to move along the road disappears in front of Goodwin's home then returns further down the street so users can drag themselves past the house without seeing it.
Users had been able to see directly into Goodwin's garden and his home which has large bay windows at the front and a glass door which opens into the house.
The Google cameras which are usually placed on top of a car to capture images means the small fence outside Goodwin's home does little to protect his privacy.
The image also allowed users to view the large garden to the side of the house and driveway.
A spokeswoman for Google said: "We are not authorised to give out details on removal requests. Anybody is at liberty to get their house removed."
Police Scotland said they were unable to determine if there had been any recent attacks on Goodwin's home as they would need a specific date to find incidents.
During the attack in March 2009, a Mercedes S600 had its windows shattered along with the downstairs bay windows, one of which had been struck with such as force that both the double panes of glass had smashed.
Goodwin may have had his property removed from Google Street View because his plans to move out were thwarted.
He purchased a much more secluded mansion, worth £3.5 million, in nearby Colinton following the vandalism.
Goodwin invested more of his £16 million pension pot on refurbishing the property only to split with his wife, Joyce, following allegations he had cheated on her.
Vince Cable says 'no-one needs to earn £1m a year'
16 March 2014 BBC NEWS
Business Secretary Vince Cable has said he does not understand why people need to earn £1m per year.
"I've asked one or two of the more sympathetic bankers to explain it to me," the Liberal Democrat said in an interview with the Observer magazine.
He said their response was "because others get it so I should, too". That was a "ludicrous mindset," he said.
The British Bankers Association said banking was "very successful" in the UK and bankers were paid a market rate.
In an interview for the magazine's This Much I know Feature, Mr Cable, 70, also reflected on how he thought the coalition government would be seen in future.
"I think history will judge the coalition far more favourably than our contemporaries have done," he said.
"I don't fear for the future of the Liberal Party. In 20 years' time [the coalition] will be judged as a very necessary government."
He said he considered himself a "radical", but added: "Though obviously since being in government I have become much more enslaved these days."
Mr Cable, who became an MP aged 55, also said his late father would have been "over the moon" if he had known his son would end up in a government with the Conservatives.
On millionaire bankers, he said: "I don't understand why people need a million quid a year.
"I've asked one or two of the more sympathetic bankers to explain it to me.
"The response has been: 'It's not that I need the money, it is because others get it so I should, too'.
"That is a ludicrous mindset. What on earth do these people think they are doing?"
It is not the first time the business secretary has criticised high bankers' bonuses, having previously described them as "offensive".
He said last month he thought the public would find it hard to understand how Royal Bank of Scotland could pay bonuses of £576m for staff when it had made an £8.2bn pre-tax loss for 2013.
A spokesman from the British Bankers Association said: "Bankers are paid a market rate which all banks have to pay.
"If the UK banks aren't paying that, then other countries will.
Thousands to get £300 refund from their banks
By Sean Poulter PUBLISHED: 02:12, 21 March 2014 | UPDATED: 08:38, 21 March 2014
Nearly half a million people are to receive surprise bank refunds averaging £300 on charges and interest rate debts run up on credit cards, loans, HP and store cards.
Seventeen leading banks and building societies have agreed to pay up after making a blunder on the wording of credit agreements and penalty notices, the Office of Fair Trading revealed yesterday.
Some customers who were hit with penalty charges and interest rate fees over a long period could receive more than £1,000.
While the OFT has not named them, the 17 lenders involved are believed to include most, if not all, of the big high street names.
Their £149million bill comes on top of around £370million that Barclays and Northern Rock have agreed to pay, plus an undisclosed sum from the Co-op Bank.
In total, the finance industry faces a bill of more than £600million because executives failed to ensure documents complied with the Consumer Credit Act 1974.
Many people who were hit with the charges, which have now been ruled illegal and unfair, will have suffered real hardship as a result, perhaps struggling to put food on the table or pay the mortgage
The revelation represents a new blow for the banking industry, which already faces a bill of more than £20billion to refund charges linked to the sale of Payment Protection Insurance (PPI) alongside loans, cards and mortgages.
While the average refund will be some £300, some people who were hit with penalty charges and interest rate fees over a long period could be entitled to payments of more than £1,000.
The money is to be repaid after the OFT wrote to 50 banks and building societies in November 2013 asking them to confirm that they had fully discharged their obligations to provide post contract information under the Consumer Credit Act.
David Fisher, the OFT’s director of consumer credit, said: ‘These issues were not deliberate misconduct, but the institutions concerned should have ensured they were complying with the law.
‘The OFT welcomes the proactive steps taken to return money to customers where it was incorrectly charged.’
Bankers are not all wolves - TSB will bring trust back to banking
Paul Pester 20 March 2014
Banks have spent the past six years making headlines – for all the wrong reasons.
Since the start of the financial crisis, barely a week has gone by without the industry shooting itself in the foot.
Mindboggling investment banker bonuses? Check. Rewards for failure? Check. Interest rate rigging? Check. Money laundering claims? Check. There are countless more, but you get the picture.
It is hardly surprising that the blizzard of headlines has shattered confidence in the industry. It may even have convinced you that most bankers really are like Jordan Belfort, Leonado DiCaprio’s character in The Wolf of Wall Street.
If this is the image people have in their minds it is no wonder that people don’t trust bankers!
While DiCaprio’s character may be extreme, there is no doubt that the bad behaviour of bankers contributed to the recession that hit every one of you. I’d be surprised if everyone reading this doesn’t know someone who has fallen foul of the banking practices of the past.
Take Payment Protection Insurance (PPI) – perhaps the most high-profile and far-reaching scandal of all so far. It affected thousands of people and the cost of compensation has now reached an astonishing £22 billion.
Some banks are now trying to fix this problem but their DNA remains the same. Banks need to fix that before they can even hope to begin really convincing people they’ve changed.
That is why, in the creation of the new TSB Bank, I have decided to tackle the issue of trust, a topic many of my peers would avoid like the plague. Banks have let YOU down and YOU deserve better.
So I see my role in leading Britain’s newest bank as not just to challenge the established players but also to demonstrate that a bank can be different and can be a force for good. TSB is unique in being a new bank with a clean slate, plus we have the size and scale to challenge the big banks. And we want to more than punch our weight.
In a similar vein, I believe we have a moral duty to make decisions for the benefit of local communities and society, not purely to boost profits. If we want a fairer Britain, companies – not just banks – must, for example, pay their taxes in this country rather than deliberately avoid doing so.
Bankers' pay has become bit of a Ponzi scheme, claims Ed Balls
Shadow chancellor echoes business secretary, saying most top executives and bankers would do the work for half the money
Andrew Sparrow, political correspondent The Guardian, Sunday 16 March 2014 16.52 GMT
Pay for bankers and top executives has become "a bit of a Ponzi scheme" and most of them would do the work for half the money, Ed Balls, the shadow chancellor, has said.
But the Manchester United striker Wayne Rooney was worth his reported £300,000 a week because of his exceptional talent, Balls said in an interview on BBC Radio 5 Live's Pienaar's Politics on Sunday.
Balls was responding to a comment from Vince Cable, the business secretary, who said he could not understand why bankers needed to earn £1m a year.
Rooney's pay was understandable, Balls said. "There's only one Wayne Rooney and he plays for Manchester United, he could go anywhere in the world."
Very-high salaries for exceptional entrepreneurs like the late Steve Jobs, whose iPhones are sold around the world, were also acceptable, he suggested. But Balls said he agreed with Cable about some bankers' salaries being impossible to defend.
"In some parts of our economy – when it's not a great idea or when it's not the talent of Wayne Rooney – then you do think to yourself these massive multimillion-pound salaries, it feels like a bit of a Ponzi scheme," Balls said.
It was time to "get back to a bit of rationality", he continued. "If somebody actually was to say stop a minute, let's stand back and say is this really sensible and rational, most of those people would do those jobs for half the money."
Cable told the Observer: "I don't understand why people need a million quid a year. I've asked one or two of the more sympathetic bankers to explain it to me. The response has been: 'It's not that I need the money, it is because others get it so I should too.' That is a ludicrous mindset. What on earth do these people think they are doing?"
Bonus row: Deutsche Bank bankers cash in despite losses
James Moore Thursday 20 March 2014
Deutsche Bank’s top bankers saw their total pay rise by nearly 40 per cent despite a brutal fourth-quarter profit warning
Deutsche revealed today that it had paid its 10-member management board €40 million (£32 million) in 2013, up from €28 million the previous year.
The bumper awards included €9 million to co-chief executive Anshu Jain, a rise of nearly 50 per cent. The awards came despite a final quarter in which the bank lost €1.2 billion as legal and restructuring costs, as well as poor trading, wrecked its numbers.
Another €400 million of hits was taken in February.
Anshu Jain’s Pay Up 53% in First Year as Co-CEO of Deutsche Bank
Bloomberg Mar 21, 2014, 11.59AM IST
FRANKFURT: Deutsche Bank, Europe's biggest investment bank by revenue, raised the total compensation of Anshu Jain and Juergen Fitschen 53% for their first full year as co-CEOs.
Jain, 51, and Fitschen, 65, were each paid 2.3 million ($3.2 million) in salary last year, an increase of 26% from 2012, while bonuses surged 69% to 5.17 million a piece, according to a report on the Frankfurt-based bank's website on Thursday.
Most of the bonus payments were "restricted equity awards," which almost tripled to 3.53 million, it said. Bonuses across the bank as a whole fell to 3.16 billion from 3.17 billion for the prior year, according to the statement. Deutsche Bank employed 98,254 people at the end of 2013 compared with 98,219 a year earlier.
Deutsche Bank's profit last year was sapped by the cost of paying fines and legal settlements related to alleged attempts to manipulate interest rates and inadequate disclosure of US mortgagebacked securities
Bankers' bonus cap architect says EU must sue UK government
MEP calls on European commission to take UK to court for allowing banks to 'blatantly' sidestep EU rules limiting bonuses
Jennifer Rankin and Jill Treanor The Guardian, Tuesday 4 March 2014 18.48 GMT
One of the architects of the EU's cap on bankers' bonuses has called for the UK government to be sued for allowing banks to sidestep the new rules as two more high street banks were preparing to hand their bosses up to £1m in extra pay to avoid the clampdown.
Philippe Lamberts, the Belgian Green MEP who helped devise the restrictions, said it was clear the UK was failing to implement EU law and accused the coalition of having no interest in halting "absurd remuneration packages". He urged the European commission to take the UK to court for allowing bankers to bend the rules which limit bonuses to 100% of salary or 200% if shareholders approve.
His plea came as Barclays and the bailed-out Lloyds Banking Group are expected to reveal they are handing their bosses Antony Jenkins and António Horta-Osório new share awards, on top of their salaries, to prevent their overall pay falling as a result of the cap. The new pay deals could be announced as early as Wednesday.
Their disclosures will follow HSBC's move to pay its chief executive, Stuart Gulliver, an additional £32,000 a week in allowances on top of his £1.2m salary, and after Virgin Money raised the salary of its boss, Jayne-Anne Gadhia, to £637,000 from £550,000 as a result of the restriction. Royal Bank of Scotland, which is 81% owned by the taxpayer and paid out £567m in bonuses after making an £8bn loss, is yet to announce its response to the bonus cap. However, it is considering asking its shareholders for permission to pay out bonuses worth 200% of salary. Standard Chartered reports its results on Wednesday when it will also face questions about how it intends to tackle the cap.
"What we are witnessing now is an attempt by the major banks, with the support of the British government, to circumvent the rules and that is to compensate what we did on terms of structure, by just raising the fixed rate of remuneration," said Lamberts.
The European commissioner for the single market, Michel Barnier, should take legal action against the UK, he said. "I will see Barnier soon and I will encourage him to do that. I know that the commission has already asked for specific information from the British government. So I will certainly take a hard look at that."
The chancellor, George Osborne, is challenging the bonus cap in the EU's highest court because it will push up the amount of fixed pay but Lamberts said he was not worried about losing because the UK government argument that the caps are illegal was based on "fragile" logic.
"People like David Cameron and George Osborne are part of the same club. These are people who are really out of touch with reality. They are part of the same class, so I think it is natural for them to defend their interests."
The MEP insisted that the EU cap on bankers' bonuses had not failed, because "disguised remuneration" was now out in the open. Barnier on Tuesday published details of which bank staff would be affected by the cap and said that "some banks are doing their utmost to circumvent remuneration rules… The commission will remain vigilant to ensure that new rules are applied in full."
The European commission said it was too early to say if any country was in breach of the capital requirements directive, known as CRD IV, which includes the bonus cap.
Lamberts, however, said the UK government was in breach of the directive:"To me it is clear that it doesn't act. And I think the best example of that is when a bank is 80% owned by the British government and they are not acting. To me they have no appetite for really going after absurd remuneration packages."
HSBC hands allowances to hundreds of bankers to avoid EU bonus cap
Britain's biggest bank awards staff 'fixed pay allowances' to side-step restriction on bonuses imposed by Brussels
Jill Treanor The Guardian, Monday 24 February 2014 20.28 GMT
A defiant HSBC is handing its chief executive, Stuart Gulliver, allowances worth £32,000 a week – on top of his £1.2m salary – to get around the EU's cap on bonuses, in a move that is expected to be replicated by the other high street banks.
HSBC became the first UK bank to reveal how it will sidestep the pay restrictions imposed by Brussels, as it further fuelled the debate over City pay by also revealing that 239 of its bankers received more than £1m last year. Gulliver, the boss of Britain's biggest bank, hit out against the new rules, which restrict bonuses to 200% of salary even with shareholder approval, but the TUC accused HSBC of "soaraway boardroom greed".
The £1.7m "fixed pay allowance", paid in shares every three months on top of Gulliver's salary, will ensure he is paid a minimum of £4.2m a year, up from £2.5m now. Similar allowances, in shares that cannot be sold for five years, are being handed to 111 top bankers at HSBC, while another 554 are to be handed extra payments in cash.
The move prompted Labour to call for a repeat of its bonus tax while the Robin Hood Tax campaign said the payments bolstered its argument for a tax on financial transactions.
"HSBC haven't so much circumvented rules on bonuses as driven a coach and horses through them. The only way to rein in bankers' remuneration is to make banks pay their fair share to society," a Robin Hood Tax campaigner said.
The TUC general secretary, Frances O'Grady, said: "It would be great if banks put the same effort into lending to small businesses and investing in infrastructure as they do to getting round EU rules on boardroom bonuses."
HSBC's response to the Brussels bonus cap was contained in its annual report, which showed profits rose 9% to $22.5bn (£13.6bn) in 2013, when its bonus pool for staff rose 6% to $3.9bn.
A year ago HSBC made $20.6bn profits and paid 204 of its staff more than £1m, although its shares were among the biggest fallers in the FTSE 100 index of blue chip shares on disappointment that the profit rise was not greater.
Top investment bankers paid most at Barclays
by Tim Wallace March 19, 2014, 1:20am
SENIOR executives at Barclays saw their share awards drop by around 20 per cent for 2013, the bank’s figures showed yesterday.
The drop for the top 12 staff comes after a poor year for the bank – adjusted profits fell 32 per cent compared with 2012, and executives are under pressure from shareholders and politicians to cut their payouts.
Investment banking bosses Eric Bommensath and Skip McGee led the share awards league table.
US boss Skip McGee was the best paid with 3.8m shares worth around £8.9m. Bommensath was second, bringing in 3.7m shares worth around £8.6m at yesterday’s opening price
Though large, those payouts are down on the biggest bonus of last year – then-investment banking boss Rich Ricci was awarded 5.7m shares for 2012, which were worth £17.6m at the time.
Chief executive Antony Jenkins saw his award cut 9.6 per cent to 1.64m shares, worth £3.8m.
He turned down his bonus for 2013 and for 2012, but is still receiving awards for previous years when he headed Barclays’ business and retail banking arm.
His successor in that role, Ashok Vaswani saw his awards rocket – the executive received almost 360,000 shares, up 67 per cent on the year.
Barclaycard boss Valerie Soranno Keating also saw her award rise, increasing 3.7 per cent to 404,000 shares.
All of the top 12 bar Jenkins and finance boss Tushar Morzaria are receiving role-based pay allowances as part of the awards. These are fixed share awards, rather than bonuses, allowing the bank to maintain pay levels even as the EU’s bonus cap comes into effect.
Jenkins and Morzaria expect to receive the allowances but must first run the plan past shareholders
Sick and tired of excuses for paying useless bankers fatcat salaries
While millions of people struggle to pay the bills, pampered bank bosses can steal whatever they like
Paul Routledge 5 Mar 2014
The two most offensive words in the English language today are “banker” and “bonus.”
Put them together and you have an accurate, obscene description of a man (they are almost all men) who thinks he is above society, above decency, above the norms of civilised behaviour. And above the reach of the law – British, European, religious or moral.
While millions of workers in this country scrabble for zero-hours contracts, short-term employment, a few hours here or there, anything to keep the wolf from the door, these pampered prostitutes of capitalism steal whatever they like. And nobody can stop them. Certainly not the Tories, whose party is bankrolled by their ill-gotten gains.
Like me, you must be sick and tired of hearing the old excuses. That if we don’t allow these bastards to have both hands in the till, they’ll work abroad. That they contribute massively to the nation’s wealth. That we can’t do without their investment skills. If any of that was true, then why did we, the taxpayers, have to put the country into grinding debt for a decade to rescue the banking system from their greed and stupidity?
The bankers are not even good at banking. They make losses – often at our expense – and still demand bonuses for incompetence, while sacking tens of thousands of ordinary bank workers who share neither the guilt nor the gold.
Labour promises to tax bankers’ bonuses. I think the country is ready for a far, far tougher stand. In the USA, corrupt financiers go to jail. There must be room for a prison on London’s Bankside.
RBS bonus fury as bankers walk away with £576m in 'astonishing betrayal' to taxpayers
RBS reveals staff bonus pot despite slumping deeper into the red with £8.2bn losses
Maria Tadeo Thursday 27 February 2014
Royal Bank of Scotland has sparked fresh outrage for its "astonishing betrayal" to taxpayers after handing out £576 million in bonuses despite slumping deeper into the red with annual losses of £8.2 billion.
The bank saw losses widen from £5.2 billion in 2012 after setting aside £3.8 billion in provisions for customer mis-selling compensation. It also took a £4.8 billion hit after setting up an internal bad bank. The bank's bonus pool is down 15 per cent on 2012 when it handed out £679 million.
The latest results mark the sixth, and largest, consecutive loss for the lender since it was rescued by taxpayers at the height of the financial crisis in 2008 following an era of reckless expansion under Fred "the Shred" Goodwin.
Chief executive Ross McEwan said the losses were "sobering" and "huge" but defended the bank's bonus pool insisting that the lender must be "pragmatic" when it comes to pay in a bid to "keep people doing their jobs" in a highly competitive industry.
Trade union Unite said the bank's decision to pay out more than half a billion pounds represented an "astonishing betrayal" for taxpayers given the scale of the losses- RBS has lost more than £46 billion in six years.
Chris Leslie, Labour's shadow chief secretary to the Treasury, said: "Taxpayers will be incredulous that such large bonuses continue to be paid out at a time when huge losses are being made.
"George Osborne should also make clear now that he would reject any request from RBS later this year for approval to pay bonuses of more than 100 per cent of salary."
Deputy Prime Minister Nick Clegg warned the bank, which is 81 per cent owned by the UK taxpayer, should show restraint on pay and bonuses.
Country's most senior judge calls for radical reform of laws on fraud so City bankers can be tried and punished
Follows no charges against those responsible for financial crisis
By Steve Doughty 4 March 2014
The country’s most senior judge called for radical reform of the laws on fraud so that corrupt City bankers can be tried and punished.
Lord Chief Justice Lord Thomas said: ‘It is vital for the health of our economy and the pre-eminence of London that those who commit financial fraud or engage in bribery and corruption are tried in a criminal court and severely punished.’
He said there were too few prosecutions for fraud and shaking up the law would ensure ‘rigorous pursuit of more prosecutions for fraud, particularly fraud in the financial markets, and for bribery and corruption.’
The intervention from Lord Thomas, who is the head of the judiciary and the leading criminal judge in England and Wales, follows the failure of prosecuting authorities to bring criminal charges against a single bankster or financier over the wrecking of the economy in 2007 and 2008.
The collapse of banks including Northern Rock, the Royal Bank of Scotland and HBOS cost the taxpayer scores of billions in bailout money. Yet no City executive has answered in court for the lapses and greed that led to more than five years of recession.
Since the banking catastrophe the banks have been involved in a series of scandals that have led to the payment of further billions in compensation, and large-scale fines against financial institutions.
These include the fixing of interest rates, which led to a £290 million fine on Barclays; the mis-selling of payment protection insurance; and the selling of interest rate swaps which were supposed to protect small businesses, but ended up driving many to the wall.
Not one banker has yet been successfully prosecuted over any of the post-crash scandals.
Barclays Puts £140,000 Cap On Cash Bonuses
By Mark Kleinman 7 February, 2014
Barclays is imposing a £140,000 cap on cash bonuses for its investment bankers as it prepares to hand out roughly twice as much to employees as it does through shareholder dividends.
Sky News has learnt that the cap - the third consecutive year that Barclays has had one in place - has been reduced from £185,000 last year. In 2012 there were complaints from staff that a ceiling of £65,000 was not high enough.
Paradoxically, the cap will not affect the most senior executives at Barclays' investment bank because all managing directors have been told that they will receive no cash up front and that their bonuses will be deferred for three years.
Barclays staff are being informed about their bonuses for 2013 and salaries for 2014 during the course of business on Friday.
Hundreds of senior executives are also being told about new role-based allowances they will receive as banks attempt to circumvent new European pay rules which are being applied from this year.
On Thursday Sky News revealed that Barclays would pay close to £2.5bn in bonuses for 2013, a rise of approximately 10% on the previous year's pool. The final number is understood to be between £2.3bn and £2.4bn.
A senior source at Barclays said the bank would increase the amount paid out in dividends from around £800m last year to more than £1bn this time, a figure that will be revealed when the bank reports annual results on Tuesday.
Although that will entail paying twice as much to employees as it does to investors, the gap between the two has narrowed sharply in recent years.
Antony Jenkins, Barclays' chief executive, is expected to defend the increase by pointing to a robust performance by its investment bank in the US and the threat to its Wall Street business by attempts to poach its top staff there.
Sky News revealed last week that the proportion of Barclays' revenues paid out to staff would also increase from 2012's 39% figure, probably to 40%.
Part of the explanation for the increase on last year's payout ratio and bonus pot is the fact that the 2012 numbers were reduced sharply by moves to claw back £300m in bonuses following Barclays' involvement in the Libor rate-rigging scandal.
PUBLISHED: 22:38, 6 February 2014 This Is Money
Alex Brummer is a British economic commentator, working as a journalist, editor, and author. He has been the City Editor of the Daily Mail (London) since May 2000.
Why have no top financiers been tried and gone to jail?
A great mystery of our time is why none of the financiers who brought about the sub-prime mortgage meltdown and the ‘Great Panic’ has been tried and gone to jail.
The only convictions so far have been those in Iceland.
A trial is currently taking place in Ireland where three past Anglo Irish Bank executives – former chairman Sean Fitzpatrick, former chief risk officer William McAteer and former managing director Pat Whelan – have all denied providing unlawful financial assistance. Whelan faces further charges of fraudulent alteration of loan letters.
What is most surprising is the passivity of US prosecutors. The Americans traditionally have come down like a ton of bricks on even the most celebrated financial offenders.
In the late 1980s the insider trader Ivan Boesky and the financier Michael Milken of Drexel Burnham Lambert were both brought to trial and given hefty prison sentences. And in the early 2000s the main characters behind the accounting frauds at Enron and WorldCom also received lengthy sentences.
Most recently the US Federal authorities lost no time in bringing the investment adviser Bernard Madoff to justice for operating a Ponzi scheme. He received a 150-year prison sentence.
In an article in the current edition of the New York Review of Books Judge Jed S Rakoff examines why none of the bank chieftains involved in the Great Panic has been brought to justice. The most obvious reason, he suggests, might be that no fraud was committed.
But he notes that the official Financial Crisis Inquiry Commission referred to fraud on no less than 157 occasions and also charged there was a ‘systemic breakdown’ of ethical behaviour.
The Department of Justice says that proving intent of fraud has been difficult. Rakoff disagrees and suggests there were many indications of intent including the use of ‘AAA’ ratings on rotten debt.
And he argues that among the key reasons for the failure to bring prosecutions was the role of government in weakening protections that might have prevented the frauds taking place.
Moreover, government was so deeply immersed in the shotgun weddings at the core of the Great Panic, such as the ill-conceived JP Morgan takeover of Bear Stearns, that it became complicit.
Loopholes: most of the banks are finding new ways to hand extra pay to investment bankers
Jim Armitage 7 February, 2014
Barclays is finalising controversial bonus hikes for its investment bankers despite having to tap shareholders for £6bn of extra funds, a move that could see the Bank of England come in for criticism from European regulators.
The European Commission has ruled that banks cannot pay more than two times a banker’s salary in bonuses. Officials hope this will serve to reduce the temptation for bankers to take risks that are dangerous to their banks and the financial system.
But Goldman Sachs in London, Barclays and HSBC are all proposing to get around the rules by offering a “role-based allowance”.
Goldman is said to have had its scheme approved by regulators, as the allowance will be varied every month depending on the state of the economy. Barclays’ proposed monthly allowance will be varied annually. Full details will be published before a shareholder vote on the scheme at its spring annual general meeting.
However, the commission is clearly concerned that this is merely a bonus by another name, and has demanded an explanation from the banks’ Prudential Regulatory Authority over how it can approve them. An official told Reuters the commission had demanded the European Banking Authority watchdog “take a strict approach” when demanding answers from the PRA.
Given the British Government’s opposition to the caps, analysts said the commission was suspicious that UK regulators were taking a relaxed approach to banks’ proposals.
A spokeswoman for the EU financial services chief, Michel Barnier, said: “One would expect banks to interpret this in a common sense and straightforward way without trying to circumvent it by including in fixed remuneration elements which actually vary in level.”
Barclays is to offer bonus rises for its staff above the £1.854bn pot paid out last year. Although sources denied reports it would be as much as £2.4bn, it is expected that deals would be more generous.
News of the bonus pots came just days after its chief executive Antony Jenkins turned down a bonus of up to £2.75m for the year.
EC urges Britain to explain new allowances in bankers’ pay
Yorkshire Post 7 February, 2014
The European Commission has asked the Bank of England to explain how new allowances in British bankers’ pay comply with an EU bonus cap, an official at the bloc’s executive said, a new flashpoint of friction over the reach of financial control.
Under EU rules, from 2015 bonuses cannot be more than fixed salary, or double this amount with shareholder approval, and most of the bankers affected are based in London.
Banks including Barclays, HSBC and Goldman Sachs are expected to raise the non-bonus part of remuneration with, for example, monthly or quarterly “allowances”.
The European Commission official said the executive has asked the European Banking Authority (EBA), an EU watchdog, to seek an explanation on such extra payments from the BoE’s Prudential Regulation Authority (PRA).
“A report is expected next week,” the official said.
The EU executive has powers to fine countries that fail to apply its rules properly. The PRA said bank remuneration policy is frequently discussed but it would not comment on any ongoing discussions.
Britain is challenging the bonus cap in the EU’s top court, arguing it goes beyond EU powers and will push up fixed pay, making banks riskier as they will not be able to trim costs quickly in rocky markets. The EBA could not be reached for comment.
It will publish guidelines this year with a more precise definition of what constitutes variable and fixed pay, the Commission official said.
“We will encourage the EBA to take a strict approach in this exercise,” the official added. A spokeswoman for EU financial services chief Michel Barnier, who is responsible for enforcing EU financial services rules, said the Commission has no detail yet from banks about allowances so it was hard to reach a firm position on them.
Three Anglo Irish executives blamed for Irish banking crisis go on trial
Trial of Sean FitzPatrick, Pat Whelan and William McAteer will be one of most complex in history of European financial crime
The Guardian, Monday 3 February 2014 15.00 GMT
The trial of senior executives at the bank that almost bankrupted Ireland begins this week with tight security around the Dublin courthouse where the men blamed for the Irish banking crisis are to be tried.
It will be one of the most complex and controversial trials in the history of European financial crime, with hundreds of witnesses, millions of documents and a trio regarded as national hate figures in Ireland. The case also marks a rare criminal intervention against senior figures involved in the credit crunch, with Iceland making the only notable attempt to prosecute bank executives for their role in institutional failures.
Three leading figures in the defunct and disgraced Anglo Irish Bank – Sean FitzPatrick, Pat Whelan and William McAteer – will each face 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008.
All of the charges relate to transactions with 16 individuals who allegedly received financial assistance from the accused trio between 10 July and 17 July 2008. The three former bankers deny all the charges against them.
Among the star witnesses expected to give evidence will be Ireland's one-time richest man, Sean Quinn, who borrowed billions from the bank to fund a global property portfolio during the Celtic Tiger boom years. When property prices collapsed across the world, Quinn owed billions and had to file for bankruptcy.
A jury of eight men and seven women have been sworn in at the Dublin circuit criminal court, where the trial begins on Wednesday morning. It will be the first time in Irish criminal history that an extended jury of 15 has been selected to hear a major case.
About 350 people volunteered to serve on the jury, giving an indication of the interest in the upcoming trial, which is expected to last for three to six months.
Judge Martin Nolan told the assembled panel that any past or present Anglo Irish Bank employees should not serve on the jury and said anyone who has expressed "strong public views" on Anglo Irish – including on Facebook and other social media networks, or who owns shares in any bank, was prohibited from serving.
MP accused of ‘siding with bankers’ in bonus dispute
8:00am Wednesday 5th February 2014 in Local news Ilkley Gazette
Otley’s MP has been accused of “siding with bankers” during a Parliamentary clash about limiting bonuses.
Labour recently put forward a motion calling on the Government to veto any attempt by the publicly-owned RBS bank to pay bankers bonuses of more than double their salaries.
But the proposal was defeated by 304 votes to 242, with Mr Mulholland – who has since tabled his own motion, supporting bonus caps – and 43 other Liberal Democrat MPs amongst those voting against.
Leeds North West Labour Parliamentary candidate Alex Sobel said: “David Cameron has refused to rule out approving bonuses of up to 200 per cent at RBS.
“Time and time again the Lib Dems claim to be keeping the Government in the centre ground, diluting the Tories, but time and time again in practice they do the opposite.
“Mr Mulholland would rather vote with Conservatives to protect London bankers’ rights to receive up to 200 per cent of their annual salary in bonuses than act to tackle the cost-of-living crisis his constituents are struggling with.
“It’s not even as if RBS is doing well – they’re still making losses and businesses across Leeds North West are telling me getting loans from any of the banks is incredibly difficult.
“The Prime Minister’s promise of a cap on total remuneration is a complete red herring because RBS is cutting another 2,000 jobs in its investment bank and many executives were paid bonuses worth more than 100 per cent of their salary last year.”
Mr Mulholland, however, whose subsequent Lib Dem-backed proposal calls for more to be done to control state-owned banks, dismissed the opposition day motion as “Labour Party posturing”.
He said: “I will continue to push for proper regulation of state-owned bankers’ pay and bonuses.
“Taxpayers rightly object to excessive bonuses at those banks that depend on a taxpayer guarantee. That’s why the coalition Government is fundamentally reforming the banking sector by ring-fencing high-street retail banks from investment banking so big banks can no longer rely on taxpayers to bail them out.
“No specific proposal has been made by RBS at this stage, so it is not possible to evaluate fully the merits and implications for shareholders. It is important for taxpayers that proposals by RBS are considered fully and properly, but I will continue to push for appropriate restraint.”
European laws brought in after the global economic crisis prohibit banks from paying bonuses of more than double basic salaries unless shareholders give their permission
FROM 2012 - and nothing has changed
Dave Prentis has been general secretary of UNISON since January 2001
The fact that bankers live in another world – immune from the economic chaos that they created – is being highlighted by this year’s round of City bonuses.
While the government threatens to decimate public services and scrap hundreds of thousands of public service jobs, individual bankers are being rewarded with millions of pounds.
"Bank of England governor Mervyn King has said very clearly that it was the bankers who caused the crisis, not the previous government," notes Mr Prentis. "He also says that he's surprised that people aren't more angry. Of course, once the cuts to services and jobs start to hit in earnest, they will be.
Under his leadership, the union has continued to grow in membership and influence. The Guardian wrote “Dave Prentis in many ways defines the modern centre-left union leader. Dave has led Britain’s biggest (public sector) union formidably."
His sense of fair play, compassion, and his strong work ethic, were honed in the streets of Leeds where he was born and brought up. A great campaigner for educational opportunities for all, he studied history at the University of London and mastered in industrial relations at the University of Warwick.
Financial watchdog publishes Libor warnings to two bankers
Financial Conduct Authority airs allegations against bankers implicated in Libor rigging scandal saying more warnings will follow
Sean Farrell theguardian.com, Monday 3 February 2014
The Financial Conduct Authority has published details of warning notices against two bankers over the rigging of the Libor interbank lending rate.
The notices, handed out in November but announced on Monday, are the first made public by the regulator since it gained the authority in October. They also show that the FCA is pursuing alleged Libor offenders through civil action.
The FCA said it warned a manager at a bank who for more than three years condoned traders asking rate submitters to rig Libor figures and submitters making submissions based on those requests.
The manager enabled interest rate manipulation and allowed the same people to submit Libor numbers and trade derivatives linked to the benchmark.
The watchdog issued the second warning to a banker who made Libor submissions based on traders' requests and colluded with an interdealer broker to manipulate the rate.
The banker also colluded with traders at another bank by asking them to adjust their Libor submissions and responding to their requests to influence submissions.
The banker involved also made Libor submissions based on the interest derivative positions they managed themselves.
The FCA declined to say whether the bankers worked at the same bank or which banks were involved. The regulator's practice is not to name individuals unless it needs to do so to clear up speculation
Financial world shaken by 4 bankers' apparent suicides in a week
Published time: February 03, 2014 RT NETWORK
The apparent suicide death of the chief economist of a US investment house brings the number of financial workers who have died allegedly by their own hand to four in the last week.
50-year-old Mike Dueker, who had worked for Russell Investment for five years, was found dead close to the Tacoma Narrows Bridge in Washington State, says AP.
Local police say he could have jumped over a fence and fallen 15 meters to his death, and are treating the case as a suicide.
Dueker was reported missing by friends on January 29, and police had been searching for him.
A Sheriff’s spokesman said investigators learned that he was having problems at work but did not elaborate.
Jennifer Tice, a company spokeswoman declined to comment, however said, that Dueker was in good standing at Russell.
“We were deeply saddened to learn today of the death,” Tice said in an e-mail on Friday. “He made a valuable contributions that helped our clients and many of his fellow associates.”
Dueker joined Russell Investment in 2008. He wrote for Market Outlook financial services publications, forecasting the business cycle and the target federal funds rate. He is the creator and developer of a business cycle index that forecast economic performance published monthly on the Russell website.
He was previously an assistant vice president and research economist at the Federal Reserve Bank of St. Louis, and is ranked in the top 5 percent of published economists.
Over the past two decades he wrote dozens of research papers mostly on monetary policy, according to the bank’s website.
His most-cited paper was “Strengthening the case for the yield curve as a predictor of U.S. recessions,” published in 1997 while he was a researcher at the Federal Reserve. Another tragic incident occurred on January 28, when a 39-year-old Gabriel Magee, a JP Morgan employee, died after falling from the roof of its European headquarters in London.
OFFICIAL COMMENTS FROM RT PAGE
hiyabu 05.02.2014 02:31
It is actually disgusting to see how many people generalize bankers and put them all in the same boat. Yes there is corruption in the financial sector......but not every banker. These men have families, keep that in mind when you bash them. In addition, Duecker's 1997 paper that is mentioned in the article seems to be beneficial for the economy.
Lee Ferguson 05.02.2014 12:26
the hornets nest is stirring the walls are closing in...... money is nothing but paper and a representation of luxury and power , its the soul that brings fulfilment
Tony Blair 05.02.2014 17:48
Only 4 its hardly worth reporting. Please do another report when 200 have jumped. This is the logical extension of their own greed & they have finally created a system that destroys them selves. Keep it up your doing a great job.
Evelyn Blake 06.02.2014 04:51
Tony Blair, a quite fitting response. I am amazed that 4 psychopaths were capable of not being able to live with their conscience but it is more likely that they couldn't face their imminent arrests for fraud. Whatever the case may be, it is perfect kharma. I would love to hear more of the same.
Ted Due Process Voth Jr. 06.02.2014 05:25
If they all offed themselves, the lying, thieving, murderous b*st*rds, the world would be a better place…
revealsins2me 06.02.2014 22:40
greedy till there last breath, steal money from the poor in society horde billions to satisfire there own desires. then commit suicide leaving there loved ones alone and pondering could i have done more. best wishes to the innocent ones left behind but i cant say i care they are dead, considering the damage these men have done.
paul Floody 07.02.2014 04:30
Only four bankers, in all other sectors the rate is much higher especially farming around the globe. If these bankers had any care they would all take the leap
New name, same old thinking on banker pay
William Wright 04 Feb 2014
The argument about investment bankers’ pay shows that it may take longer than expected for banks to regain the trust they have lost, because they seem not to appreciate why they lost it in the first place.
It also suggests that instead of using the past five years as an opportunity to have a fundamental rethink about pay in the industry, banks have just been counting down the days until normal service can be resumed.
Over the past few months, banks have been working frantically to come up with ingenious ways of getting round the new rules that limit bonuses to being equal to fixed pay (or twice the level of fixed pay if shareholders give their explicit approval). The majority seem to have adopted some form of “role-based allowance” that sits somewhere between a salary and a bonus and that would be paid monthly to help top up any shortfall in income for bankers or traders.
It’s probably not quite what the European Parliament had in mind when it voted the cap into law last year. To many people outside the industry – and some inside it – it all looks a little squalid.
You may well think that the bonus cap is mad (and there is plenty of evidence to support that view). And you may think that the public’s interest in what banks pay their staff is little more than intrusive titillation (ditto). But you can also look at pay as a barometer of how the industry thinks about itself in relation to shareholders and to society.
Shamed banker Paul Flowers 'planning to become £5,000-a-time after dinner speaker'
Lewis Panther 2 Feb 2014 Shamed banker the Rev Paul Flowers aims to profit from his sins by becoming an after-dinner speaker.
He hopes for fees of up to £5,000 to tell business conferences about his lurid life as a vicar who blew a fortune on rent boys.
A friend told the Sunday People: “He always gave amazing sermons and people will pay a lot to hear him talk of his troubles.”
The so-called Crystal Methodist is under police investigation for alleged drugs offences and is suspended from two churches he runs in Bradford.
Flowers, 63, resigned as Co-operative Bank chairman in June and quit Bradford Council after gay porn was found on his official computer.
The pal added: “His tales of woe will be a sobering lesson for high-fliers tempted by life’s baser things.”
OFFICIAL COMMENTS FROM MIRROR PAGE
Dennis Radke 6:57 AM on 2/2/2014
Anyone who would subject themselves to this verbal diarrhoea is in serious need of Sectioning under The Mental Health Act. And what's with the bodyguard? Does he see himself as a celebrity?
Don Jakeanddonnysdaddy Moore 9:44 AM on 2/2/2014
Check his hard drive
Pete Mcphillips 2:51 PM on 2/2/2014
Who exactly is going to pay to listen to him, personally I would pay to not have to read about this pratt anymore
Nothing can dent the divine right of bankers
By Philip Stephens 16th January 2014
Multimillion-dollar bonuses are still given even as multibillion-dollar fines are shrugged off
It is time to admit defeat. The bankers have got away with it. They have seen off politicians, regulators and angry citizens alike to stroll triumphant from the ruins of the great crash. Some thought the shock of 2008 might change things. We were fools. Bankers are still collecting multimillion-dollar bonuses even as they shrug off multibillion-dollar fines.
Countries and companies have gone bust, political leaders have fallen like skittles, and workers everywhere have been thrown out of jobs. We are all a lot poorer than we might have been. Yet on Wall Street and in the City of London, it is business as usual. Has the world been made safe for liberal financial capitalism? The short answer is No.
Two recent news items caught my attention. One reported the latest fine imposed on JPMorgan Chase, the US banking behemoth; the other that central bank regulators in Basel had diluted rules aimed at making commercial banks raise more capital against risk-taking. The remarkable thing about these reports is that they seemed wholly unremarkable. Big banks breaking the law and financial regulators retreating – what’s new?
Take the whopping fine on JPMorgan. The institution led by Jamie Dimon is paying $2.6bn to settle criminal and civil claims linked to Bernard Madoff’s Ponzi scheme. The penalty raised barely a ripple. No one in authority was vulgar enough to suggest Mr Dimon, once a poster boy for play-it-straight banking, might consider his position.
The fine, after all, was the latest in a long list. US and European banks have had to own up to crimes and misdemeanours ranging from money-laundering and interest rate fixing to defrauding customers and reckless trading. Sad to say, public outrage and political sensitivity have been dulled by familiarity.
What, anyway, is another couple of billion to an institution such as JPMorgan, which has totted up penalties of $20bn? In no other business would a chief executive survive such expensive ignominy. Bankers have made themselves an exception. The fines make only a small dent in the vast rents they extract from productive sectors of the economy. They may even be tax-deductible.
With the Basel decision, rule-setters let big investment banks off the hook by easing new requirements on leverage ratios, thus limiting the amounts they have to raise in new capital to set against their casino trading activities. The concessions chalked up another success for the industry’s slick public relations operation. Sometimes it almost seems the banks were victims rather than villains of the crash.
This has been the story since 2008. True, laws have been changed and regulations have been tightened to curb the most egregious dice games. Capital requirements have been raised a tad, lowering slightly the insurance risk to governments and reducing by the same small amount the implicit taxpayer subsidies that pay for the bankers’ bonuses. The Dodd-Frank legislation has increased compliance burdens on Wall Street.
Welcome as they are, these represent changes at the margin. The basic structure of the system – with its perverse incentives, too-big-to-fail institutions and too-powerful-to-jail executives – remains untouched. The universal banks, combining straightforward commercial banking with high-risk trading, live on. The result is that the organising purpose of banking – to provide essential lubrication for the real economy – remains entangled with dangerous and socially useless speculation.
Banker who didn't like the kitchen cabinets that came with his £12million Knightsbridge apartment wins £4MILLION payout
Banker Geoffrey Logue was in four-year legal battle over his apartment at One Hyde Park he bought from the Candy Brothers in 2007
He has secured a near £4million payout from the property developers
Kitchen of his £11.5million property was fitted out with 'wrong' units
Dispute is a rare bit of bad PR for the luxury development in Knightsbridge
Candy Brothers' spokesman confirmed that the dispute over £1.15billion property development has been settled
By Rob Cooper PUBLISHED: 13:13, 17 January 2014 | UPDATED: 17:45, 17 January 2014
A banker who hated the kitchen cabinets fitted in his £12million apartment at Britain's most expensive address has received a £4milion payout from the wealthy developers.
Geoffrey Logue became embroiled in a bitter four-year legal battle with brothers Christian and Nicholas Candy which started over the quality of the finish at One Hyde Park.
The dispute, which descended into claim and counter-claim, ended with New York-based banker Mr Logue lodging a £28milion claim for damages in the High Court.
Mr Logue ultimately filed a case for breach of confidence, abuse of process and unlawful interference.
The final claim was made after he had a worldwide freezing order placed on his assets during the dispute.
Nicholas, who married Holly Valance in a fairytale wedding in Beverly Hills, and his brother eventually agreed to settle the case last year as the court hearing loomed.
They paid close to £4million plus Mr Logue's legal expenses which sources said are likely to run into hundreds of thousands of pounds.
The pair are Britain's best known luxury property developers and built the £1.15billion One Hyde Park in conjunction with Sheikh Hamad bin Jassam bin Jabr al-Thani
The problems started for Mr Logue, who owns property in New York, London and Italy, in 2008 when he realised the kitchen would be fitted with cream lacquer cabinets - while he wanted dark wood with bronze.
Later he was told that the washing machine and tumble dryer would have to go in the kitchen because a planned laundry room was instead going to house an air conditioning unit.
He told The Times: 'I didn’t want cream lacquer cabinets in my kitchen, no way, it looks like Ikea. I wanted a dark wood kitchen frame with bronze. That’s how this entire drama started.'
He added that the brothers later travelled to Milan to see him in an attempt to smooth relations over
If it's January, it's time for the traditional disclosure that hundreds of bankers in London are earning considerably more than £1m each, prompting outrage from Labour and embarrassment on the part of the government.
Robert Peston 14 Jan 2014
The dance has been more-or-less the same every year since the Crash of 2008.
And although pay levels for bankers have fallen a bit since then, and more remuneration is deferred and capable of being cancelled if deals go bad, the sums shelled out still look enormous at a time when earnings for the vast majority of households continue to be squeezed.
There is however an awkward twist for the government this year. Which is that new European Union rules mean that if banks want to pay bonuses greater than 100% of salary, they have to get the approval of shareholders - and in the case of semi-nationalised Lloyds and RBS (in particular) that would require a "yes" from the Treasury.
To labour the point, the government, as 80% shareholder in RBS, would have to formally approve any desire by RBS to pay 200% bonuses to its top people.
So, does RBS want to do this?
Well, the huge bank is "consulting its shareholders about this" but insists that it has made no formal request.
As for the Treasury, it too says that RBS "has not made a request".
And the Treasury also points out that it is challenging the EU cap on bonuses in court, because it agrees with the head of the Prudential Regulation Authority, Andrew Bailey, that any limit on bonuses will "just increase base pay, reduce claw back [the ability to get money back for poor performance] and undermine financial stability".
Or to remind you what you already know, for bankers big pay is as natural as cold weather in January. And if they don't get it in the form of enormous bonuses, they'll take it in higher salaries - or move to Switzerland, New York or Singapore.
'Not sure if view of bankers can sink any lower'
Bankers invited by Guardian to watch film find it to be a parody while women among them say sector's macho culture persists
Katie Allen The Guardian, Wednesday 15 January 2014 17.49 GMT
We are just minutes into Martin Scorsese's financial black comedy, The Wolf of Wall Street, when the investment banker next to me starts slowly shaking his head.
On the screen Leonardo DiCaprio's character, the crooked stockbroker Jordan Belfort, is waxing lyrical about his millions, his cars and his trophy wife and combining those two latter passions in a characteristically prurient scene.
"This is what gives the City a bad name," says my viewing companion, one of a group of senior City bankers gathered to compare their own career experiences with the excesses in Scorsese's film, released in UK cinemas on Thursday.
As the story romps on through lavish beachside parties, office orgies and increasingly criminal dealings, the head shaking and seat-shuffling intensifies.
"I hope that people see this in a historical context and not in the current context," says the same banker, who worked in a big investment bank on Wall Street in the 90s before relocating to London.
As the credits roll after almost three hours of Belfort's odyssey in the underworld he concludes: "I would be disappointed if I had paid money to see that because it just isn't real."
The title fingers Wall Street, but this tale is not about the investment banking world of corporate clients our viewer works in: "They sold investments to widows and orphans and Jo Schmo on Main Street," he adds.
The bond market expert in our party is less quick to distance his industry from Scorsese's tale. "We are only five years on from the crisis, so I wouldn't pretend it was ancient history," he insists. For this banker, in the industry since 1981, several elements of the film ring true: conferences in glamorous locations, drunken lunches and the rambling pep talks before crucial deals.
UBS Eyes 10% Banker Bonus Boost in Asia for 2013
By Lianna Brinded | January 17, 2014 08:39 AM
UBS is planning to bump up banker bonuses for its Asia based staff after the Swiss giant allegedly raked in significantly higher revenue from arranging sales of stocks and high-yield bonds.
According to unnamed sources cited by Bloomberg, the bonus pool will rise by 10% while its top performing employees will get larger increases with total pay packets, which includes salaries and bonuses, exceeding $2.5m (£1.5m, €1.8m).
Most managing directors are expected to receive a minimum of $1m to $1.5m. Meanwhile, the bonus pool is tipped to be structured in a similar way as last year, with managing directors to get 40% in cash and 60% in stock options.
The rise in bonuses is said to be fuelled by the rise in investment banking fees and trading revenues in certain sectors.
According to research firm Freeman & Co's data, UBS in Asia excluding Japan has a 13% rise in investment banking fees, reaching over half a billion dollars.
Meanwhile, UBS managed 26 of Asia's major high-yield bond sales denominated in dollars, yen and euros in 2013, up from 14 a year earlier.
UBS declined to comment.
UBS bump in its banker bonuses will buck the trend for a number of investment banks that are reporting either a flat or declining number for its staff compensation pool.
Goldman Sachs paid its employees $12.61bn in 2013 but this is still a 3% drop from the year before.
JPMorgan reported a big drop in its staff compensation amounts while Citi said that bonuses for investment bankers and traders will probably be little changed or drop from the previous year to cut costs
Bahamas 'Can't Survive Many' Banker Detention-Type Hits
By NEIL HARTNELL, Tribune Business Editor firstname.lastname@example.org
The Bahamas “cannot survive many incidents” similar to this week’s detention of a senior UBS banker,
a leading QC warning it will reinforce perceptions in some quarters that this nation has a “hostile” Immigration policy.
Brian Moree QC, senior partner at McKinney, Bancroft & Hughes, yesterday said the Immigration Department’s treatment of Emmanuel Fiaux was “bound to cause” the Swiss bank, a financial services giant, to review its presence in the Bahamas.
Expressing hope that UBS would not overreact, Mr Moree nevertheless agreed the incident was “counterproductive” and “very damaging” to the Bahamas’ efforts to promote itself as an international financial and business centre.
“The entire incident was extremely unfortunate, as it tends to play into the perceptions that many people have about the Bahamas,” he told Tribune Business.
“While this incident was clearly an aberration, it’s real harm to the country is that it feeds into the perception that we have a very restrictive and hostile Immigration policy.
“We know that in reality that is not correct, but one’s perception tends to be one’s reality, and the great danger of this incident is that it tends to negate a great deal of good work, and positive marketing, that we have accomplished. People tend to focus more on the bad than the good.”
Mr Moree added: “The net result is adverse for us as a jurisdiction, and every effort needs to be made, and presumably is being made, to avoid any further occurrence.”
The incident with Mr Fiaux, UBS (Bahamas) executive director, threatens to undermine the work the Bahamas Financial Services Board (BFSB) and other industry bodies have done in influencing positive perceptions of this jurisdiction among institutions’ global head offices.
Mr Moree alluded to this concern, telling Tribune Business: “I would guess, discern, the [UBS] head office will be very concerned about the way their senior officer was treated, and that is bound to cause them to carefully review their presence in the Bahamas.
“While one would hope their head office does not react to this incident, as bad as it was, and they would accept it was an aberration, it nevertheless provides a very unpleasant, a very unfortunate, impression of the jurisdiction.
“The hope is that they’ll look at it in context, and not let a single event govern their overriding view of the jurisdiction.”
The well-known QC said the “damage to the country” was disproportionate to the incident involving Mr Fiaux.
He added that the Bahamas now had “to reassure the international banking community this..... does not represent the policy of the Government”.
But, from a competitive standpoint, Mr Moree agreed that the episode threatened to undermine the attractiveness of the Bahamas as a financial centre and place to do international business.
“It’s very counterproductive to a great deal of good work that’s been done on that front,” he told Tribune Business.
“We know, in this very competitive environment, the private and public sectors all work very hard to promote the Bahamas’ reputation as a financial centre and centre that is pro-business.
“This type of incident is clearly very damaging to those efforts..... We cannot survive many incidents of that nature without taking a major hit.”
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This week sees the large investment banks start to announce their quarterly earnings and reveal the bonuses paid to staff.
When the public see amounts of money they would not dream of earning in decades being distributed in a single year once again, they might rightly ask if the banks – and the people that caused the financial crisis – have changed at all.
16 January 2014 Cross-posted from the UK Conversation
It is no surprise the Labour party thinks there might be some votes in it with activists on Wednesday morning busily plugging a #blockthebonus hashtag on Twitter. But the reality is that banks have gone some way to recognising the errors of the past, and are engaged in a tricky balancing act.
One of the findings of the postmortem into financial institutions after the crisis was that the way employees got paid was an important contributing factor to the problems which followed. Rewarding bankers with cash bonuses for short-term performance did not align the interests of shareholders with those of the bankers. Rather, it created what economists call moral hazard: during the good times, bankers got a significant cut of the gains, but during bad times they did not have to take the same kind of hit on losses.
We all know what happened next.
It was rational to take high risk positions, and so people did, ramping up their bank’s risk profile in the process. That sent many banks to their grave.
Reports examining the failure of HBOS noted how the rise of widespread emphasis on bonuses for short term performance led employees at all levels of the organisation to engage in increasingly risky behaviour in order to deliver short term results. A similar pattern is evident in investment banks such as Bear Sterns and Lehmans. Key staff were given incentives to take significant risks without having to put their own capital at stake.
Financial regulators have taken these insights into account. There seems to be a welcome consensus that paying large cash bonuses for short-term performance is a recipe for disaster. This has led to all manner of attempts to redesign the way bankers are compensated. The UK parliamentary committee on banks standards recommended locking up bonuses over a longer time horizon; anything up to ten years. The EU has recommended that bonuses can only be a maximum of 100% of base pay or 200% with explicit shareholder approval. Many banks have been experimenting with offering shares or options which their employees are unable to sell for a significant period of time. All of which is aimed at reducing the percentage of compensation accrued as a bonus and to extend the time horizons across which benefits are offered.
Hankies at the ready …
Given the continued opprobrium targeted at banks and bankers, you might think not enough has been done. But these changes are already creating some significant problems in practice, particularly if we assume that it’s not in our interest to dismantle the industry.
The first and perhaps most obvious is that the changes have upset many bankers. Many feel they have been unfairly targeted, and attempts to meddle with bonuses by regulators will undermine one of the principal drivers of the industry. When speaking about bonus caps, Jaspal Bindra, Asia CEO at Standard Chartered, said, “the last thing we would like to do is give up on performance-oriented culture we have cultivated over a long time”.
In addition, the lengthened time horizon on bonuses could mean they become less motivating for bankers. Research in behavioural economics shows we have a strong preference for smaller rewards which are offered right away than large rewards which are deferred. Offering a bonus in two, five or ten years time is unlikely to be anywhere near as enticing or motivating.
by Joe Curtis | 16 January 2014
Xactly believes its SaaS solution means firms can justify staff rewards.
Outrage over bankers' bonuses has boosted business for a firm offering transparency into how staff are rewarded.
Public anger over the huge sums of money awarded to bankers despite their role in the economic downturn has led them to seek ways to justify those bonuses publicly.
That is according to Xactly, an enterprise cloud software firm specialising in solutions that help employers and employees monitor how much of a bonus they are due.
Its SaaS solution, Objectives, links individual objectives to those of the business, and tracks employees' progress in visual form as well as the number of days they have left to achieve their aims.
Crucially, managers can link their progress to the equivalent bonus due.
While banks would not have to make this information public, Xactly's worldwide sales VP, Steve DeMarco, believes they want to in order to avoid public backlashes akin to that of 2008, when banks' role in the financial crisis came to light.
He said: "More and more banks are adopting our solution. When they see the transparency and reporting they can have over this process it's been very well received.
"There's always going to be a feeling of complete unfairness when these bonuses are seen but the more transparency you can put in up front, at least there's some logic there."
While DeMarco conceded such transparency may not allay anger over the size of some bonuses, he said it would ensure that "at least there's some semblance of control and transparency and it won't seem like it's so arbitrary".
Fred Goodwin, ex-CEO of RBS, was stripped of his knighthood in 2012 after earning millions in bonuses from the bank, despite being blamed for its near-collapse at the height of the financial crisis.
DeMarco said that Xactly is in talks with HSBC at the moment and hopes to expand into Europe, doubling its London team from six to 12 staff.
Banker Bonuses in Germany Don’t Comply With Rules, Bafin Says
By Karin Matussek Jan 13, 2014 3:34 PM GMT
German banks often used the wrong parameters in rewarding bonuses to top executives and risk-takers in 2012 and didn’t always comply with finance rules, the country’s top banking regulator said.
Bafin, which reviewed the way 15 banks paid salaries and bonuses in 2012, found that the lenders failed to adequately identify which of their employees were risk-takers, Raimund Roeseler, head of banking supervision at the watchdog, told reporters in Bonn today. One review is still under way and the findings pertain to the other 14, he said.
The way employees were rewarded wasn’t always aligned with the banks’ strategies and lenders often lacked criteria for when bonuses should be cut because of performance failures, he said.
“No one was really good and many were bad,” Roeseler told reporters in Bonn. He didn’t identify any of the banks reviewed.
Banker pay has been targeted by regulators and lawmakers since the 2008 financial crisis, with the EU adopting the two-to-one cap on bonuses last year. The European Banking Authority, set up in 2011 to harmonize banking rules across the EU, defined anyone earning more than 500,000 euros ($683,000) as a “risk-taker,” making them subject to the pay cap which comes into effect this year.
By Sarah Treanor Business reporter, BBC News
The debate over bankers' pay has resurfaced with Labour's call for a block on
Royal Bank of Scotland paying bonuses of double its bankers' annual salary.
Since the banking crisis in 2008 - there have been reforms, and calls for more.
Many of those in the industry say bonuses are vital for keeping talent - others say they are out of proportion.
We canvassed the views of experts on the topic.
Luke Hildyard - head of research at the think tank the High Pay Centre
"We haven't seen convincing evidence that a bonus cap would drive people abroad. We are pro business so if we had seen such evidence we may revise our view.
"But there is also a lack of real evidence rather than anecdotal that the so-called top talent in the banking sector is irreplaceable.
"In all jobs in all sectors people leave for more money or other reasons and they are successfully replaced.
"Pay in banking is too high, and the bankers are not as irreplaceable as their banks seem to perceive them to be.
"Pay in the financial services sector has contributed to a risk-taking bonus culture which has proved damaging to society overall."
John Purcell at the city recruitment firm Purcell and Company
"If the likes of RBS were to be ultimately damaged by high-performing people leaving, that ultimately damages us on the whole as an economy.
"What went on in the past with bonuses was out of line. But there's a balance to be struck between commercial reality and politics.
"Almost nobody outside the financial sector understands banking - they think bankers go around with wheelbarrows of cash. But the truth is that a very small number of people can make an enormous difference to a company, and if they leave the company suffers.
"It's a bit like a football club. It rapidly goes downhill if a fantastic manager leaves. Extraordinary individuals can make a huge difference and that's why they get extraordinary pay.
"There is clear evidence I have seen of individuals, especially in smaller companies, moving to places like Singapore, Switzerland, Hong Kong and yes, New York."
Ralph Silva - banking analyst at SRN
"We need to infuse some morals and ethics into these institutions. But as far as bonuses go, they (the banks) will find a way to pay perks.
"The problem with bonuses in all of Europe is the amount that is paid in America. The US banks have been doing very well and have been paying huge bonuses.
"They are getting lots of British bankers ready to get on a plane and go to New York City, and they are going to have to start paying bigger bonuses to keep people in the City of London.
"Bankers are fickle, and they will move - at a certain level. The small number of very top earners will make £5m to £6m and they will move for that.
"But for the average banker, earning between £150,000 and £500,000, an extra 10% won't make enough of a difference. But double it? And it will."
Daily Telegraph 7 January 2014
Former UBS banker Raoul Weil pleads not guilty to helping Americans dodge taxes
Raoul Weil was charged five years ago with conspiring to help thousands of Americans conceal $20bn (£12bn) in numbered accounts at UBS
A former high-ranking UBS banker charged with helping Americans dodge taxes through secret Swiss bank accounts has pleaded not guilty to fraud conspiracy charges linked to a US tax evasion investigation that rocked Swiss banking.
Raoul Weil, a 54-year-old Swiss citizen and former head of global wealth management at UBS, was charged five years ago with conspiring to help thousands of Americans conceal $20bn (£12bn) in numbered accounts at the bank.
He disputed the charges initially and was listed as a fugitive from US justice until his arrest in mid-October in Bologna, Italy.
Weil's appearance in federal court in Fort Lauderdale on Tuesday was his second since he was extradited last month. He was granted a $10.5m bond, pending his arraignment at his first court hearing on December 16.
Wearing a blue suit, blue tie and glasses with thick, black frames, Weil said little in court other than confirm his name and age before the not guilty plea was entered on his behalf.
"We look forward to coming back to Florida, and defend him," his lawyer, Aaron Marcu, told reporters after the brief court session. A February 18 trial date was later set for the case.
Lawyers for UBS whistleblower Bradley Birkenfeld, the bank employee who revealed the tax fraud conspiracy to US authorities in 2007, fear that Weil may be negotiating a "sweetheart deal" that would spare him a trial and ultimately shield secret account holders and other bankers from prosecution.
The lawyers, who note that Birkenfeld worked directly under Weil when he headed UBS's former cross-border banking business, have been highly critical of what they see as the US government's failure to prosecute UBS and some of its former top executives to the full extent of the law.
"Weil can clearly bargain inside information he has that could be embarrassing to American officials or institutions for leniency," said Stephen Kohn, a Birkenfeld lawyer who also heads the Washington, DC-based National Whistleblowers Centre.
"Weil knows where all the skeletons are buried," Mr Kohn added. "The Justice Department must work closely with the IRS and Department of State to make sure that every person guilty of tax evasion in the UBS America's program are identified and prosecuted," he said.
Switzerland is taking a new tack to protect its prized banking secrecy — one that could undermine the efforts of U.S. tax authorities to snag tax evaders stashing funds offshore.
By RACHAEL BADE | 1/14/14 11:41 AM EST
The country, which bars citizens from dishing banking secrets to foreign governments, is probing former Swiss banker Renzo Gadola for spilling the beans on wealthy Americans with hidden bank accounts, according to the Office of the Attorney General of Switzerland.
It marks the first public admission by Switzerland that it is probing one of its own for helping U.S. offshore tax efforts. The Swiss contend they’re merely upholding their privacy laws, but some say the investigation sends a message to bankers: Keep quiet or else.
“It makes it tough for the U.S. prosecution to get whistleblowers from Switzerland,” said Max Riederer von Paar, who practices tax law in Switzerland and the U.S. “These people with this information would have to ask themselves: ‘What should I do? Come to the U.S. and get a few years on probation? But then I can’t go back to Switzerland because they will prosecute me there.”
The U.S. has led an aggressive push to rein in Swiss banks helping Americans dodge taxes, fueled in 2009 when the country’s biggest bank admitted it courted Americans with promises of secrecy. UBS paid $780 million and handed over account information to settle.
Individual bankers, however, have found themselves in hot water for publicizing secrets.
Banker-turned-whistleblower Rudolf Elmer, who ran the Cayman Islands branch of Swiss bank Julius Baer, spent months in a Swiss prison, including time in solitary confinement, for disclosing some of his employer’s secrets.
“What message Switzerland has sent to the world is that [client] data is safe in Switzerland, and if anyone violates that, he goes to prison,” Elmer said over Skype from his home in Switzerland. Gadola’s situation could “show how it’s a no-no to work with other governments.”
The Swiss also gave their banks permission to hand over some account data sought by U.S. authorities, waiving Swiss law that bars institutions from working with foreign governments on such matters.
Swiss attorney general’s office would only confirm the case but would not provide further comment.
Martin Naville, Swiss-American Chamber of Commerce CEO, said he sees no political message in the investigation.
“There is some perceived evidence that the law has been broken and the government is obliged to follow this up,” he said.
Why Bankers Have Gotten a Pass
By TERESA TRITCH Jan 9, 2014
In recent years, it has become increasingly clear that no prominent banker would be prosecuted for fraud in the run-up to the financial crisis. In the current issue of The New York Review of Books, Judge Jed Rakoff of the Federal District Court in Manhattan asks why.
The comforting answer — that no fraud was committed — is possible, but implausible. “While officials of the Department of Justice have been more circumspect in describing the roots of the financial crisis than have the various commissions of inquiry and other government agencies,” he wrote, “I have seen nothing to indicate their disagreement with the widespread conclusion that fraud at every level permeated the bubble in mortgage-backed securities.”
So why no high-level prosecutions? According to Judge Rakoff, evidence of fraud without prosecution of fraud indicates prosecutorial weaknesses.
This is not the first time Judge Rakoff has weighed in on the prosecutorial response to the financial crisis. In 2011, he rejected a settlement between Citigroup and the Securities and Exchange Commission because it did not require the bank to admit wrongdoing.
His insights on financial-crisis cases also apply to cases that have emerged since then, like JPMorgan Chase’s settlement with the government this week over the bank’s role in Bernard Madoff’s Ponzi scheme.
Under the deal, JPMorgan Chase, which served as Mr. Madoff’s primary bank for more than two decades, must pay a $1.7 billion penalty, essentially for turning a blind eye to Mr. Madoff’s fraud. It must also take steps to improve its anti-money-laundering controls. And it had to acknowledge, among other facts, that shortly before the fraud was revealed, the bank withdrew nearly $300 million of its money from Madoff-related funds.By adhering to the settlement terms, the bank will avoid criminal indictment on two felony violations of the Bank Secrecy Act. No individuals were named or charged.
And that is the problem. Until relatively recently, it was rare for corporations to face criminal charges without the simultaneous prosecution of managers or executives. That changed over the past three decades, as prosecutors shifted their focus away from individuals and toward corporations, as if fault resides not in executives, but in corporate culture.
That shift, in Judge Rakoff’s view, largely explains the lack of banker prosecutions from the financial crisis. It also explains the JPMorgan Chase settlement in the Madoff case. A likely consequence of this approach is more wrongdoing, since, as Judge Rakoff argues, imposing compliance measures that are often just window-dressing is far less potent than “the future deterrent value of successfully prosecuting individuals.”
Even worse is the distortion of justice. In the financial crisis, prosecutors not only took a hands-off approach to bankers, but to banks as well for fear that indicting a big bank could harm the economy.
The JPMorgan Chase settlement in the Madoff case also sidesteps justice by relying on “deferred prosecution.” That tactic, wrote Judge Rakoff, makes prosecutors happy because they tell themselves that the threat of prosecution will deter future crime; it makes corporations happy because they avoid indictment; and happiest of all are the executives or former executives responsible for the misconduct who are left untouched.
Labour Party wants immediate squeeze on RBS pay
by Sarah Butcher on 15 Jan 2014
Investment bankers at the Royal Bank of Scotland don’t have much to look forward to come bonus time this year. As we reported earlier this week, their compensation per head is on track to decline by 30% (based upon accruals in the first nine months) year-on-year. This is steep, especially when most other banks are expected to shave off just 5%. It also follows a 40% reduction in the bonus pool for code staff in RBS’s markets business in 2012.
RBS investment bankers’ pay is therefore being squeezed already. However, for political purposes it is not being squeezed enough. The Financial Times reports that RBS bonuses are back in the British political spotlight and that the Labour Party is demanding that RBS pay should be immediately curtailed to meet the European Union’s bonus cap, due to come into force for next year’s bonus round. “At a time when families face a cost-of-living crisis, it cannot be right for George Osborne to approve a doubling of the bank bonus cap,” said Chris Leslie shadow chief secretary to the Treasury. Leslie has tabled a Commons motion seeking to restrict bonuses later today. The British government owns 81% of RBS.
Whether it passes or not, Leslie’s motion is unlikely to have much effect. Across RBS as a whole, bonuses were a mere 1.3x fixed pay last year and therefore already conformed to the new EU rules restricting bonuses to 2.5x salaries. The biggest outliers to the EU’s rule were U.S, banks like Goldman Sachs and JPMorgan, where bonuses were more than 5x fixed pay for 2012. So far, there’s been no indication that US banks’ bonuses will be anything different for 2013
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